The number of startups in the nation has skyrocketed.
The S factor explains it. What was initially a global effort intended for geopolitical and commerce schmoozing has just been sexified by India. The Group of Twenty (G20), which this year is led by India and consists of 19 major economies, the European Union, as well as international financial institutions like the IMF and the World Bank, has cleverly been repurposed as a tool for promoting India as a tourist and investment destination.
From 415 in 2016 to 86,000 in 2022, the number of startups in the country has increased dramatically.
We shouldn’t rush into such circumstance, in my opinion. Here, there is a sizable enough domestic market for you to actually have firms specialising in India solutions. We can then go on to global solutions as it develops. Confederation of Indian Industry (CII) President R. Dinesh
Startup20 is the singular S factor at the heart of it all. It was launched this year, during India’s G20 presidency, as the nation insisted that the Business 20 (B20) forum for international businesses was insufficient to address the startup ecosystem because it also catered to large corporations and other trade issues.
Instead, the concentrated basis for promoting companies would be Startup20. Indeed, a policy communiqué released at the conclusion of the Startup20 meeting in Goa mentioned “scouting startups globally, funding them collaboratively, mentoring them contextually, and scaling them internationally… setting the stage for a vibrant and thriving global startup ecosystem.”
By extension, India wants to benefit from positioning itself as a hub for startups around the world. Amitabh Kant, former CEO of NITI Aayog and G20 Sherpa, recently claimed that “within a few years, we were able to become the world’s third largest ecosystem for startups.” “Startups can play a crucial role in a country’s, if not the world’s, development story.”
For the Indian establishment, startups represent a singular success story that should be projected and monetized. Not only that, though. The founding of Startup20, which had meetings in Sikkim and Goa before holding its main summit in Gurugram the following month, was motivated by a very specific goal.
The goal is clear-cut and straightforward. To firmly establish India as the world’s leading startup ecosystem, complete with a talent pool of qualified professionals and a variety of funders from venture capitalists to private investors to pitch to.
But is the world paying attention?
For the Indian establishment, startups represent a singular success story that should be projected and monetized. Not only that, though. The founding of Startup20, which had meetings in Sikkim and Goa before holding its main summit in Gurugram the following month, was motivated by a very specific goal.
The goal is clear-cut and straightforward. To firmly establish India as the world’s leading startup ecosystem, complete with a talent pool of qualified professionals and a variety of funders from venture capitalists to private investors to pitch to.
But is the world paying attention? As many as 115 Indian businesses have achieved unicorn status in the previous ten years, which is a valuation of more than one billion dollars (about Rs8,000 crore equivalent). They are estimated to be worth an astounding Rs28 lakh crore when valued collectively.
Even better, from 415 in 2016 to 86,000 in 2022, the number of startups in the nation has increased dramatically. In fact, according to some estimates, the total may be close to a lakh.
More than the price, the concepts and problem-solving abilities these firms produced had people lining up all around the world. The most notable of these are on the fintech side, where distinctly Indian innovations like the Unified Payments Interface (UPI) are now being more and more widely used around the globe as a speedy and affordable method of money transfer and buying.
R. Dinesh, president of the Confederation of Indian Industry (CII), the leading national business chamber that has already established two centres of excellence aimed at fostering startups in the nation, said that digital fintech is an example of an Indian startup developing solutions for a specific issue India faces that can then be applied to other economies.
That might serve as a foundation for a global future. According to Ninad Karpe, a partner of the venture capital firm 100X.VC, “India is well positioned to become a global startup hub,” There is a lot of room for many more startups in India given the size and scope of the Indian market. The ecosystem as a whole is stronger now than it was a few years ago thanks to the government’s assistance and the abundance of incubators and venture capital (VC) funds.
According to Aditya Malik, a startup mentor with the CII, India’s appeal stems from a mix of its bright workforce and ability to produce the solutions that its sizable population need. “The home market in India has enormous growth and scalability potential, and the diversity and demographic dividend of the nation encourage innovation. Additionally, India’s IT services sector leads the world in market share and offers a solid base for tech-driven startups.
However, despite its achievements on the unicorn stage and the overall G20 effort, India’s status as the global startup capital may still remain a pipe dream.
According to Dinesh of CII, developing a favourable market for international entrepreneurs is yet in the future. We shouldn’t rush into that issue, in my opinion. Here, there is a sizable enough domestic market for you to actually have firms specialising in India solutions. We can then go on to global solutions as it develops.
There are also many practical concerns. India may have gained some ‘China plus one’ brownie points as a result of post-Covid global reconfigurations, and its standing in different ease of doing business indexes throughout the world may have significantly improved in recent years, but it is still not always the clear pick.
“Inadequate physical infrastructure, unreliable power supply, and limited access to high-speed internet in rural areas are still a problem, and stall c-commerce and tech startups from growing,” said Saumya Kumar, director, I-Venture, Indian School of Business (ISB). “Navigating the regulatory environment is difficult due to its bureaucracy.”
Funding is yet another area of concern. Even if the larger businesses generate headlines by winning large sums of money, the ecosystem in which early-stage startups may meet investors, make pitches, interact with one another, and network is still far from ideal. “India has the potential to become a preferred location for entrepreneurs to pitch globally, but there is still some time until that occurs. More international VC and PE funds need to open offices in India, according to Karpe of 100X.VC.
Particular problems annoy visitors who come to establish businesses in the nation. According to Kumar of ISB, “Specific challenges for startups that come to India are around issues relating to protecting trademarks, copyrights, and patents,” Startups must put a lot of effort into finding a solution if they run into legal or regulatory problems. Instead of concentrating on growing their firm, they waste a lot of time figuring things out.
Another troublesome topic is taxation. “To stimulate investment in innovation, the government must overhaul the taxation system for new businesses and research. This can be accomplished by providing tax incentives, streamlining tax laws, and making clear tax laws while avoiding retroactive tax laws.
In addition, the government ought to take into account ESOP (Employee Stock Ownership Plan) tax holidays or exemptions, lowering capital gains tax on unlisted investments in businesses, and streamlining tax procedures to lessen compliance obligations, according to Kumar.
While the government has designated Ahmedabad’s GIFT City as almost a free port for entrepreneurship, experts believe that more similar centres are needed there as well as elsewhere. “GIFT City, a special economic zone, provides many advantages to international businesspeople, including tax discounts, customs duty exemptions, loosened foreign exchange regulations, and single-window clearances. It’s a desirable choice for international companies. When choosing a company location in India, it’s important to take other aspects into account, such as the availability of trained personnel, the cost of living, infrastructure, and political stability.
The question is, will the G20-fueled dream remain at the “angel” stage or will it ascend into the unicorn universe? “It will happen on its own. I don’t think we need to do anything different, said Dinesh, “other developing markets will undoubtedly come to India. The problem is that we are developing solutions that can be applied elsewhere in the world. Just keep growing companies so that they can provide us with global solutions.
