(GIST OF YOJANA) Startups-Revolutionising India’s growth story

(May-2023)

In recent years, startups have emerged as a key driver of economic growth in India. With the government’s focus on promoting entrepreneurship and innovation, the startup ecosystem in India has been growing at a rapid pace.
According to a report by NASSCOM, India is the third-largest startup ecosystem in the world, with over 50,000 startups.
The country’s entrepreneurial ecosystem has also seen an exponential spurt in funding activities over the past few years. Indian startups raised over $25 billion in 2022 alone.
Indian Unicorns are also flourishing in the fast-paced, dynamic ecosystem while developing innovative solutions and generating large-scale employment.
India is home to over 108 unicorns today -becoming the second-largest unicorn nation in the world.
These startups are revolutionising India’s growth story by creating new job opportunities, driving innovation, and contributing to the country’s GDP.

The spike in funding for startups was majorly led by the increased adoption of digitisation and the easy availability of capital at the early stages of growth for startups.
Startup India has introduced various schemes to simplify and facilitate the process of raising funds at both early and mature stages.
One such scheme, supporting early-stage funding from angel investors and venture capital firms, is the Startup India Seed Fund Scheme (SIFSS) with an outlay of Rs 945 crore, which provides financial assistance to early-stage startups for proof of concept, prototype development, product trials, market entry and commercialisation.
Another government scheme committed to assisting startups financially is the Fund of Funds scheme launched in 2016.
Apart from the several managerial and regulatory challenges, one of the biggest problems faced by startups is easy access to early-stage debt to finance their capital requirements. Traditional lending institutions, such as commercial banks, rely on the same old mandate.
The Government has established the Credit Guarantee Scheme for startups for providing credit guarantees to loans extended to DPIIT-recognised startups by Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs), and Venture Debt Funds (VDFs) under SEBI registered Alternative Investment Funds.