“We Have To Believe In Our Abilities” – PM Modi On Tier 2, 3 Cities’ Youth Powering Startups

Speaking in his address to the nation from the Red Fort on India’s 76th Independence Day, Prime Minister Narendra Modi said that the people behind India’s startups came from Tier 2, 3 cities and the country’s villages.

“We are looking at Digital India and startups. Who are these people [behind them]? This is the talent from the Tier 2, Tier 3 cities and the talent that lives in a village somewhere,” the Prime Minister said while addressing the nation for the ninth consecutive time.

The Prime Minister added, “These are our youngsters who are taking on the world today with new innovations.” In his address, PM Modi also talked about the colonial mindset and how India needed to outgrow it. 

Talking more about the founders coming from India’s tier 2 and 3 cities, he added, “We have to believe in our abilities. It is only when we are connected to [the] ground realities of our nation, will we be able to fly.”

It is prudent to note here that according to official figures from the government, nearly 50% of the startups are registered in Tier 2 and 3 cities. As of June 30, 2022, India has 72,993 recognised startups, according to the Department for Promotion of Industry and Internal Trade (DPIIT).

The government has been bullish on India’s startup ecosystem since the launch of the Startup India initiative in 2016. Incidentally, in his second address as a PM to the nation from the Red Fort in 2015, Modi gave the slogan, ‘Startup India, stand up India’. That worked as a stepping stone for the Startup India initiative which was formally announced the next year.

The number of startups since then has increased by a quarter while the number of unicorns has gone up by as much as 377%, according to Inc42 data. According to DPIIT data, 80 new startups are registered in India every day.

The government has also shown its commitment to supporting startups from tier 2 and 3 cities in the country on multiple occasions. In March, DPIIT secretary Anurag Jain suggested that unicorns should adopt districts to facilitate the development and expansion of the startup ecosystem in those districts.

The move towards Tier 2 and 3 cities is an evolutionary step. Hubs such as Bengaluru and Delhi NCR have the highest concentration of startups and unicorns in the country, and hence, there is competition for everything.

Startups in these big hubs have to compete for resources. More importantly, talent is something which has seen the fiercest competition, with companies offering big packages and perks for the best talents in a field. Hence, India’s startup ecosystem is slowly expanding its roots to the Tier 2 and 3 cities, that have these resources in abundance.

For instance, in Delhi NCR, startups are slowly moving from the heart of Delhi to the larger NCR. Gurugram, Faridabad, Noida and Ghaziabad are becoming emerging hubs. The trend is similar elsewhere; groups such as Mumbai and Pune, Bengaluru and Chennai and Hyderabad are emerging.

The PM’s comments, thus, come in light of this evolution of India’s startup ecosystem, right on the cusp of a paradigm shift.

India has become the third-largest ecosystem in the world, in terms of funding raised and unicorns created. According to Inc42’s latest report, ‘The State of Indian Startup Ecosystem Report, 2022’, India’s startups have raised $131 Bn from 2014 to H1 2022 and hold a combined valuation of $450 Bn.