Technically, a start-up is any company that works to grow, commercialize and create new products, services or mechanisms based on intellectual property or new technologies. Over the last two decades, the Indian startup ecosystem has grown rapidly and increased support has become available across all dimensions. Startups do not exist in isolation, but are part of a broader business environment focused on generating effective solutions, thereby acting as vehicles for socio-economic development and transformation. As start-ups are centers of new innovation, they generate jobs, which implies more career opportunities; more jobs leads to a stronger economy, and a healthier economy directly impacts the growth of cities where startups locate. For example, consider how Infosys transformed the city of Bangalore.
Therefore, to promote start-up culture in India and strengthen the Indian economy, the Indian government has taken various measures. For example, Prime Minister Narendra Modi launched the ‘Standup India’ initiative in August 2015. The broader aim is to help new businesses through bank financing, boost entrepreneurship among young Indians , create frameworks to stimulate startups and make the country the best destination. for technology companies. Let’s look at the role of startups in growing the Indian economy:
India has 112 million people of working age, aged 20 to 24, compared to 94 million in China. In the absence of government jobs, this demographic dividend is accelerating the country’s startup culture. As of August 29, 2022, India has become the third largest startup ecosystem in the world, with over 77,000 DPIIT-recognized startups spread across 656 districts. These startups simultaneously create more jobs than large companies or companies in the same sector. Thus reducing unemployment problems in developing countries like India.
Many multinational companies now outsource their tasks to smaller companies in order to focus on their core competencies. Due to this trend, not only Indian venture capitalists but also many multinational companies are closely watching the progress of Indian startups to invest their money. For example, Accenture has given $1.35 million in business to startups over the last year, giving startups the opportunity to make a significant impact in the Indian and global markets.
Research and development
Start-ups heavily subsidize research and development (R&D) in countries like India because they often have to contend with high-tech and knowledge-based services. The startup’s R&D team acts as innovation seekers and keeps the company updated. Start-ups therefore encourage a pragmatic approach or independent research within the academic establishment. This motivates students or researchers to put their ideas into practice by collaborating with the start-up, which above all contributes to developing means of economic expansion.
A better GDP
Despite high inflationary pressures due to rising global food and fuel prices, India’s gross domestic product (GDP) is expected to grow by 6.9% in FY 2022-23 and 6.2 % during the financial year 2023-24. Since GDP plays an important role in the economic development of a country, it will become possible to increase income at the national level and consumer capital will also be able to circulate throughout the country if we continue to promote and support more of start-up initiatives.
Democratizing technological advantages
Many startups are not only driving innovation and technology, but also demonstrating how their benefits reach more distant customers. Fintech startups are now expanding into remote areas with their solutions and making financial solutions easily accessible in tier 2 and 3 cities. Hesa, a Fintech and Agritech startup, is a solution to all rural problems by bridging the gap rural-urban through technology and labor. It successfully facilitates banking transactions, manages supply chains and increases visibility of farmers’ rural products. Similarly, e-commerce startups such as Zypp are using EV technology to make last-mile delivery sustainable and emissions-free. Thanks to these innovative startups, it has become easier for local entrepreneurs operating in rural areas to market and sell their products. Local entrepreneurship is no longer limited to a particular region but is able to compete globally, thereby helping India become a stronger economy.
The subtle influence of start-ups on the Indian economy
- When a startup creates jobs for locals, they also start purchasing goods and services, thereby increasing the inflow of cash and revenue to the government and thus boosting the economy.
- When several startups flourish in the same location, the market in that geographic area also grows. Since many people want to live there to work, this radically changes the infrastructure of this city.
- When infrastructure is improved, many guest houses, homestays, restaurants and transportation services are opened, creating countless employment opportunities and increasing the city’s revenue.
- Startups also create innovative solutions and technologies that improve people’s quality of life. Many startups in India operate in remote areas with the aim of supporting the entire local community, including the economy.
- When Indian start-ups maintain the requirement of a required product or service, it reduces the importation of that foreign product or service. This not only minimizes the cash flow to another country but also increases the flow of capital into the Indian market, which is essential for the growth of the Indian economy.
In India, startup-friendly policies do not always require large sums of money or incentives. They do, however, need help from successful founders and strategic angel investors at all stages of their development, such as business strategy, community building, and connecting with qualified business mentors . As India has a massive and diverse population with many talented individuals looking for work, it is essential to develop state ecosystems by establishing a startup policy, startup portal and helpline within each State. Creating incubation centers, coworking spaces, entrepreneurial cells and instilling the entrepreneurial spirit in every student from a young age is even more necessary.
The opinions expressed above are those of the author.
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