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Entrepreneurship is rooted in India's economy and culture. Whether it was the existence of a formidable business community in the past or the advent of liberalisation in the 90s, it is fair to say that Indians have always been active in trading and business. The Global Entrepreneurship Monitor now estimates that 20% of Indians (aged between 18 and 64 years) see themselves starting a business in the next three years, while more than 11% are blossoming entrepreneurs. Over 63% of Indians see entrepreneurship as a desirable career option. The precedent set by the opening up of the economy was taken to the next level by developing the start-up ecosystem in India.
Drivers of the Entrepreneurship development and start-up culture
Liberalisation was the last throw of the dice by the government to revive a dwindling economy. The start-up movement is blossoming on strong foundations that have emerged in the aftermath of the liberalisation. These foundations include an immense leap in technological infrastructure, the emergence of a massive demand pool, and a hunger to improve. Let's take a look at the pillars that are giving Indian entrepreneurship a steady sail.
The digital revolution
Digitisation in India is receiving massive impetus from the government as well as private businesses. The government's JAM initiative improves digitisation of banking, identity and telecom – namely Jan Dhan bank accounts, Aadhaar numbers and Mobile connections. From Direct Benefit Transfers to tax reforms, the government is on a sprint to make India a ‘Digital First’ economy. On the private front, India is home to several IT heavyweights such as Tata Consultancy Services (TCS), Wipro, Infosys, and HCL, with some of them operating for several decades now. This IT ecosystem has helped India become home to a quarter of the world’s IT engineers and has ready access to IT infrastructure and resources.
Post-liberalisation India saw the prominence of a swelling middle class of consumers. Powered by affordable internet, connectivity, e-commerce, and hyper-delivery, consumerism in India has thrived with each passing year. The number of unicorns or billion-dollar start-ups increased with this boom, with NASSCOM predicting the number to cross 50 by the end of this year. This continues to inspire new start-ups to replicate the model, as consumerism feeds off it and vice versa.
From its early reputation as a process and service outsourcing hub, India has enhanced its portfolio to become a research and development and innovation hub. Name the biggest MNCs and Silicon Valley majors, and they are likely to have an R&D presence in India. Indian start-ups are increasingly using the B2B model to offer sophisticated solutions to their global clientele. AI-driven solutions, robotics, enterprise-tech, fintech, space-tech, SaaS space are only a few of the many deep-tech business innovations that India has accommodated in its arsenal.
Rising entrepreneurial aspirations
A fitting ecosystem is created with these key drivers, inspiring more and more entrepreneurs in India to float businesses. The ambitious India Stack project ensures the digitisation of the public infrastructure and information in the country, which includes over 1.2 billion unique ID to citizens, 500 million new bank accounts, a unified tax regime, and many more. The presence of a digital database has made it easy for businesses to operate and trade in an organised manner on every aspect, from compliance to sales and collections. As of 2021, there are an estimated 479 active investors in India, out of which venture capital firms constitute a 42% share. The first quarter of 2021 saw funding of $2.7 billion to Indian start-ups across 268 funding deals. Fintech was the most favoured start-up and accounted for a 26% increase in funding deals.
The relevance of home-grown unicorns like Zomato, Ola, Oyo, First Cry, and Swiggy has inspired entrepreneurs to develop different aggregation and delivery platforms and specialised retail. Last year’s Economic Survey indicated an increase in the number of businesses in recent years. Compared to a 3.8% rate of growth between 2006 and 2014, new businesses in the formal sector rose at 12.2% in the four years ending in 2018.
Government’s pro-start up approach
The government is particularly active in its bid to promote the start-up culture in India further. It provides capital to start-ups with a Start-up India Seed Fund, while the Start-up India Initiative provides tax benefits and concessions. The ASPIRE scheme promotes rural entrepreneurship and innovation, MUDRA banks provide credit assistance, and Atal Innovation Mission has been set up to promote innovation and R&D. The government has a dedicated ministry for skill development and entrepreneurship and has provided infrastructures like eBiz Portal, single point registration, NewGen Innovation and Entrepreneurship Development Centre to promote entrepreneurship in India.
The future is brimming with optimism for Indian entrepreneurship and start-ups. Despite the dreaded nature of the year 2020, 11 start-ups achieved unicorn status, and eight new ones joined the pack in the first three months of 2021. If these numbers are any indication, Indian entrepreneurship development seems to be breaking new grounds every year and is likely to continue doing so in the upcoming years.
Do these developments inspire you to start your own venture? If yes, then explore your options with IDFC’s range of business banking products.
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