Startup India : Analysis – UPSC GS3

Startup India:
  • Startup India is the government of India’s flagship initiative started in 2016.
  • It aims to create a strong ecosystem for nurturing innovation and startups in the country, resulting in long-term economic growth and large-scale job creation.
Positive Outcomes of Startup India:
  • Addressing regional entrepreneurial disparities
    • Startup India was created with the goal of identifying and integrating entrepreneurs from tier-2 and tier-3 cities into the portal.
    • Startup India’s networking, training, and mentoring services, as well as entrepreneurship outreach campaigns in these cities, helped to address India’s regional entrepreneurial disparities.
  • Creation of Employment:
    • As a result of the increased number of startups, there is a greater demand for leisure and essential amenities among the general public.
    • This, in turn, boosts employment, economic activity, and efficiency.
Concerns about Startup India:
  • Heavy concentration in megacities
    • Entrepreneurship remained “highly concentrated” in three megacities, namely Mumbai, Bengaluru, and the National Capital Region of Delhi.
    • Such concentrations can exacerbate economic inequity and stifle the emergence of entrepreneurs from industries outside of the clusters.
    • In and around these three cities, India’s venture capital industry is also concentrated.
  • Lack of representation: 
    • The words “caste,” “tribe,” “marginalized,” “indigenous,” and “social group” are not mentioned in the Startup India Action Plan document.
    • This runs counter to the initiative’s stated goal of making entrepreneurship more inclusive in India.
    • Multiple factors may contribute to the underrepresentation, including caste-based economic exclusion, the urban-rural divide, a lack of access to quality education, and limited social networks.
  • India’s digital divide: 
    • The policy’s reliance on technology fails to account for India’s digital divide, particularly between urban and rural areas.
  • Women in the industry
    • According to the results of RBI’s pilot survey, 5.9% of participating startups had a female founder, compared to 55.5 percent of the opposite gender.
    • The government has taken dedicated measures to spur women’s entrepreneurship:
      • 10% of the fund in the Fund of Funds operated by Small Industries Development Bank of India (SIDBI) has been reserved for women-led startups.
      • All the alternate investment funds where the SIDBI takes equity have been mandated to contribute 20% in businesses that are women-led, women influenced and women employment or women consumption centric.
      • Capacity building programmes and dedicated webpage for women on the portal.
Way Forward:
Even though India’s entrepreneurial policy Startup India has had a positive impact in reducing regional entrepreneurial disparities, entrepreneurship in India continues to be plagued by issues such as high concentration, under-representation, lack of access to quality education and limited social networks. Unless these challenges are refactored into the scheme initiatives, it will fail to be truly inclusive.
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