[Yojana April 2023 Summary] Startup India Action Plan Foundation of Indian Startup Ecosystem – Explained, pointwise

Introduction

Innovation and entrepreneurship are essential for achieving self-reliant and sustainable growth in India. As the country moves towards becoming a developed nation, it must focus on fostering innovation and supporting entrepreneurs.  

What is the growth story of India’s startup ecosystem?

India has experienced tremendous growth in its startup ecosystem, with the number of recognized startups increasing from 500 in 2016 to over 92,000 in February 2023. This growth is evident in every state and UT, spanning over 660 districts and more than 55 sectors. The inclusiveness and diversity of the ecosystem are evident, with 47% of recognized startups having at least one woman director.  

What are the steps taken by the Indian government for the development of the startup ecosystem in India?

Startup India Action Plan: The Indian government launched the Startup India Action Plan in 2016, which aimed to address the various stages of a startup’s lifecycle, recognizing that a one-size fits-all approach would not work. The plan consists of 19 action items that focus on simplification, funding support, incentives, and industry-academia partnerships.  

Executing the Startup India Initiative: The Department for Promotion of Industry and Internal Trade (DPIIT) adopted a multi-fold strategy for executing the Startup India initiative. This included institutionalizing the right team, introducing reforms for ease of doing business, and activating a completely digital policy and scheme implementation regime.  

Startup India Hub: The DPIIT established the Startup India Hub, a one-stop online portal to execute action plans. The hub functions as a hub-and-spoke model, enabling end-to-end digital program execution for all stakeholders in the startup ecosystem.  

Funding Schemes for Startups: To address funding needs, DPIIT is implementing the Fund of Funds for Startups (FFS), Startup India Seed Fund Scheme (SISFS), and Credit Guarantee Scheme for Startups (CGSS). These schemes provide funding support to startups throughout their business lifecycle.

The SISFS provides funding in form of grants or debt for startups in the early stages of their growth, FFS mobilises private equity capital for high-growth startups and CGSS promotes collateral-free debt funding for mature startups.  

National Startup Awards (NSA): The DPIIT launched the National Startup Awards. The NSA identifies the depth, quality, and spread of innovation, inclusivity, and diversity in the country, showcasing exceptional innovations emerging from smaller cities, indicating that innovation is thriving beyond the metros.  

National Startup Advisory Council (NSAC): The DPIIT introduced the (NSAC) to develop policies and programs in collaboration with stakeholders. The NSAC, chaired by the Minister of Commerce and Industry, includes members from various ministries, departments, organizations, and non-official members from the startup ecosystem.

It plays an essential role in identifying intervention areas, ideating, and implementing national programs under the Startup India initiative, serving as a stakeholder-driven public policy example. 

Programmes such as MARG National Mentorship Program, Incubator Capacity Development Program, Startup India Investor Connect portal, Adoption of NavIC Grand Challenge, Startup Champions 2.0, etc. are all ideated and incubated by this Council.  

How do States and UTs contribute to the development of the startup ecosystem in India?

States and Union Territories (UTs) play a vital role in fostering the growth of the startup ecosystem in India. They help in spreading the spirit of innovation and entrepreneurship across the nation.  

States’ Startup Ranking Framework (SRF): It was launched by the Department for Promotion of Industry and Internal Trade (DPIIT). This framework encourages States and UTs to adopt best practices, learn from each other, and create a favourable policy landscape for startups.  

Capacity Building Initiatives: States and UTs also participate in capacity-building measures throughout the year. Initiatives like Startup India Yatra to nurture the culture of entrepreneurship among students, while regional and international exposure visits provide valuable insights to startup nodal officers and teams.  

Supporting Local Innovations: By promoting local innovations and providing resources, States and UTs enable startups to thrive, contributing to the overall growth and development of India’s startup ecosystem. 

How can India’s G20 Presidency impact the growth of the startup ecosystem globally?

India’s G20 Presidency offers a unique opportunity to showcase its thriving startup ecosystem on a global stage, influencing the growth of startups worldwide.  

Promoting Unity and Collaboration: With the theme ‘One Earth, One Family, One Future,’ India’s G20 Presidency aims to unite nations in supporting entrepreneurship and fostering innovation across borders.  

Startup20 Engagement Group: The institutionalization of the Startup20 Engagement Group within G20 enables India to lead from the front, facilitating collaboration and knowledge-sharing among G20 countries to bolster their respective startup ecosystems.  

Global Exposure for Indian Startups: India’s G20 Presidency also provides a platform for Indian startups to gain international recognition, attract investments, and establish partnerships, further enhancing their growth and contribution to the global economy.  

Conclusion

The startup ecosystem is evolving rapidly, driving India’s growth through digital transformation, private investment, clean energy, and innovative solutions. Collaborative efforts are essential for developing an enabling ecosystem that empowers Indian thinkers and innovators to transition from job seekers to job creators.  

Source: Yojana

Syllabus: GS 3: Economic development – Changes in industrial policy and their effects on industrial growth.