Start-ups in Indian Economy

The Prompt purpose to promote the start-up initiative was to encourage young enthusiastic entrepreneurs to start a new business. This can be done by capitalizing on their new ideas, skill and talent and thus transforming India into a Startup Nation. The aim of startups in India is to make our country enriched with ‘job creators’ instead of ‘job seekers’.

Startup means an entity incorporated or registered in India:

• For not more than 5 years
• Turnover not exceeding INR 25 crore in any preceding financial year.
• Working towards innovation, development, deployment or commercialization of new products, processes, service technology or intellectual property.
• Such an entity is not formed by splitting up or reconstructing a business already in existence.

It cannot be denied that the Startup India initiative has already got recognition and appreciation at the national and international platforms for a high rate of growth achieved in a short span of time. However, this does not mean that the aims and objectives of the project have been fulfilled and no task is ahead of us. In fact, we need to do a lot to reach the goal, which is far away and continuously expanding.

With the change of time, some of the grey areas are making hindrance and hampering the smooth functioning, desired growth, and development of startups in India.

• Lack of nourishment and nurturing of entrepreneurial talent: Making a business is a risky job and there are a series of uncertainties in every step of doing business. Therefore, the majority of the people do not prefer promoting a business and hence gladly accept the service life of another similar job where the chances of uncertainties are minimum.On the other hand, there are some people having inborn talent,skills, and the ability to handle risks and uncertainties. These are the leaders and potential entrepreneurs who are highly ambitious and can satisfy themselves with small things and take the risk of doing business.
• Lack of steady supply of Finance: A recent report discloses that 50%-54% of the respondent entrepreneurs who attempted to raise funds in the last 12 months had a favorable experience but 46% of them quoted the same as challenging. They further argued that the government must think about this seriously and finalize a solution to the problem through convincing interface meetings with startup managers and other related stakeholders. It is reported that existing foreign investment norms need to be released to attract international industries in the fold of startups in India.
• High Regulatory burden: Formalities requiring companies with various labor and environmental laws are also still headed to the startups operating in our country. The startup India action plan was for reducing the regulatory burden on startups and thereby allowing them to focus on their core business and keeping the compliance cost at a minimum. There are seven labor laws and three laws relating to the environment or an operation that make the trust critical and problematic.
• Existing taxation policy: It is argued that in order to attract investment in startups, the rate of incentives should be more attractive and the rate of various taxes must be rationalized. Young entrepreneurs opined that better incentives are needed for domestic players to compete against global players.
• Lack of appropriate marketing policies: Though it was expected that startups will attract young talents and entrepreneurs of our country in doing indigenous innovative businesses, in reality, it has been observed that many large business houses under the Startup India initiative have used these opportunities and started their business but could not make an impact till date.
• Impact of Coronavirus on Startups:The impact of coronavirus may lead companies to think to change the business models of startups. Startups are dependent on funding which has been massively impacted due to this disaster.

According to one of the researches, startups and small scale businesses were affected a lot in annual revenue by this crisis. But once-in-a-lifetime disruption like the coronavirus crisis is difficult to plan for, and the risk to startups is substantially larger than to big corporations. Recently, Uber announced it would be reducing its workforce by 14 percent, and Air BnB announced a 25 percent cut. In both cases, the companies explained that they will be closing their most disruptive lines of business.

Startup India has immense scope and opportunities to flourish businesses by utilizing the ever-increasing demands of one of the biggest local and niche markets. Keeping in view the ever-changing lifestyles of our society, startups should concentrate on changing the form of business activities, products and services, consolidation of ideas and transforming the same into a product or service and creation of demand, for it is the main motto or success story of today’s startup businesses. Swiggy, Zomato, Ola, Pine Labs,Fareye, Peel Works are today’s business identities that emerged from startup endeavors.

History of business taught us that there are many success stories built by some renowned multinational entrepreneurs like Kroc, Facebook by Mark Zuckerberg, Microsoft founded by Bill Gates and more.

We are therefore very optimistic about the future of the startup movement in our country despite the coronavirus outbreak and other discouraging issues. Hoping that all negative issues would be dealt with seriously by the appropriate authorities to make the initiative truly a success.