An �Idea� is all it takes. But is it really that simple??

With the current government promoting the �Make in India� campaign to such a large extent, the start-up picture in its totality appears much larger than one would have otherwise imagined. Not only are startups becoming increasingly imperative to improving the country�s economy, they might also be a solution to India�s future development and prosperity. Realising the importance, the present government constituted the Ministry of Skill Development and Entrepreneurship with the view to improve the skill and entrepreneurship ecosystem in the country. Here are some reasons as to why, in the light of the challenges we face, startups are the way forward.

India has an enormous population base, a majority of which is in the age group of 15 �59 years[i] . It is set to become one of the youngest nations in the world by 2020. This is strengthened by the fact that the average working Indian will be only 29 years by 2020 as compared to 37 in China and the US, 45 in Europe and 48 in Japan (Economic Survey 2011�12, Government of India)[ii] . This will give India an upper hand vis-�-vis the rest of the world with respect to its key human resources. This demographic development of India offers both opportunities and challenges.

India�s economy has grown at the compounded rate of 7% a year over the past 10 years. Continued growth at this rate implies a two fold increase in personal consumption by 2020. With the government�s focus on making the youth of India job creators and not job seekers, young graduates from prestigious Indian institutions such as Indian Institute of Technology (IIT) and Indian Institute of Management (IIM) are keen to start their own businesses. Following a growing trend over the past few years, many graduates opt out of possible placements in favour of initiating their own start-ups and putting their own innovative business ideas into practice.

In addition to the social challenge of not being welcomed by society, there have also been ongoing concerns that some regulations, rules, and government policies place a disproportionate burden on small businesses and entrepreneurs. India, in comparison to the other developing countries like Philippines and Thailand, has the least business friendly regulations. As per World Bank statistics, India has a 12-step procedure for startups in comparison with other countries like Korea, Thailand, United Kingdom and United States that have a less than 10-step procedure. The cost of startup procedure in India in 2014 was 12% of Gross National Income (GNI) per capita which is higher than other developing countries like China, Korea, Rep, and Thailand. [iv]Due to the high number of laws, regulations and registration, starting any new business becomes difficult and time consuming, and the World Bank has ranked India an abysmal 142(out of 189 economies) in the ease of doing business.Thus, one is compeeled to ask the question whether or not startups are actually being welcomed and supported by Indian society and the people in power?

The first and most fundamental challenge faced by entrepreneurs in India is that of raising finance. As compared to other countries these are very different in India, especially with reference to online entrepreneurs. Online business models are still new in the country and thus getting initial business funding becomes extremely challenging for them. [v]The loan option gets ruled out as most bankers agree that the organized lenders tend to avoid start-ups. Coming up with a solution for funding startup-related problems, India�s stock market regulator is planning to create a crowd funding platform for small enterprises. However the numbers of investors have been limited and the companies are not allowed to publicize their efforts through ads on other media channels.[vi] The lack of infrastructure is another hindrance faced by the startups. The most obvious signs of lagging infrastructure development are the over-stressed power grids. In this context it must also be kept in mind that that in order to fulfill our objective of generating a self-accelerating process of economic growth, the development of infrastructure plays a vital role.

The Government has numerous ways and means to stimulate economic activity and growth within the country by helping entrepreneurs achieve their dreams and by helping established businesses grow and prosper. The most powerful incentives the government has are at the financial level. The Union Budget of 2015 increased the opportunities for startups,;MUDRA Banks have been set up under a Prime Ministerial Scheme to facilitate funding for small entrepreneurs. 200 billion rupees have been allocated to the plan; the Finance Minister has allotted funds worth Rs. 1000 crore for startups[vii] ; and various other measures like Public Procurement Policy, investment in infrastructure, Goods & Services Tax (GST), introduction of internationally competitive Direct Taxes, sharp slash on few indirect taxes, and simplification of tax regime announced should result in ease of doing business. Focusing on self-employment and skill development of the youth will also lead to a positive impact on our present economic system if adequate measures are taken to ensure their implementation.

The true success of the budget lies in its implementation. Mere allocation of resources is futile if the way forward regarding funding is not specified. At present no significant disbursement has been announced regarding the 1000 crore allocation for startups. Therefore, the country will require adequate measures regarding availability of finance and an infrastructural boost to bring it at par with the world�s manufacturing hubs. In order to meet the countries development goals, the pace of reforms also needs to be maintained or rather improved. Socially, the Indian society is adapting to a more risk-friendly environment. The physical infrastructure needs to be upgraded. There needs to be an increase in the quality and quantity of Venture Capital /Angel Investors in India. Crowd funding must be promoted. Also, the governments need to continue reducing the administrative burden on entrepreneurs, and coordinate among their agencies to ensure that the necessary resources are directed where they are needed[Viii].

With a vast majority of the Indian population set to fall into the youth bracket within the next few years, the scarcity of job opportunities is going to rise tremendously making startups the ideal solution to our problems. However the challenges faced in this area in our country bear the potential of being damaging. When seen in this light it is clear that we might just be facilitating our own downfall unless we act in the right direction and take the necessary steps required. India as a country has always had potential � now it is high time we delivered. But can we? The question remains.

— Lipakshi Kapoor


[i]Census Of India (last access July 7, 2015)

[ii]India to be a youngest nation by 2020 � March 16, 2012 (last access July 9, 2015)

[iii]Nasscom : Perspective 2020 � Transform Business , Transform India
(last access July 7, 2015)

[iv]World Bank Data- (last access July 7, 2015)

[v] Entrepreneurship Challenges and Opportunities in India access July 9, 2015)

[vi]Crowdfunding may get easier for start-ups in India, Hindustan Times � May 6 ,2015 access July 9, 2015)


[vii]Budget 2015: Fund of Rs 1,000 crore for startups, Times Of India, Feb 28, 2015 (last access July 7, 2015)
World Bank -While India�s Economy has Turned the Corner, Wider Reforms are needed to Boost Economic Growth -April 28, 2015 access July 9, 2015)