India’s Startup Ecosystem Key to Becoming Third Largest Economy, Says Chief Economic Advisor
India’s Chief Economic Advisor (CEA), V Anantha Nageswaran, has emphasized the crucial role of startups in helping India become the third-largest economy globally. Speaking at the Huddle Global 2023 event organized by the Kerala Startup Mission (KSUM), Nageswaran highlighted the transformative power of tier-2 and 3 cities, including Kerala’s capital, in nurturing the startup ecosystem. He attributed this success to improved infrastructure and favorable government policies.
India, currently the fifth-largest economy, is on track to reach the third position in the next few years. Nageswaran proposed the ambitious goal of achieving a 7 trillion USD economy in seven years, with startup entrepreneurs playing a vital role in this journey. He stressed the importance of startups actively participating in the development of business models that leverage the expansion of physical and digital infrastructure to drive efficiency, revenue, and economic growth.
Underlining the significant progress made in India’s startup landscape, Nageswaran mentioned that the country has emerged as the third-largest startup ecosystem globally, with over 1.12 lakh startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) across 763 districts. Impressively, more than 110 of these startups are unicorns, with a total valuation of approximately USD 350 billion.
Nageswaran also highlighted India’s strong innovation quality, ranking second in this aspect. Startups in India are not limited to specific sectors but are instead solving problems across 56 industrial sectors. IT services account for 13% of these startups, followed by health and life sciences at 9%, education at 7%, agriculture at 5%, and food and beverages at 5%.
An interesting revelation is that 49% of the startups are located in tier-2 and 3 cities, challenging the long-standing perception that small towns are not conducive to conducting business. Nageswaran attributed this shift to improved internet penetration, better physical infrastructure, and supportive government policies that have reduced costs for entrepreneurs compared to tier-1 cities.
Speaking specifically about Kerala, Nageswaran praised the state’s startup journey, crediting the Kerala Startup Mission (KSUM) for its instrumental role in propelling the state to the forefront of the global startup arena. Established in 2006 as the Kerala government’s nodal agency for entrepreneurship development and incubation activities, KSUM has successfully fostered over 4,000 registered tech startups, boasting 63 incubators and 10 lakh square feet of incubation space. Its achievements have earned KSUM a distinguished position among the world’s top business incubators.
The recently concluded Huddle Global event, India’s largest beachside startup conclave, showcased cutting-edge products from emerging sectors such as robotics, artificial intelligence, machine learning, augmented reality, virtual reality, life sciences, space tech, blockchain, IoT, e-governance, fintech, healthtech, agritech, edutech, and SaaS.
Nageswaran’s remarks shed light on India’s thriving startup ecosystem and the pivotal role it plays in propelling the country towards becoming the world’s third-largest economy. With continued support from the government, improved infrastructure, and a skilled talent pool, startups have the potential to drive economic growth and innovation across various sectors, enabling the realization of India’s economic ambitions.
