India’s startup ecosystem has grown to over 140,000 startups, according to Minister of State for Commerce and Industry Jitin Prasada, highlighting the significant growth and dynamism of the entrepreneurial environment under the government’s ‘Startup India’ initiative.
Startup India was established in 2016 and since then, it has played a key role in fostering innovation and streamlining the regulatory environment for new businesses. The Department of Promotion of Industry and Internal Trade (DPIIT) has recognised 1,40,803 startups as of June 30. Over 55 regulatory reforms have been introduced to simplify business operations, facilitate easier fundraising and reduce compliance burden. All this reflects a commitment to creating a more favourable environment for new entrepreneurs.
Recently, the government has abolished angel tax on startups, which is believed to attract more foreign investment, which will help ease fundraising challenges.
The Startup India Seed Fund Scheme (SISFS) has also played a key role in generating a large number of startups in India. Its allocation for the period 2021-22 was Rs 9,450 crore. The fund supports early stage startups and provides them with the seed capital required for business growth and expansion. Additionally, the Fund of Funds for Startups (FFS), with a capital of Rs 10,000 crore, has helped startups by fulfilling their funding requirements. The fund is administered by the Small and Medium Enterprise Development Bank of India (SIDBI). The fund ensures that startups have access to all the financial resources they require.
Another key initiative is the Credit Guarantee Scheme, which provides guarantees against loans extended by scheduled commercial banks, Non-Banking Financial Companies (NBFCs) and Venture Debt Funds (VDFs) to DPIIT-recognized startups, aimed at reducing risk for lenders and encouraging more financial institutions to back startups.
