INDIAN STARTUP ECOSYSTEM BOOSTER SHOT

Updated: Mar 6

Startup India has grown massively and the proof of that is "Last year alone, 42 unicorns were made in the country. Today India is rapidly moving towards hitting the century of the unicorn. Prime Minister Narendra Modi today said that start-ups are the "hallmark of self-reliant, self-confident India" as he announced that January 16 will be celebrated as "Start-Up Day".


indian startup ecosystem
indian startup ecosystem

Out of the total, 42 unicorns with a total valuation of $82.1 billion emerged in 2021 alone, a record year for the country. 2020 and 2019 saw 10 and 9 unicorns, respectively. Bengaluru is India’s unicorn capital with the highest number of unicorns headquartered there, followed by Delhi (NCR) and Mumbai.

"Our Startups are changing the rules of the game. Thus, I feel that start-ups are going to be the backbone of new India," - PM Modi said during an interaction with more than 150 startups.


India has the 3rd largest startup ecosystem in the world; expected to witness YoY growth of consistent annual growth of 12-15%


India has about 50,000 startups in India in 2018; around 8,900 – 9,300 of these are technology-led startups 1300 new tech startups were born in 2019 alone implying there are 2-3 tech startups born every day, according to the startupIndia.


The awesome measures that is been taken by the government to make the startup ecosystem as healthy as possible so they can survive and grow. the key goals set out to achieve the vision are the promotion of the digital economy and fintech, technology-enabled development, energy transition, and climate action.


Having called out the promotion of technology-enabled developments as a fundamental theme, Budget 2022 has also gone ahead to introduce policies to encourage the startup ecosystem. And these initiatives also alliance with the Atmanirbhar Bharat and Make In India.


Budget 2022 Proposals

  • promoting start-ups

  • showcase the commitment of the Government towards the start-up and investor community

  • to set up an expert committee

  • to examine the frictions and suggest appropriate measures

  • to scale up venture capital and private equity investments have created a strong positive vibe amongst the investor community


Startup India Scheme is an initiative by the Government of India for the generation of employment and wealth creation. The goal of Startup India is the development and innovation of products and services and to increase the employment rate in India. The benefits of these initiatives have a direct impact on the startup ecosystem by providing support infrastructure and funding facilities so that the startup at the initial state can have the right environment


Government Initiatives For Business Development


startup ecosystem benefits
startup ecosystem benefits

Tax Benefits

  • Tax incentives for startups increased from three years to four years of incorporation, in view of the pandemic, the finance minister announced in Union Budget 2022. The key benefits for startups offered redemption of taxes for three years consecutively have been extended until March 31, 2022.

  • introduced a concessional tax regime of 15% tax for newly incorporated domestic manufacturing companies to establish a globally competitive business environment. The Finance Minister proposed extending the last date for commencement of production or manufacturing under Section 115BAB by one year, i.e. from 31.03.2023 to 31.03.2024.

  • extension of customs duty exemption by another year given by the government to steel scrap last year to grant relief to MSME secondary steel producers.

Financial benefits

  • thematic funds will be promoted by the Government with equity participation of up to 20% to encourage important sunrise sectors such as climate action, deep tech, digital economy, pharma, electric vehicles, and AgriTech. The Government’s intent to have private fund managers manage such sectors will bring in necessary agility and better IRRs, resulting in a win-win situation for both the Government and the start-up ecosystem.

  • To mitigate the adverse impact of the pandemic on sectors that are yet to regain their pre-pandemic business levels, the one-year extension of the Emergency Credit Line Guarantee Scheme (ECGLS) and proposals to finance AgriTech start-ups and rural enterprises through a co-investment model are welcome moves.

  • Seed Fund Scheme (SISFS) aims to provide financial assistance to start-ups for proof of concept, prototype development, product trials, market-entry, and commercialization.

  • the fund would be raised under the co-investment model and facilitated through NABARD to finance start-ups for agriculture and rural enterprise that are relevant to value chains for farm products.

Collaboration benefits

  • The startups will be promoted to facilitate ‘Drone Shakti’ through varied applications for Drone-As-A-Service (DrAAS). In this regard, the required courses for skilling will commence in select ITIs in all states.

  • Defense R&D will be opened up for startups, industry, and academia with 25% of the defense R&D budget earmarked.

  • A fund with blended capital will be facilitated through NABARD, raised under the co-investment model to finance startups for agriculture and rural enterprises relevant to the farm produce value chain. The activities for these startups will include machinery for farmers on a rental basis at the farm level, support for FPOs, and technology, including IT-based support.


In the final thesis


Although the Union Budget 2022-2023 may not have relieved us of greater tax burdens, it has given some respite to businesses and startups that have strived during the pandemic. This should incentivize and nurture the startup ecosystem while creating propitious sentiments towards entrepreneurship.

startup india seed fund scheme
startup india scheme

The budget was short and brief but it also very much focus on the startup and how the government can boost the startup ecosystem. Again, India has emerged as the third-largest startup ecosystem in the world after the US and China and the pace of growth is not showing any signs of slowing down.


The budget was at a satisfactory level according to me as a participant in the Indian startup ecosystem. I think we should take it as a challenge cause we all have started our journey where all odds were against us and still we give our best and come back harder. In the coming years, we can expect more supportive infrastructure and ecosystem to work in.


At flyboat, we are also working towards helping a startup with good potential and even capacity to be unicorns in the future ahead gets the best of services and financial support to grow, that is our contribution towards the startup ecosystem. Share your opinion in the comment box, click on the button to connect for potential synergies!!

Related article: Stages and Challenges in start-up lifecycle, How to Ace it?




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