Startup India is an initiative by the government of India to boost entrepreneurship by nurturing, mentoring and providing resources to make ideas a reality. The campaign was first announced by Prime Minister Narendra Modi in his 15 August 2015 address from the Red Fort. In January 2016, the action plan was launched. From then the startup culture has caught on the Indian population especially the youth and many incubators and clusters have been formed and till date, the government has funded 75 startups.
India needs more than a 100 million jobs a year and the jobs which are generated mostly from startups and not big enterprises. Startup entrepreneurship is crucial because it also brings new innovations, new jobs, and competitive dynamics into the business environment and enterprises. This also brings great opportunity to be involved in dealings with new technology which generally lies at the highest end of value addition chain. Startups can induce change, which results in a chain reaction. Once an enterprise is established, the process of industrialization is set in motion. This will generate demand for various types of units and will, in turn, lead to overall development of an area due to increase in demand and setting up of more and more units.
Impact of startups on Indian economy
India is amongst the top five countries in the world in terms of startups. The US ranks number one on the list with 83,000+ startups.
The numbers of startups speak volumes about the emergence of startups — it is projected that by 2020 there will be 11,500 firms from 3,100 startups in 2014. And according to D.S. Rawat Secretary General ASSOCHAM it’s going to change the way the markets are working today in India. Between 2010 and 2014, the infusion of VC and PE increased from US$ 13 mn to US$ 1,818 mn. Angel investment too has multiplied almost eight times from US$ 4.2 mn to US$ 32.2 mn.
Youth of India
If we happen to interview an aspiring entrepreneur before the startup era he/she would give us a whole rant about the red-tapism that is involved in starting a business. There are several examples where great ideas did not see the light of the day due to bureaucracy. With the advent of startup India, the youth expects simplification of the process which our prime minister promised by various initiatives like startups being exempted from paying income tax on their profit for the first three years. He said the Government is working on a simple exit policy for Startups. He also said the Government is working towards fast-tracking of Start-up patent applications. He also announced an eighty percent exemption in patent fee for Start-up businesses and said a self-certification based compliance system for Startups would be introduced to 9 labor and environment laws. He said the Atal Innovation Mission will be launched to give a boost to innovation. There are several other schemes that are put in place or being actively pursued to provide safety, support, stability to the entrepreneurs
Startup India has made a wave among the Indians and has definitely created a lot more opportunities. But like any other great plan, it too has many challenges that have to be addressed. For example, according to World Bank’s report, India ranks 130th out of 189 economies on the ease of doing business, 133rd on the ease of trading across borders and 157th on the ease of paying taxes.India is ranked 155th in case of starting a business. On an average, Indian businesses need to make 33 tax payments annually with around 243 hours spent to prepare and pay taxes in a year. In contrast, China requires just nine tax payments annually, while the US doesn’t trouble its taxpayers more than 11 times annually for tax payments.
Apart from these, there are social and cultural challenges. We tend to look down upon failures and like the old saying ‘startups are not built in a day’.People need to accept failures and look for second chances. Challenges in technology, infrastructure and assigning the right mentors to right group should be addressed. Startup India in itself is a huge business idea that is currently been on a trial. With the right kind of resources and people, it will definitely generate jobs and create a sustainable economic growth.