Startup India Initiative

Anish Tiwari, Colm O’Gorman and Teresa Hogan,’ The Good, the Bad and the Ugly of ‘Startup India’ , Review of India’s Entrepreneurship Policy Economic and Political Weekly (EPW), Vol (50), 2021.

A research paper from Dublin City University in Ireland reviewing India’s entrepreneurial policy, Startup India, confirmed its positive impact in reducing regional entrepreneurship disparities. However, it cited shortcomings in addressing the under-representation of women and marginalized caste groups in the national startup ecosystem. Posted in letter economic and political weekly in December 2021. Startup India was introduced in 2016 as “a clarion call to the country’s innovators, entrepreneurs and thinkers to advance India’s sustainable development and generate massive employment opportunities”.

Commerce and Industry Minister Piyush Goyal informed the Lok Sabha in the second week that over 65,000 startups are registered in the entrepreneur portal. Of which 40 achieved ‘unicorn’ status in the last twelve months, taking the total to 90. He said that India ranks third in the global startup eco-system.

Addressing the disparities of regional entrepreneurship

Evidence gathered by the authors of the research paper suggested that the networking, training and mentoring facilities provided by Startup India, along with entrepreneurship outreach campaigns in Tier-II and Tier-III cities, reduced regional entrepreneurial disparities in India. helped to remove. The objective of the program was to find entrepreneurs from these cities and integrate them into the portal. It will then facilitate a network between venture capital funds, angel networks, banks, incubators, accelerators, universities, legal partners, consultants and R&D institutions.

The paper said the initiative helped redirect policymaking of several state governments in favor of startups. Citing the Startup India Report (2018), the researchers noted, only four states had dedicated startup policies prior to its launch. After its launch and as of December 2019, 23 states and 2 union territories had formulated a dedicated Startup Policy.

Heavy Concentrations in Megacities

Despite the initiative, the researchers pointed out that entrepreneurship remains “highly concentrated” in the three metros, namely Mumbai, Bengaluru and Delhi NCR. The three cities accounted for 93% of all funding raised between 2014 and 2019. The paper reported that India’s venture capital industry is also in and around these three cities.

The same assumption was established by the Reserve Bank of India (RBI) in its pilot survey on the Indian Startup Sector (2019). The research involving 1,246 participants said that nearly three-quarters of the participants were from Karnataka, Maharashtra, Telangana, Delhi and Tamil Nadu.

Citing recent studies, the researchers said such concentration could increase economic inequality and hinder the emergence of entrepreneurs from industries other than the industries belonging to the groups. The boom of industries (in this case, startups) creates employment opportunities, this increases the demand for leisure and essential amenities among the masses. In turn, this advances employment, economic activity and efficiency. However, this happens at the expense of another sector that has previously failed to enable a suitable supporting ecosystem.

According to the results calculated by the researchers in the paper, 30% of all states and union territories in India have an equal or higher proportionate share with respect to the start-up pool recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). Is. share in the country’s population.

ensure representation

Researchers show that 40-page Startup India Action Plan The document makes no mention of the words ‘caste’, ‘tribe’, ‘marginal’, ‘indigenous’ or ‘social group’.

According to him, this is contrary to the notion of the initiative to make entrepreneurship inclusive in India. Under-representation can be caused by a number of factors, including paper states, such as caste-based economic exclusion, urban and rural divides, lack of access to quality education, and limited social networks. Additionally, the policy’s reliance on technology does not take into account India’s digital divide, particularly with respect to urban and rural areas.

With reference to government data from 2013, the paper concluded that the share of scheduled castes and scheduled tribes was higher in ownership of agricultural establishments, including agriculture, livestock, fisheries and forestry, compared to non-agricultural establishments. They were based predominantly in rural areas as compared to urban areas. Most of them worked without any hired labour, indicating that a large number of these enterprises were need-based undertakings which were not creating any significant employment opportunities. According to economist Thorsten Beck, need-based or subsistence entrepreneurship refers to businesses that are run informally and through self-employment. A large number of these have been set up due to lack of employment opportunities in the formal sector. “The evidence thus suggests the need for targeted measures to promote technology and innovation-driven entrepreneurship among SC and ST communities. Although Startup India Policy The document in its current form does not address this issue,” the paper said.

women in industry

In February, Minister of State for Commerce and Industry Som Prakash, in response to a question on women entrepreneurship under Startup India, had pointed out that 46% of the 62,000 startups registered with DPIIT had at least one woman director. RBI’s pilot survey earlier said that 5.9% of the startups that participated in its survey had a female founder, compared to 55.5% of the opposite sex. The remaining 38.6% had both male and female co-founders.

Shri Som also apprised the House about the dedicated measures taken to promote women entrepreneurship. In the Fund of Funds run by Small Industries Development Bank of India (SIDBI), 10% of the funds have been reserved for women-led startups. In addition, all alternative investment funds where SIDBI takes equity have been mandated to contribute 20% to businesses that are women-led, women-influenced and women’s employment or women’s consumption centric. He also informed the House about the capacity building programs and a dedicated webpage for women on the portal. As per the established arrangement, DPIIT allocates funds to SIDBI, which in turn invests the money in Alternative Investment Firms (AIFs). The latter will then raise matching funds, and post funding, will invest the money and disburse the startups, the paper informs. This is done to avoid any possible allegation of ‘bias’.