Startup India’s Decade: Catalysing Innovation Across 779 Districts

India’s startup ecosystem has undergone a remarkable transformation over the last decade, evolving from a niche market to one of the most vibrant startup landscape in the world. India sure did have a humble beginning, but its current global recognition is a testament to the Government’s proactive stance in fostering a startup-friendly environment. Initiatives like Startup India, launched in 2016, played a pivotal role in this transformation by providing support through policies like — Fund of Funds for startups (a scheme of DPIIT being managed by SIDBI), National Deeptech Policy and infrastructure to encourage innovation and entrepreneurship across different sectors and industries.

In the early 2010s, India’s startup landscape was dominated by a handful of major players limited to mainly NCR, Mumbai and Bengaluru. However, as of December 2024, India has around 157,066 DPIIT-recognised startups across 779 districts. Today, India has become the world’s third-largest hub for unicorns, with 118 unicorns showcasing the startup sector’s maturation and its contribution to the economy. This reflects a diverse and expansive entrepreneurial journey the country had in just ten years.

Thanks to the government’s push to decentralise, entrepreneurs anywhere in India have access to resources, capital, and mentorship. It brought one of the most significant shifts in India’s startup landscape: the emergence of tier 2 and tier 3 cities as startup hubs, catching the attention of VCs who were looking beyond the metros to invest. In 2016, India had around 300 DPIIT-recognised startups which has increased to more than 1.25 lakh by the end of March 2024. And it’s not just the number of startups, the funding raised by Indian startups since 2014 has grown from $20 Bn in 2016 to $111 Bn in 2021 and finally reaching $158 Bn by the end of 2024.

In the most recent scenario, from just June 2024 to August 2024, tier 2 & tier 3 cities witnessed a surge in fundraising up to INR 2,202 Cr compared to just INR 175 Cr in June 2024. It is a result of the Government’s efforts of encouraging innovation, access to capital, favourable policies, tax incentives, easier compliance processes, that made venturing into niche markets or emerging industries a risk worth taking. We’ve seen a trend where startups from smaller cities are gaining traction as they focus on solving local problems and catering to niche markets. These startups are playing a vital role in driving inclusive growth and bridging the urban-rural gap.

Another factor that helped is the Government’s proactive policies and initiatives like The Startup India initiative, Atal Innovation Mission (AIM), Pradhan Mantri Mudra Yojana (PMMY), Startup India Seed Fund Scheme (SISFS), which introduced several measures aimed at supporting startups through tax exemptions, easier compliance procedures, legal support for patent filing, etc to start a business easily. Along with providing a framework for setting up incubators, accelerators, and research parks that help startups with mentoring, networking, and access to cutting-edge technologies.

Additionally, India’s push toward a digital economy through initiatives like Digital India and Make in India have made it easier for startups to establish themselves and attract global investors.

India’s startup ecosystem has attracted significant interest from international limited partners (LPs). The country’s large consumer base, rapid digital adoption, and burgeoning middle class make it an attractive destination for global investors. Venture capital and private equity firms from across the world are eager to tap into India’s rapidly expanding market, providing startups with the much-needed capital to scale and compete globally. This trend is likely to continue as the Indian government’s reforms and policies continue to create a favorable environment for startups.

The Way Forward In The Indian Startup Ecosystem

Looking ahead, tech will continue to bring the most innovative models to the forefront while solving real-life problems. Every sector and industry is now becoming tech-savvy. Be it agriculture going agritech, education going ed-tech, finance going fin-tech and so on and so forth. Deeptech will see a strong emergence of early movers. Deeptech startups around AI, machine learning, IoT, robotics, quantum computing, biotechnology, green hydrogen, and spacetech are going to be the next big thing in India and around the globe.

Deeptech startups are not just about creating new products but are also about solving complex, high-impact problems across industries like healthcare, agriculture, energy, and manufacturing. They require a high level of technical expertise, R&D, and significant patient capital to scale. Fortunately, India’s deeptech ecosystem is supported by a growing number of tech-savvy founders, venture capitalists willing to back them. The talent pool is also slowly expanding. The government has played a key catalyst role in this sector gaining momentum. Initiatives like the Fund of Funds for startups and National Deeptech Startup Policy, BIRAC programmes, Atal Innovation Mission, etc, provide much-needed support to deeptech startups along with the creation of specialised incubators and accelerators.

The future of India’s startup ecosystem looks promising. The government’s policies, the rise of tier 2 and tier 3 startups, and increasing international interest are all contributing to the growth of the sector. As we look ahead, deeptech will continue to be a focal point, with India’s ecosystem maturing to support the next wave of breakthrough innovations.