Startups have a key role in India’s journey to become 3rd largest economy: CEA

Startups play a paramount role in India achieving its ambitious developmental aspirations and becoming the third largest economy in a few years, said Dr V Anantha Nageswaran, Chief Economic Advisor to Government of India.

Delivering the Leadership Talk at the Huddle Global 2023 of Kerala Startup Mission (KSUM) here on Saturday before the three-day flagship event drew to a close, Dr Anantha Nageswaran also said tier-2 and tier-3 cities of the country including Kerala capital are emerging as startup powerhouses leveraging the improvement in infrastructure and government’s supportive policies.

“As all of you know very well we are the fifth largest economy on course to becoming the third largest economy in a few years. In fact, I will say   7-in-7 is the buzz slogan, that is 7 trillion USD economy in seven years. Seven trillion USD economy size by 2030 is possible if India maintains its present growth trajectory, and in that journey startup entrepreneurs are going to play an important role”, Dr Anantha Nageswaran said.

He also noted that Kerala’s startup journey has been an inspiring one with KSUM serving as the catalyst since its establishment in 2006 to promote change that propelled the state into the forefront of global startup arena.

The active participation of startups in India in developing business models on the foundation of expanding physical and digital infrastructure will continue to generate efficiency, revenue and economic returns for the country, he said.

“The culture of entrepreneurship and innovation is one pandemic that India would like to experience continuously. It must spread,”  Dr Anantha Nageswaran said.

“The last decade has seen an exceptional transformation in the startup landscape in India, which has emerged the third largest ecosystem globally, with over 1.12 lakh startups presently recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) across 763 districts. Among them, more than 110 are unicorns with a total valuation of around USD 350 billion”, he said.

Also, the country ranks second in innovation quality. The innovation in India is not just limited to certain sectors as startups are solving problems in 56 industrial sectors, with 13 per cent of them from IT services, 9 per cent from health and life sciences, 7 per cent from education, 5 per cent from agriculture and 5 per cent from food & beverages, Dr Anantha Nageswaran said.

It is significant to note that 49 per cent of startups are from tier-2 and tier-3 cities, which has turned to be a game-changer as the business advantages in these locations enable entrepreneurs to operate at lower costs as compared to tier-1 cities, he said.  

Apart from improved infrastructure and government’s pro-active policies, availability of technically skilled talent pool is a huge advantage for startups to set up and flourish in tier-2 and tier-3 cities, he said.

“Historically, a perception was held that small towns were difficult places to conduct business, but with the improved internet penetration, vastly better physical infrastructure, road, rail and air connectivity and supportive government policies this is  no longer true, “ he said.

Having over 4000 registered tech startups, 63 incubators and 10 lakh square feet of incubation space, KSUM has not only met its goal of promoting technology-based entrepreneurship but has also earned distinguished position among the world’s top business incubators, he added.