Ojaank IAS Academy




India and its Startup Ecosystem

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The “average annual growth rate of Indian unicorns is higher than that of the US”, UK and many other countries.

What is start-up?

The term “start-up” refers to a company in its first phase of operations. Start-ups are established by one or more entrepreneurs who wish to develop a product or service for which they believe there is demand.

Why is India seeing the rise of start-ups?

Beneficial Demographic Dividend: India’s demographic dividend has blessed it with an age-group population that has either not entered the job market or is ready to quit the existing job and start a business.
Government initiatives like Start-up India and Stand-up India are focused on providing finance, training, market access, tax breaks etc. to entrepreneurs.
Availability of investors, both foreign and domestic, whose objective of financing start-ups is to achieve multi-bagger returns.
Growing demand for products and services that can meet the needs of India’s growing middle class.
The telecom and IT revolution in India has made it quite easy to access new products and services and hence building a customer base through a website or app is not that difficult for a start-up.

How can startups help the Indian economy?

Opportunities: Start-ups are providing an opportunity to the entrepreneurial youth of India to express their views and grow their finances rapidly. Hence wealth creation has become synonymous with start-ups.
Employment: Establishment of a start-up brings with it an increase in employment opportunities.

Catering to the needy section:

Manufacturing of products or services can meet the needs of a section of the Indian population and make them more economically powerful. For example, the availability of online e-commerce platforms for traditional artisans who can now easily reach their customers.

Why are start-ups not a panacea for India’s economic crisis?

Economic issues: It arises out of the closure of the start-up.
Sets a demotivating example for those willing to take the opportunity by setting up a business unit. Inequality in pay and working conditions is also largely present in the start-up ecosystem.
Unregulated: The start-up sector is less regulated, with minimum or minimum labor laws in place. Exploitation: Most of the workers working for start-ups are not entitled to labor welfare law and hence have to face exploitation.

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