The startup landscape in India has seen extraordinary expansion since the launch of the Startup India initiative in 2016. According to the Department for Promotion of Industry and Internal Trade (DPIIT), the number of startups has surged from around 400 to more than 158,000 today. This initiative has been vital in fostering entrepreneurship and creating a dynamic startup culture.
DPIIT Secretary Amardeep Singh Bhatia mentioned during a briefing on January 10 that the “initiative has played a crucial role in transforming India into a nation of job creators rather than job seekers.”
Highlights
Increase in Startup Funding
The funding scenario for startups has experienced remarkable growth, reaching $155 billion by 2024, compared to merely $8 billion in 2016. Notably, 48% of new startups are being established in Tier II and III cities, as highlighted by DPIIT Joint Secretary Sanjiv Singh. Additionally, the number of unicorns in India has surged from eight in 2016 to 118 by 2024. This sector has created over 1.7 million jobs, as stated by Singh.
Significant Policy Improvements
A number of essential policy changes have supported this growth. Key initiatives include the removal of the angel tax in the latest Budget and the launch of the Fund of Funds for Startups (FFS) scheme in 2016. Bhatia noted, “Feedback suggests that the abolishment of the angel tax has significantly encouraged startups to return to India.”
On January 10, DPIIT held discussions with representatives from over 75 alternative investment funds (AIFs) to explore strategies for boosting startup funding nationally.
Fund of Funds for Startups (FFS)
The Fund of Funds for Startups (FFS) was introduced with a capital base of Rs 10,000 crore to strengthen India’s startup ecosystem by enhancing access to domestic capital. Instead of making direct investments in startups, this scheme directs funds to SEBI-registered AIFs, which then invest in startups through equity and equity-linked instruments.
The department has reached out to the top 100 NSE-listed companies to promote the creation of manufacturing incubators. This effort aims to boost capital mobilization and reinforce the startup ecosystem by fostering collaboration between established enterprises and startups, emphasising mentorship and support for emerging businesses. Additionally, several large corporates have been approached to enhance investments in manufacturing startups by identifying specific products they could procure from these companies.
