The Start-up India initiative 

News: Recently a research paper was released by Dublin City University in Ireland which reviewed India’s entrepreneurial policy ‘Startup India’ which was introduced in 2016.  

How has the program been successful so far? 

The study affirmed that Startup India had a positive impact in reducing regional entrepreneurial disparities.

Startup India entrepreneurship outreach campaigns in tier-2 and tier-3 cities, helped address regional entrepreneurial disparities in India.  

The entrepreneurs that are integrated into the portal would be connected to venture capital funds, angel networks, banks, incubators, accelerators, universities, etc.  

In fact, many State govts have adopted the policies in favour of start-ups after the launch of this program.

What are the issues? 

Despite the initiative, the entrepreneurship continues to be “highly concentrated” in three megacities, namely, Mumbai, Bengaluru and Delhi NCR.

– For example, 93% of all funding raised between 2014 and 2019 were done in these three megacities. It happened because India’s venture capital industry is clustered in and around these three cities. Eventually, it can result in regional disparities because there will be growth of one area at the expense of another area. 

The skewered nature may increase economic inequality. It will not promote the emergence of entrepreneurs in industries which are not found in the clusters of the megacities.  

There is under-representation of the ‘caste’, ‘tribe’, ‘marginalised’, ‘indigenous’ or ‘social groups’ in the policy. It could be due to caste-based economic exclusion, the urban and rural divide, lack of access to quality education and limited social networks etc. 

The policy does not take into consideration India’s digital divide, especially with respect to urban and rural areas.  

The policy ignores necessity-based or subsistence entrepreneurship which are run informally and through self-employment. For example, it is high among SC and ST communities in rural areas. 

There is under-representation of women in Start-ups. For example, RBI’s pilot survey about the new start-ups stated that 5.9% of participating Start-ups in its survey had a female founder. 

What is the way forward?

There is a need for targeted measures to promote entrepreneurship among SC and ST communities in India. It can be done using technology-and innovation-driven approach. 

The government has started capacity building programmes and the dedicated webpages for women on the entrepreneurship portal.  

Source: The post is based on an article “The Start-up India initiative” published in The Hindu on 29th March 22.