Approach:

Introduction: Define what is a startup

Body: Explain how they are important for a new India, mention some recent efforts towards the start-up sector, mention various challenges to realise the potential of startups for new India

Conclusion: Suggest a way forward to move towards a vikasit Bharat.

Answer:

A startup company is a newly formed business with particular momentum behind it based on perceived demand for its product or service. A startup intends to grow rapidly as a result of offering something that addresses a particular market gap. Such growth has the potential to provide multiple benefits to India’s development.

Startups as the spine of new India:

• Boosting innovation as startups bring fresh ideas, creative solutions, and cutting-edge technology to the market by challenging the traditional ways of businesses driving the changes.
• The creation of jobs provides employment to many which is the need today in a country like India. More support helps to ensure greater job creation as DPIIT data also denotes how the total number of jobs (self-reported) created by DPIIT-recognised startups increased from 43in 2017 to 269 in 2022.
• Helps contribute to economic growth through products and services, revenue generation, and taxes, particularly in emerging markets where there is a need to increase the tax-to-GDP ratio.
• Boost entrepreneurial spirit and foster a culture of risk-taking rather than avoiding failures. It helps people to fail easily and fail faster for better growth opportunities in the economy.
• Helps in the diversification of the economy by creating new industries and products which can reduce reliance on traditional sectors leading to more sustainable and resilient growth.
• Help in solving social and environmental challenges in the economy.

There are many efforts being promoted to boost the start-up ecosystem such as the Startup India Initiative of 2016, boosting innovation by the Atal Innovation Mission, skill development by Pradhan Mantri Kaushal Vikas Yojana, establishing a fund of funds to provide equity-based funding to startups, etc.

Challenges to utilizing the potential of startups as the spine of new India:

• Promotion of startups requires a substantial level of resources consistently for years which can become a challenge in a developing country like India.
• Regulatory barriers create hurdles by complex navigation through regulations and bureaucratic hurdles. There India is promoting ease of doing business through multiple steps like incentivization by plug-and-play facilities, simplifying labour laws, etc.
  1. Economic survey 2022-23 also mentions how these startups are flipping their economic base from India to other countries for less taxation and regulatory burden.
• Market saturation by a limited demand in a highlighted competitive industry can make it difficult for startups to gain traction and achieve sustainable growth.
• Talent shortage in startups as finding and retaining skilled personnel is difficult limiting our ability to innovate and achieve goals. In India, there are multiple issues in skill development like outdated ITI centres, little focus on vocational education in schools, etc.
• Startups often focused on short-term growth and profitability, which may not align with the long-term interests of the country. This can result in a lack of investment in research and development, and a failure to address social and environmental challenges.

Steps that can be taken to overcome the above challenges:

• Flipping for short-term gains can be reversed ensuring reverse flipping by other measures:
  1. Simplification of processes, multiple layers, procedures for capital, flows like US and Singapore, etc.
  2. Facilitating collaboration and partnerships with established private entities to develop best practices, exploring incubation and funding landscape for startups in emerging fields like social innovation and impact investment.
• Promoting the culture of failing faster in a controlled manner through the greater rollout of regulatory sandboxes, more incubation centers to be rolled out with public-private collaboration, etc.
• Effective implementation of the New Education Policy’s focus on vocational education in mainstream schools to focus more on skill development and not just theoretical knowledge in the economy to ensure more talented personnel.
• Better industry-academia collaboration to ensure boost translation of academic research and innovation in hands of startups and industry players.

The startup ecosystem of India needs dedicated and holistic efforts towards ensuring the development of our country. Collaboration at all levels is needed to overcome the challenges of resources. We should learn from countries like China and Israel to boost innovation and solve our specific problems to move towards being a Vikasit Bharat by 2047.