How Can Indian Startups Take Off?

India is on track to becoming the world’s most populous country by 2025. While a massive population does pose its fair share of challenges, it also presents opportunities aplenty. This large population base offers a sizeable consumer base. And this is why global enterprises are always vying for a share of the Indian marketplace.

One sector that has been making waves for quite some time now is India’s technology industry. There are numerous tech startups that now boast multi-billion dollar valuations. Among this elite club of unicorns are several e-commerce companies. While e-commerce was already growing by leaps and bounds in the country, the pandemic-led lockdowns provided it a further shot in the arm.

How might the government contribute? What infrastructure support will help these startups scale their businesses?

Horasis is organizing the Horasis India Meeting on 24 July 2021. The one-day virtual event will see participation from a diverse range of people, spanning members of governments, businesses, academia, and the media. The goal is to deliberate on pressing issues to arrive at actionable solutions that can ensure shared prosperity.

E-commerce Holds Immense Potential

The Indian e-commerce sector has enjoyed a consistent ‘bull-run’ of sorts. It is on track to becoming the world’s second largest e-commerce market by 2034, well ahead of the US. Currently, in terms of e-commerce volumes, India ranks ninth. Industry forecasts suggest that, in only two years from now, the e-commerce sector will register a cumulative valuation of $99 billion – an over three-fold increase in just five years. Segments such as grocery and fashion are expected to be the key growth drivers. The grocery sector has made unprecedented gains; it has recorded annual increases of 57 percent.

A strong e-commerce enabler in the country is its availability of inexpensive mobile data plans. In fact, Indian smartphone users have access to the world’s cheapest data. Following the pandemic’s onset, this feature was instrumental in ensuring online procurement of essential supplies and also in ensuring that millions were able to access online learning and work.

Several of India’s technology startups have now achieved what is termed as decacorn status – meaning they have a valuation of over $10 billion.

The Role of Government

The Indian government—both at the center and in states—has initiated several programs to encourage startups. Business incubation services have been launched, access to funding has been extended, and mentorship programs have also been made available. With 5G networks gradually becoming available, more innovative ideas will come to the fore.

The National Small Industries Corporation (NSIC) is a central government scheme encouraging startups to take forward their ideas in the ICT space. It is especially geared towards first generation entrepreneurs by providing assistance right from ideation to launch. Aspiring business owners can leverage on the NSIC’s expertise to grow their startups into sustainable organizations. In addition, the NSIC also extends networking opportunities.

The Indian government also offered several tax exemptions for startups. A three-year ‘tax holiday’ was offered in a period of seven years.

Prime Minister Modi has also shown vision by extending support for the SME sector. Small businesses are the backbone of any economy. And in India, particularly, SMEs are a crucial employment generator. The Pradhan Mantri Mudra Yojana scheme was launched in 2015. It extends loans of up to about $15,000 to small or micro firms that are not engaged in the farming or corporate sectors. 

In addition, the Micro Units Development and Refinance Agency Limited or MUDRA is a non-banking financial company (NBFC) that is SME focused. This initiative’s framework permits loans to be extended by several categories of financial institutions in addition to NBFCs. SME owners can even apply online through the Udyami Mitra portal.

With a large majority of India’s citizens based in rural areas, an employment generating initiative called the Prime Minister’s Employment Generation Program was launched. This program’s key focus is to encourage and enable self-employment, especially for traditional artisans. It is the merger of two schemes – the Prime Minister’s Rojgar Yojna and the Rural Employment Generation Program.

Encouraging Startups Across All Segments

In sum, Indian startups must be encouraged across all sectors. While technology startups typically receive the most attention, there is need to allocate focus on startups across the board and especially so in the SME sector. India’s government has extended strong enablers, has made information easily accessible online, and extended online application facilities.

Citizens too must now come forward and avail these initiatives. Synergizing the strengths of both its government, and its people, will help unlock latent potential and take India to greater heights. And there is no better time than now to forge ahead.