National Startup Day
Syllabus: GS 3: Economy (Source: Indian Express, 16^th Jan 2025)

Context:
On January 16, 2025, India marks nine years of Startup India Program, a transformative journey that began in 2016. January 16 is designated as National Startup Day.

About Startup:
In India a company must meet the following criteria to be considered eligible for DPIIT startup recognition

• Company age – less than 10 Years
• Company Type – Private Limited Company, a Registered Partnership Firm, or a Limited Liability Partnership
• Annual turnover –  Not exceeding Rs. 100 crore for any of the financial years
• Original Entity – Not have been formed by splitting up or reconstructing an already existing business.
• Innovative & Scalable – Development or improvement of a product, process, or service

 National Startup Day Theme:

• 2025: sustainable and inclusive development
• 2024: Startups Unlocking Infinite Potential
• 2023: Founders of Today, Leaders of Tomorrow

 Motive of National Startup Day:

• Economic Growth: Startups contribute significantly to GDP and create millions of jobs.
• Innovation: They bring cutting-edge solutions to societal and industrial problems.
• Youth Empowerment: The day inspires young minds to pursue entrepreneurship.
• Global Competitiveness: It strengthens India’s image as an innovation hub.
• Policy Refinement: It provides a forum to discuss challenges and improve startup-related policies. It will bridge gaps between policymakers, investors, and entrepreneurs, showcasing success stories and addressing challenges

 Current Status of Startups in India:

• Ranking: India now ranks as the third-largest startup hub in the world, with over 100 unicorns. Ranking order are US, China, India, UK, Germany.
• Total: DPIIT-recognized startups grew from 500 in 2016 to 1,59,157 as of January 15, 2025.
• Women-led: 73,151 startups include at least one woman director (as of October 31, 2024).
• Employment Generation: Startups created 16.6 lakh direct jobs between 2016 and October 31, 2024.
• Emergence: Over 50% of startups emerged from tier 2 and 3 cities as of December 2023

Key Factors responsible for growth of startups ecosystem in India:

• Government Support: Many government Initiatives promoting like Startup India through offering funding, tax benefits, and simplified regulations.
• Sectoral Diversity with digital infrastructure: Startups operate across diverse domains such as fintech, edtech, health-tech, and e-commerce, leveraging technologies like AI and block chain.
• Employment Generation: Startups have generated over 1.6 million jobs, strengthening India’s economic foundation.
• Large Consumer Market: India’s demographic dividend of 65% of the population under 35 years offers a significant consumer base for startups
• Emergence of Tier-2 and Tier-3 Cities: Nearly 50 per cent of the country’s startups originate from Tier II and Tier III cities, including emerging hubs like Indore, Jaipur, and Ahmedabad
• Women’s Participation: Nearly 50% of startups in India have at least one woman director, highlighting gender inclusivity.

Government Initiatives

1. Startup India Scheme: Launched by the Department for Promotion of Industry and Internal Trade (DPIIT) on 16th January, 2016. Many Flagship scheme are started under this umbrella

• • Fund of Funds for Startups (FFS) Scheme, 2016: Established with a corpus of Rs 10,000 crore to provide funding support to startups through venture capitalists
  • Startup India Seed Fund Scheme (SISFS), 2021: Provides financial assistance to early-stage startups in India.
  • Credit Guarantee Scheme for Startups (CGSS), 2022: Provide collateral-free funding to startups through credit guarantees for loans extended by Scheduled Commercial Banks, NBFCs, and SEBI-registered AIFs
  • BHASKAR (Bharat Startup Knowledge Access Registry) 2024: To centralize and streamline interactions within India’s entrepreneurial ecosystem

2. Prime Minister’s Employment Generation Programme (PMEGP) : Lunched by: Ministry of Micro, Small & Medium Enterprises (MSME) , Subsidy: 25% in rural areas, 15% in urban areas; higher for SC/ST/OBC/Women (35% rural, 25% urban), Assisted 9.69 lakh micro-enterprises since 2008-09, generating ~79 lakh jobs, Second loan scheme for expansion: ₹1 crore in manufacturing, ₹25 lakh in services
3. TIDE 2.0 (Technology Incubation and Development of Entrepreneurs) (MeitY): Focus on emerging tech: AI, IoT, Blockchain, 51 incubators established; 1235 startups supported.
4. GENESIS (Gen-Next Support for Innovative Startups) (MeitY): ₹490 crore outlay for 5 years; supports 1500+ startups in Tier-II and Tier-III cities.
5. Atal Innovation Mission (AIM): Atal Incubation Centers (AICs) to provide physical infrastructure and support to startups.

Challenges to the Growth of Startups in India:

1. Fund: Complex compliance requirements and regulatory ambiguities create barriers like Digital Personal Data Protection Act, 2024, though necessary, adds compliance burdens for startups handling user data
2. Complex Regulation: Funding remains concentrated in select regions and sectors, leaving startups in Tier-2 and Tier-3 cities underfunded. Global economic uncertainties, such as the funding slowdown in 2023, have also impacted capital availability
3. Talent Retention: Startups face stiff competition from established corporations and international opportunities, leading to a brain drain. A 2023 study showed that 60% of Indian tech professionals were willing to relocate abroad because Challenges in offering competitive salaries and growth opportunities
4. Infrastructure Limitation: Internet penetration in rural areas is only 37%, compared to 69% in urban areas, limiting the market reach of digital startups. India has three main startup clusters—Bengaluru, Delhi National Capital Region (NCR), and Mumbai.
5. Lack of Scalability: Around 90% of startups fail within the first five years due to operational inefficiencies and an inability to scale.