The world slowed down when the COVID pandemic hit in 2020. Economic growth rates tanked; supply chains contracted. But amidst the chaos, start-ups didn’t stop despite all operational and financial challenges.
Layoffs and slashed incomes pushed people across the globe towards various businesses, altering the economic graph of their countries.
While the pandemic was a huge catalyst, India’s start-up trajectory saw a revolution five years earlier. Today, there are over 65,000 recognized start-ups in 2022, according to reports. This number was just over 14,000 in 2020 and 471 in 2016.
India is one of the biggest hotspots of start-up businesses worldwide, and COVID is not the reason. Technology, funding possibilities, career options, and risk appetite have contributed to the exponential rise in start-ups.
A significant enabler, however, is a brilliant initiative rolled out by the Indian Government, Start-up India.
Start-up India is an initiative by the government to handhold Indian start-ups towards growth and expansion with various tools, easy finance, and other incentives. Launched to create an empowering ecosystem that promotes an innovation culture, the initiative enables entrepreneurs to leverage lucrative schemes and opportunities.
There are support systems to overcome major obstructions in business—finance, process engineering, and overall streamlining.
To understand how this initiative benefits and whom, let us understand what a start-up is.
For common understanding, a start-up is simply a new business.
To avail of the benefits under Start-up India, the start-up needs to be-
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For any business, the foundation is remarkably challenging. Here is where Start-up India provides a platform for them to iron out the creases with ease.
If the entrepreneur wants to register a patent, he gets an 80% waiver on the patent registration cost. The government deals with the facilitator fees while the start-up bears only the statutory cost.
The government parks ₹10,000 crores to invest as a venture capitalist in start-ups.
Registered start-ups also enjoy a three-year tax holiday if they have the needed certifications.
Research park facilities are set up to facilitate the business’ research, coupled with multiple online tools.
To incentivize further investments in start-ups, the government has also exempted investments in the same from taxation.
Impact of Start-up India
Until the previous decade, foreign investments in India were low—mainly because India was never considered a good country to work in.
Entrepreneurs, too, were scared to take a plunge because of the risks involved.
Lack of resources was also a serious demotivation for them.
Start-up India resolved all the above.
As per a report by the World Bank on Doing Business Index, India jumped to 63rd rank from below 100 in five years. Meaning, as per this chart, India is the 63rd best country in the world for doing business.
According to a report by Livemint, India is the third largest start-up ecosystem in the world, with an impressive number of start-ups transforming into unicorns today.
Unicorns are start-up companies with a value of over $1 billion.
Today, a total of eighty-three start-ups are unicorns, which contribute about 50% of our GDP.
The strive for survival and growth of these start-ups has enhanced the financial circulation in the economy.
The Union Minister, Piyush Goyal has been positively seeking venture capital funds globally and has declared the government’s focus to work on Start-up India’s penetration in Tier II and Tier III cities.
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Start-ups are said to play a key role in the world economy in years to come. Between April and November 2021, approximately 89,066 crores were raised via IPOs.
Despite the market crash scare and negative impact on income, investments continue to flow in.
So, it is safe to say that start-ups are here to stay and give a strong fight to well-established corporates.
The tech industry is already booming with start-ups which shall continue to, as long as innovation remains constant. There is a noticeably growing interest in the unexplored dairy and farm sector, with the onset of climate change and other environmental woes.
State governments also are rolling out dedicated policies in line with Start-up India’s policies.
While the facts in this article reflect a fair view of the start-up economy of the country, this is based on the registered start-ups, which can be easily tracked. There are still several businesses that aren’t registered under Start-up India, missing out on transformational opportunities, because of a lack of awareness.
With the few who took advantage of the various tools and benefits, India has seen a superb boost to the economy. If more businesses are aware of the same, the Indian economy can grow multifold. The loss of employment may be a scary scene, but the welcoming start-up economy isn’t.