WHY DOES INDIA NEED STARTUPS?

"Startups are Young India’s war cry — where ambition roars, ideas rise, and fortunes are forged from sheer will."

The big question is rather “Can India Do Without Startups”?

• Startups help India to transform from a service-based economy to a knowledge and innovation-based one, driving intellectual and technological advancements.

  
  

• India's need for startups goes beyond simple economic development—startups represent a critical engine for the country's future. Startups are innovation powerhouses that solve uniquely Indian problems while creating globally scalable solutions.

  
  

• In a country with one of the world's largest youth populations, startups create significant employment opportunities, especially for skilled workers. The startup ecosystem has generated millions of direct and indirect jobs across diverse sectors.

  
  

• Indian startups are uniquely positioned to tackle local challenges in education, healthcare, agriculture, financial inclusion, and infrastructure using innovative models tailored to Indian realities.

  
  

• Startups are helping to build global competitiveness giving it a competitive advantage in an increasingly technology-driven global economy. It positions India as a hub for innovation rather than just outsourcing.

  
  

• Successful startups also create substantial wealth that can be reinvested into the economy. They attract foreign investment and help develop domestic capital markets.

INTRODUCTION

India should view Startups as national imperatives more so in the world which lately has had a paradigm shift in its value system – new ideas have become modern day currencies. The new wealth of the nation are new ideas and how quickly are they converted it into a valued asset – a monetizable asset that build ups national economy

Unlike in America, where venture funding is abundant and failure is cushioned, the Indian startup story is often one of personal sacrifice. Most Indian startups are launched by middle-class entrepreneurs betting their family’s life savings on a dream. When they fail, it's not just a company that dies—it's a family that bleeds. The government must stop romanticizing startup culture and start institutionalizing startup survival.

THE PROBLEM: WHY MOST INDIAN STARTUPS FAIL

• Endless compliance and red tape

• Fragmented regulatory interfaces

• Lack of fast dispute resolution

• Absence of early-stage risk capital

• Legal harassment and personal liability

• No structured mentorship or guidance

My latest startup, launched in 2018, has just been folded up. I spent 50% of my time not building products, but battling the legal challenges in local and high courts, police stations, and bureaucracy. That is the reality most founders face—not the glamour shown on Shark Tank.

I launched my first start up in 1984, fresh out of IITD and since then launched several startups in different countries and have had a few failures. That is the nature of the business. However, with all the maturity gained, I should succeed in 80% of my future endeavours, which may sound utopian but that is what I also wish for all Indian startups. Critical to their success, I recommend the following initiatives on the part of Government of India (GOI). They will also help GOI achieve economic success through innovation

1.   STARTUPS HOLD VALUE – THEIR UNCEREMONIAL BURIAL IS A NATIONAL LOSS

Formation of National Startup Rescue Framework (NSRF)

Failed Startups are salvageable assets that can be repurposed, recycled, and reimagined to draw greater value

Every startup holds value—be it IP, technology, teams, or insights. Letting them sink is national wastage.

• Create a government-backed Startup Resolution Corporation

• Identify distressed but high-potential startups

• Merge similar ventures, recapitalize, and re-launch

• Resell to private investors or integrate into public systems

Koo and BluSmart are perfect examples—were companies with real value and should have been salvaged in spirit and material.

2.   ONE SINGLE CONTROL POINT FOR STARTUPS

India needs a unified digital and physical interface for startups.

• Personal startup dashboard (compliance, funding, legal updates)

• Direct links to investors, buyers, mentors, incubators

• AI alerts for risk, opportunity, and deadlines

• Regional help desks with legal and financial advisors

A startup shouldn’t need a lawyer to open a bank account or file a return. The system should

work for the innovator, not against him.

3.   STARTUPS ARE NOT MSMES. THE ESSENCE OF THEIR EXISTENCE IS VERY DIFFERENT

 Innovation, Innovation & Innovation

Policy confusion is killing ambition. MSMEs focus on consistency. Startups chase disruption. One size doesn't fit both.

• Create a separate central ministry, headed by someone who understands Indian road blocks and failures

• Institute a new company type like OPC – INS (INDIAN NATIONAL STARTUP)

• Startup-specific tax codes, funding schemes, and compliance norms

• Exclude early-stage startups from random audits and legacy obligations

MSMEs are the spine of the economy. Startups are the nerves. Both need different nutrients.

4.      GOVERNMENT AS FIRST CUSTOMER (GAFC)

Startups need cash flow and credibility more than capital.

• Mandate 10% procurement from startups across ministries and PSUs

• Fast-track onboarding to GeM (Government e-Marketplace)

• Set 30-day payment cycles for startup suppliers

Let the government be the startup's first and fastest buyer, not just a policy announcer.

5.   INSTITUTIONAL MENTORSHIP (NMCS)

India needs to stop treating mentorship as a TED Talk.

• National Mentors Council for Startups (1,000+ vetted professionals)

• Structured sessions, matched by founder needs

• Paid mentors, not just volunteers

• Monthly reporting on mentor impact

A founder with guidance is worth ten with just funding.

6.   MAKE FUNDING EASIER

• Regional Startup Investment Funds (RSIFs) with public-private capital

• Co-investment platforms matching angels with govt. money

• Zero-collateral working capital for MVPs

• Legalize and regulate equity crowdfunding

• Private local exchanges to list companies and raise monies

• Pvt Ltd companies to trade their shares as currencies

Let ideas get money before they become valuations.

7.   NATIONAL STARTUP SOCIAL NETWORK

We need a digital commons for startup founders.

• A dedicated, Indian social platform (like Koo) for startup founders

• Forums for co-founder search, hiring, policy feedback, event discovery

• Built-in grievance reporting and founder resources

This will become the nerve centre of India’s entrepreneurial revolution.

CONCLUSION: STOP WASTING BILLION-RUPEE DREAMS

India talks a lot about Atamnirbhar Bharat. But without real support, Indian entrepreneurs are only Atamnirbhar in their struggle. The government must not expect entrepreneurs to be superhuman. It must create the environment where ordinary citizens can build extraordinary ventures.

No founder should be punished for trying.

It’s time we made sure 80% of startups survive. Not by chance. But by choice, design, and national will.