An overview of India’s startup ecosystem
05.07.2019

An overview of India’s startup ecosystem

The sector, one of the most dynamic in India, offers great opportunities for foreign investors.

With a population of more than 1.3 billion people, India is one of the world’s main emerging economies. Over the past few years, and especially since Prime Minister Narendra Modi came to power, the country has embarked on a series of reforms with a view to overhauling its economic structure and fostering growth over 7%.

India is a country of great contrasts, in which large rural areas with scarce development and services are found alongside massive cities that represent some of the most important technology centres in the world, such as the Indian Institute of Technology.

According to the World Bank, almost a quarter of the Indian population lives below the international poverty threshold. As stated by the Spanish Institute of International Trade (ICEX), “even though India is a tier-one market in terms of size, its level of wealth does not match that of the Western middle classes.” In spite of this, ICEX highlights that sustained economic growth is consolidating a growing middle class that “could become the third largest global market by 2025.”

ITespresso mentions two factors as positive elements for the development of entrepreneurship in India: the penetration of Western tech companies and the high calibre of Indian science and engineering students. The first generation of startups, which emerged at the beginning of the 21st century, “has led the way for several companies that are attracting the attention of specialists and investors from all over the world.” This is evidenced by the fact that India saw record private equity investment in 2015 of some 22.4 billion dollars. Japan, China and the US are the main foreign investors in this sector.

In order to foster the growth of startups, the Government of India launched Startup India in January 2016, an initiative that has developed several programmes designed to support entrepreneurs, build a robust startup ecosystem and transform India into “a country of job creators as opposed to jobseekers.”

Startup India is structured around three basic pillars: simplification (simpler bureaucratic procedures), funding and incentives (tax breaks, capital funding) and partnerships between industry and academia to generate incubators and innovation labs, events, competitions and grants.

At the end of 2018, almost three years after its launch, over 14,000 applications had been granted startup status by the Department for Industrial Policy and Promotion (DIPP) responsible for Startup India. In addition to this, numerous plans and initiatives have been implemented, such as labs in schools, incubation centres to support startups, research and innovation centres, specific support for sectors such as biotech and fintech, and several platforms to support entrepreneurs.

Regarding India’s economic relations with Spain, ICEX estimates that the country will “continue to be a growing market” for exports and Spanish investments alike. Many of the areas in which the Government of India is investing at the moment are sectors in which Spain not only has a competitive advantage, but is also already operating within India, such as infrastructure, renewable energies, and the automotive industry. ITEspresso has stated that the Indian sector that holds the most interest for Spanish actors is IT and communications since it is the fastest-growing industry in the country, accounting for 7% of GDP and 35% of exports. Biotech, pharma and finance are also highly attractive.

During this 7th Indian Leaders Programme, the participants will analyse the present and future of the entrepreneurial ecosystem in India, its similarities and differences compared with the sector in Spain and existing opportunities for bilateral investment and collaboration, as well as the institutions and policies needed to make the most of such opportunities.

Report: 7th Indian Leaders Programme 2019

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