India’s startup ecosystem has witnessed remarkable growth in recent years. The number of recognized startups has increased from around 400 in 2015-16 to over 130,000 today. During this period, startup funding grew 15 times, the number of investors increased nine-fold, and the number of incubators rose seven-fold.
India’s robust digital public infrastructure has played a significant role in addressing global challenges such as achieving Sustainable Development Goals, combating climate change, fostering financial inclusion, and improving agricultural productivity. The country is on the brink of a technological revolution, with immense opportunities in areas like big data, energy transition, electric vehicles, genomics, 3D printing, robotics, drones, and space exploration. The government has actively supported this progress through initiatives like the National Quantum Mission, India AI Mission, and Semiconductor Mission, along with allocating substantial funds for research and development.
Progressive policies have opened new sectors, including space, geospatial technology, defence, and drones, encouraging startups to venture into cutting-edge domains. To realize the full potential of these advancements, collaboration between policymakers, entrepreneurs, and educational institutions is essential. Indian startups, particularly in deep tech sectors, face challenges in accessing patient capital.
The Fund of Funds for Startups, launched in 2016, has been a game changer, catalyzing a considerable multiplier effect. However, a specialized fund of funds for deep tech startups that require long-term investments is needed. Increasing domestic capital sources is also crucial.
Although Indian startups raised over $12 billion in 2024, about 75 percent of this funding came from international sources. Large domestic institutions like insurance companies and pension funds can allocate a portion of their surpluses to support startups, while family offices and businesses should take on more active roles as angel investors. Private equity and venture capital have significantly shaped India’s startup ecosystem.
India’s startup growth and infrastructure
Funding from these sources grew from $19.7 billion in 2015 to a peak of $77.07 billion in 2021, and in early 2024 alone, it stood at $49.54 billion. Over 50 percent of India’s unicorns have been backed by PE and VC investments.
To ensure sustainability, domestic funds must grow and focus on long-term value creation. India’s premier educational institutions, including the IITs, IIMs, and IIITs, are integral to the startup ecosystem, producing skilled professionals and fostering innovation. Collaboration between academia and industry is vital to ensure that educational programs align with market needs.
As new technologies disrupt industries, regulators must adapt to the changing landscape. India’s regulatory framework must balance innovation with oversight, enabling startups to thrive while mitigating risks associated with unregulated growth. India produces approximately 24,000 PhD graduates annually, driving advancements in science and engineering.
However, the country paid $14.3 billion in IPR royalties in 2024, while earning only $1.5 billion, highlighting a significant gap. Greater innovation and breakthroughs are essential to bridge this gap. India’s startup ecosystem is no longer confined to metro cities like Bengaluru, Mumbai, and Delhi.
Nearly 50 percent of the country’s startups originate from Tier II and Tier III cities, including emerging hubs like Indore, Jaipur, and Visakhapatnam. Supporting these regional hubs with infrastructure, educational opportunities, and inclusivity will unlock untapped talent and drive innovation. India is well-positioned to become the world’s leading startup ecosystem.
Favourable policies, a thriving culture of innovation, and collaborative efforts across sectors provide the foundation for scaling startups into global enterprises. As India works towards its vision of Viksit Bharat by 2047, startups will play a pivotal role in driving economic growth, creating jobs, and positioning the country as a leader in innovation.
