117,254 DPIIT-recognised startups created 1.2 mn direct jobs: Eco Survey

Startups soar from 300 to over 100k in 7 years

India’s successful startup story has also fuelled job creation in the country. The total number of startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) has increased from 300 in 2016 to 117,254 at the end of December 2023.

This has generated over 12.42 lakh direct jobs making significant economic impact, said the Economic Survey 2023-24 released on Monday.

The number of Indian technology startups has increased to 31,000 in 2023 from 2,000 in 2014 aided by the Start-up India Initiative and start-up hubs across ministries and departments of the Government of India, said the survey.

 

The survey said that there are over 13,000 Department for Promotion of Industry and Internal Trade (DPIIT)-recognised start-ups in artificial intelligence, the Internet of things, robotics, and nanotechnology, as of the end of financial year 2023-24 (FY24).

“The strength of the Indian tech start-up ecosystem lies in its large pool of start-ups, unicorns, and ability to scale. With 16 per cent of the world’s AI talent, India positions itself as an innovation hub, showcasing rapid adoption of AI skills,” read the survey.

India’s tech start-up ecosystem currently ranks third globally and “has performed considerably better” than the USA and the UK.

Surge in technology startups

The COVID-19 pandemic fuelled consumer and enterprise demand for technology-backed solutions.

The number of technology start-ups in India rose from around 2,000 in 2014 to approximately 31,000 in 2023, and the sector witnessed creation of roughly 1000 new tech start-ups in 2023, the survey stated, quoting NASSCOM data.

The survey outlined several factors that have contributed to the rise of start-ups in various sectors.

Changes in consumption patterns and increased internet penetration paved the way for retail tech startups. The BFSI sector saw a surge in start-ups starting in 2016, driven by significant events such as the introduction of UPI.

Moreover, the demand for scalable and efficient cloud solutions led to the growth of Software as a Service (SaaS) start-ups, resulting in 21 unicorns since 2014. And the COVID-19 pandemic accelerated growth in sectors like HealthTech and EdTech, spurred by the increased need for tele-consulting and remote learning solutions.

As per the survey, there are over 13,000 DPIIT-recognised start-ups in artificial intelligence, the Internet of things, robotics, and nanotechnology by the end of FY24. To cater to this growing number, the government had introduced the draft National Deep Tech Start-up Policy (NDTSP) -- a comprehensive framework to tackle deep tech start-ups’ challenges.

“The policy addresses vital barriers such as limited funding, resource and infrastructure constraints, and understanding the risks associated with cutting-edge technologies,” the survey said.

Other significant initiatives include the Drone Shakti Program and custom duty exemptions for EV-related capital goods and machinery.

Funding support

The survey underscored the importance of early-stage funding support for the country’s startups and outlined initiatives that have strengthened domestic capital flow, under the Startup India Initiative.

“The Start-up India initiative helps connect the Indian start-up ecosystem to global start-up ecosystems. Start-up India has engaged in several bilateral and multilateral forums to build cross-border knowledge exchange systems and facilitate cross-border incubation and acceleration programs,” the survey read.

According to the survey, under the Fund of Funds for Start-ups scheme, more than ~10,500 crore has been committed to more than 135 Alternative Investment Funds, which invested more than ~18,000 crore in start-ups by the end of FY24.

“It has not only made capital available for start-ups at an early stage, seed stage and growth stage but also played a catalytic role in facilitating the raising of domestic capital, reducing dependence on foreign capital and encouraging home-grown and new venture capital funds,” the survey said.

The government also launched the Start-up India Seed Fund Scheme, launched in 2021, with the aim to provide financial assistance to start-ups for proof of concept, prototype development, product trials, market-entry, and commercialisation.

Moreover, over 45 per cent of the recognised start-ups are emerging out of Tier 2/3 cities. More than 47 per cent of these have at least one-woman directors. These companies filed more than 12,000 patent applications from 2016 to March 2024.