International Journal for Multidisciplinary Research (IJFMR)

E-ISSN: 2582-2160 ● Website: www.ijfmr.com ● Email: editor@ijfmr.com

A Study on Emerging Trends in Startups in

India
Pragati Gupta1, Dr. Anvita Raghuvanshi2
1
Junior Research Fellow, Department of commerce & business administration, University of Allahabad,
Prayagraj, India
2
Assistant Professor, Department of commerce & business administration, University of Allahabad,
Prayagraj, India

ABSTRACT:
Innovation and technology have played a crucial role in developing emerging markets, and strengthening
ecosystems worldwide, especially in India. India has a vibrant startup ecosystem with supporting
infrastructure, incubators, angel investors, venture capitalists, mentors and a conductive policy
environment. The startup India scheme launched in 2016 has completed the 5 year journey in 2021 and
remarked India as one of the largest and strongest ecosystem in the world. With over 50,000+ recognized
startups by DPIIT (Department for promotion of Industry & Internal trade), India ranks at third-largest
startup ecosystem in the world. (Times of India,2022.) The country's startup environment has been
expanding quickly. This research paper aims to study the rise of startups in India, that has been fueled by
young and talented workforce, government support & funding options provided by the investors. This
paper is an attempt to find out the dynamic changes that Startup India campaign has brought to the country.
Further, it aims to discover opportunities, gaps & challenges that Startups face during their stages of
operation. Since its inception, the journey of startup India campaign has successfully nurtured a large
number of startup firms in the country, and has enabled thousands of youth to be employed & fulfill their
dreams of building a startup. Focusing on this notion, the paper tries to find out the opportunities and
challenges that startups are facing in the present scenario.

Keywords: Startup ecosystem, Startup culture, Entrepreneurship, Innovation & technology, Government
support.

I. INTRODUCTION
Startup venture is defined as new businesses that are in their initial stages of operation, striving to grow
and are typically financed by individual investors or capitalists. According to DPIIT (Department for
promotion of industry and internal trade), ‘An entity will be recognised as a startup for up to 10 years of
existence and up to Rs 100 crore of turnover. Earlier, the existence period was five years and the turnover
limit was Rs 25 crore’.
The Indian startup ecosystem has evolved dynamically over the last few decades. The Start up India
campaign, which is a flagship initiative of government of India was launched in 2015 by our Prime
Minister Shri. Narendra Modi, to catalyze the start up culture and build strong entrepreneurial ecosystem
in the country. There have been multiple factors, that urged an entrepreneur to get their startups off the
ground and begin their operations. Also, the Indian startups face its own set of challenges and stellar

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 International Journal for Multidisciplinary Research (IJFMR)
E-ISSN: 2582-2160 ● Website: www.ijfmr.com ● Email: editor@ijfmr.com

opportunities. The failure may occur due to cultural diversity, improper mentoring, lack of government
policies and many more complexities. Alone in 2021, India has minted 44 Unicorns and Indian startups
have raised $42 billion.(Economic Times 2022). India has one of the largest startup ecosystems in the
world with a rank of three. India had surpassed a historic milestone of 100 unicorn startups with a
combined worth of $300billion. (Byjus 2022).
India’s startup ecosystem has been on a rapid growth trajectory in recent years with a strong focus on
technology and ecommerce. Along with government initiatives, there is a definite movement in startup
arena in India due to penetration of IT and internet. Many startups are coming up in service sector
including education, legal, retail, insurance and health. With customers becoming aware of the benefits
and convenience, the popularity and viability of startups is no more a difficult proposition for an
entrepreneur. A number of venture capitalists and angel investors are aggressive and gung-ho on Indian
startups as they see lot of potential with few expected to become unicorns (high valued companies)
bringing in good returns. The government has launched a number of initiatives to promote startups across
the country as a part of Startup India Initiative such as Startup India Action Plan, The Funds of Fund for
Startups, regulatory reforms, Income Tax exemption for 3 years, the Startup India seed fund scheme etc.
The role of government becomes very important in developing the necessary infrastructure and support to
foster the startup ecosystem. India needs to build upon low cost and high-impact solutions, although there
has been a rise in angel and venture capital funding, it becomes crucial that the ecosystem is well integrated
to connect startups to fund houses and to other stakeholders.

Fig 1. Data showing the rise in the number of Indian startups

II. REVIEW OF LITERATURE

(Baporikar, 2014) in her research paper “youth entrepreneurship in Indian scenario” discusses about the
role of youth entrepreneurship with a focus on Indian scenario by integrating it to several other factors
such as business models for YE, barriers affecting YE and its impact on reducing unemployment. (Kshetri
& Kshetri, 2016) in their research article “Fostering startup ecosystem in India” have mentioned out the
factors and consequences responsible for fostering the growth of startup ecosystem in India. The research
paper explains the determinants of entrepreneurship factors that affect entrepreneurial performance in
terms of a) Regulatory framework, b) Values, culture and skills, c) Access to finance, market, R&D and
technology. (Andaleeb & Singh, 2016) in their research report titled as “A study of Financing Sources
for Start-up Companies in India” have described the stages of startups and modes of financing available
to startups at each stage. The stages through which a startup has to pass consists of 6 phases of investment;

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 International Journal for Multidisciplinary Research (IJFMR)
E-ISSN: 2582-2160 ● Website: www.ijfmr.com ● Email: editor@ijfmr.com

Self Funding or Bootstrapping, Friends and Family, Seed, Growth (also known as the ‘Early Stage’) and
Expansion. (Adhana, 2016) in his research paper “ Start-Up India, Stand-Up India: India Turning into a
Start-Up Hub by Prospering Entrepreneurial Culture” clearly explains the startup ecosystem in Indian
scenario. The entrepreneurial culture, the funding sources, types of investors and reasons of success and
failures of startups have also been stated. (Manshani & Dubey, 2017)have conducted the research study
on Women entrepreneurs in India and have concluded several factors that promotes & encourages women
empowerment in entrepreneurial development. (Jha, 2018) in her research article “Entrepreneurial
ecosystem in India- Taking stock and looking ahead” had stated the role of education & training and other
socio-cultural issues responsible for building the startup ecosystem in India. (Kalyanasundaram et al.,
2021) in their paper titled ‘Tech Startup Failure in India: Do Lifecycle Stages Matter?’ have determined
the causal factors and attributes which causes the failure of tech startup , against the successful
ones.(Chillakuri et al., 2020) in their research article ‘Linking sustainable development to startup
ecosystem in India - a conceptual framework’ have provided the conceptual framework for linking the
stsrtup ecosystem to environmental sustainability. They have stated that sustainability is not just about
reducing carbon emissions, but is a fundamental principle that guides the organization and society. (Garg
& Gupta, 2021) in their research work titled as ‘startups and the growing entrepreneurial ecosystem’ have
discussed about the role of startups in enhancing the economic growth, role of incubators in developing
these startups and the importance of Intellectual Property(IP) protection and different stages of series
funding for startups.
ECONOMIC SURVEY REPORT (2022) remarked India as third-largest startup ecosystem in the world.
The survey highlights the record of overall 83 Indian startups to achieve the unicorn status in 2021
alongwith the string of IPOs by the new-age companies. With its enhanced status, India is now a global
leader in addressing global challenges and advancing the sustainable development goals.
(Indian Startup Ecosystem- Challenges and Opportunities - Google Scholar, n.d.) in their research
article ‘Indian Startup Ecosystem- Challenges and Opportunities’ had discussed about the various set
of problems as well as possibilities that may arise in the future. The article provides a clear picture of
various set of difficulties and opportunities that startups go through during their stages of operation.
MYGOV BLOG (2022) A REPORT ON ‘STARTUP INDIA WHAT IT MEANS FOR YOUTH’-
have provided that Indians minds are playing a pivotal role in the global landscape of startups and how
the young entrepreneurs are working towards the vision of making a self-reliant India. The reports also
describes the importance of startup India scheme in nurturing the youth by unleashing their active
engagement in making of Aatmanirbhar citizens.
STARTUP INDIA WAY AHEAD (2022) an annual report published by Ministry of commerce &
Industry, Department for promotion of Industry & Internal Trade (DPIIT), discusses about the journey of
Indian startups since 2016 to present, and how the Startup India Action Plan 2016, has fueled the startup
movement in India , making India self reliant and self sufficient.

III. RESEARCH OBJECTIVES

1. To study about the current status of startup ecosystem in India.
2. To understand the government schemes that support startups in India.
3. To identify the issues and challenges relating to success & failures of startups in India.

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IV. SIGNIFICANCE OF THE STUDY

The aim of this research is to provide a comprehensive understanding of the growth drivers as well as
challenges faced by the Indian Startups in the current scenario. The research study also describes the
support from various government schemes that have been primarily focussing on growth and socio-
economic development of the nation through innovation and transformation. This research work further
investigates the opportunities and challenges associated with success or failure of Indian Startups.

V. RESEARCH METHODOLOGY
This research study is purely based on secondary data. Secondary data sources comprises of data collected
from journals, magazines, news articles, authenticated websites, newsletter and annual reports from
Ministry of commerce & industry, Department for Promotion of Industry and Internal Trade (DPIIT) and
from other sources found suitable. The study is descriptive and conceptual in nature.
5.1 Source of Data
For the present study, secondary data has been collected through different sources. Website
www.startupindia.gov.in has been referred for accomplishing the research objective. Annual status reports
from the department for promotion of industry and internal trade (DPIIT) has been alluded to describe the
journey of startups in India since the startup India campaign have launched. Press release from PIB and
several government blog has also been the fundamental part of the research styudy.
5.2 Theoretical Framework
GROWTH OF STARTUPS IN INDIA
India is growing undeniably, and so is the startup scenario in India. Government of India has declared
period from 2010-2020 as the decade of innovation. Over the past few years, lot of new and encouraging
startup stories have garnered much deserved attention.
The story of Indian startup ecosystem are everywhere, be it the payment services like Paytm, PhonePe, or
educational techs like Unacademy, Byju’s, Physics Wallah, or food tech startups like, Zomato, Swiggy or
a bit unconventional ones, we come face to face with these startups for our day to day needs.
The key sectors in the Startup Ecosystem are-
• E-COMMERCE- shows CAGR of 27% between 2019-2024. Popular startups in this sector are
Flipkart, Nykaa, Snapdeal etc.
• HEALTH-TECH- growth rate 39 %. Popular startups in this sector are Pharmeasy, CureFit, Mfine
etc.
• FIN-TECH shows potential to reach $106billion approx 42% by 2025. Popular startups here are
PayTm, PolicyBazaar, PhonePe etc.
• ED-TECH potential to reach $30billion around 34% in next 10 years. Popular startups in this field
are Unacademy, Physics Wallah, Byju’s, Vedantu etc.
• LOGISTICS- having potential to grow by 10.4% from 2020-2024. Startups in this area are Delhivery,
Blinkit, Ekart etc.
• TRAVEL-TECH potential to reach $30billion, around 26% in next 10 years. Popular startups in this
field are GiIbibo, MakeMyTrip, Yatra, OYO etc.
[source – Inc42]

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 International Journal for Multidisciplinary Research (IJFMR)
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E COMMERCE
HEALTH TECH
FIN TECH
EDU-TECH
LOGISTICS
TRAVEL TECH

Fig 2- Chart representing the growth of start-ups in potential sectors.

GOVERNMENT SCHEMES SUPPORTING STARTUPS IN INDIA

▪ STARTUP INDIA ACTION PLAN
- Launched in 2016, by Hon’ble PM Shri Narendra Modi for encouraging startups in India.
- Funding support through fund of funds with a corpus of Rs.10,000 crores.
- Entrepreneurs should register their companies in one day, against 15-20days as row.
- No tax on profit inspection for 3 years.
- Capital gain exemption
- No capital gain if the profit is invested in another startup entity.
- Benefit of Credit Guarantee scheme.
- Faster and easy Exit policy.
- Setting up of Startup India Hub for clearance.
- Convenient & easy application for registration.
- Relaxed norms of public procurement for startups.
- Legal support & fast tracking patent examination at lower costs.
- Setting up of research parks & much more.

Fig 3- Startup India action plan layout at different stages of operation.

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 International Journal for Multidisciplinary Research (IJFMR)
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STARTUP INDIA SEED FUND SCHEME

• Aims to build a robust Startup ecosystem in the country for nurturing innovation and providing
opportunities to budding entrepreneurs.
• DPIIT created Startup India Seed Fund Scheme (SISFS) with an outlay of Rs. 945 crores to provide
financial assistance to Startups.
• Assistance for proof of concept, prototype development, product trials, market entry and
commercialization.
• Seed fund is disbursed to eligible Startups through eligible incubators across India.

ATAL INNOVATION MISSSION (AIM)

• AIM provides a platform for the promotion of world class innovation Hubs, Grand Challenges, sectoral
focus, other Self-employement and talent initiatives.
• Provides for establishment of Atal Tinkering labs, innovation Centers, Incubation Centers and Atal
Innovation Community clusters.
• 14,916 schools across the country have been selected for Atal Tinkering Laboratories.
• 4,875 schools have received Rs.12 lakhs grant each and are operational.
• AIM has selected 86 incubators across the country, to provide financial support through grants in aid
and that has already been disbursed.

SAMRIDH SCHEME [STARTUP ACCELERATOR OF MeitY FOR PRODUCT INNOVATION,

DEVELOPMENT AND GROWTH]
• SAMRIDH scheme helps Startups to access Indian market and scales their products for global market.
• Scheme was launched by Ministry of Electronics & Information Technology to boost independent
software vendors.
• SAMRIDH mainly focuses on integrating all the incubators and accelerators and giving them direct
assistance.
• Financial assistance upto Rs. 40 lakhs for Startups under this scheme.
• Builds a meet up point for venture capitalists, entrepreneurs and mentors.
• Also provides hand-holding support to product Startups in the form of technical, regulatory, financial
and market access mentoring.

eBiz PORTAL
• first online forum for government-to-business collaboration (G2B), which has been launched to
modernise the nation and provide a welcoming environment for businesses.
• Launched by Ministry of Commerce and Industry, developed by Infosys, is a public-private
partnership model to provide a one-stop shop for investors and business communities in India.

CHALLENGES FACED BY INDIAN STARTUPS

A survey of Indian executives conducted by the IBM Institute for Business Values and Oxford Economics
revealed that despite India’s flourishing entrepreneurial culture, over 90% of startups do not survive
beyond their first five years of operation. The Startups in India encounter a number of challenges,
including a shortage of experienced staff, bureaucratic roadblocks, and fierce rivalry from established

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 International Journal for Multidisciplinary Research (IJFMR)
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companies. Due to unclear regulations, poor infrastructure, and problems scaling up operations, startups
confront substantial difficulties Despite these barriers, India's startup ecosystem is still growing, and
various government efforts are designed to promote and assist entrepreneurship in the country.
▪ Lack of funding - Indian startups usually struggle to secure investment due to a lack of access to
funds. . It's common for startup ecosystems to experience waves of shutdowns after periods of intense
funding activity. Venture capital firms typically target established startups, making it challenging for
early-stage companies to get the financing support. ConnectedH, a full stack B2B health tech startup
founded in 2018 by Shubham Gupta, Rahul Kumar and Suresh Singh shut down in July,2023 due to
lack of financing stating that it would return the remaining amount to the investors. Similarly, Qin1 a
Noida-based ed-tech startup ceased its operations, owing to a need for more funding In India, it is also
difficult for investors to lend money to new firms because of the significant risk associated with doing
so and the restrictions brought on by regulations.
▪ Knowledge and skill gaps- lack of knowledge can lead to unavoidable mistakes that could affect the
cost of businesses, so requirement of proper skill & knowledge while commencing a startup business
is a pre-requisite condition.
▪ Ineffective marketing – The number one reason why most startups fail is due to misinterpreting market
demand. 34% of startups fall in this category of not achieving product-market fit.[ Startup talky,2023]
▪ Time management and productivity- Mastering the art of time management is crucial for achieving
success. Entrepreneurs have to own every part of their business, as good time management will allow
them to accomplish bigger results.
▪ Regulatory environment- Startups often face regulatory complexities and bureaucratic red tape in
India. Complying with various legal & regulatory requirements, obtaining licenses, dealing with
taxation and navigating the complex business environment can be time-consuming and costly.
▪ Lack of mentorship & guidance – many Startups lack access to experienced mentors and industry
experts who can provide the adequate guidance and support. The absence of a robust mentorship
ecosystem can make it challenging for Startups to survive at early stages.

Fig.4 The chart represents the sector-wise failure percentage of startups in India.
▪ Infrastructural limitations- inadequate physical and digital infrastructure can pose several
challenges for Indian Startups. Non-Access to reliable internet connectivity, logistics and

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transportation systems and other support services can hinder the scalability and operational efficiency
of Startups.
The above data shows that IT sector has most failed start-ups in 2023, around 63%. High infrastructure
costs, constantly evolving technological costs etc have been the main cause for failure. Despite these
challenges, Indian startups have also shown tremendous resilience and innovation. The Indian government
and various organizations have taken initiatives to address these challenges and promote the growth of the
startup ecosystem in the country.

VI. LIMITATIONS OF THE STUDY

The limitation of this study is that it is a detailed conceptual analysis about startup India ecosystem
based on secondary data. More Research can be done about its prospects and benefits of startup to
entrepreneurs by using primary data and other statistical tools.

VII. CONCLUSION
Indian Startups are now spread across the length and breadth of the country. It is pertinent that the Startup
ecosystem is well integrated to connect startups to fund houses and various stakeholders. Startups in India
face a variety of obstacles, including regulatory obstacles, inadequate infrastructure, and a lack of market
knowledge. Successful businesses have shown that proactive measures can overcome these challenges,
such as performing in-depth research, building strong relationships with stakeholders, utilising
technology, and asking for mentorship and advice from seasoned business owners. Due to a growing
market and a thriving ecosystem, Indian startups have the opportunity to be highly successful and to aid
in the country's economic growth. However, to thrive in this ecosystem , Startups need to focus on key
areas such as market research, building a strong team, fostering innovation, leveraging technology,
forming strategic partnerships, and adopting a customer centric approach. It is also crucial to stay updated
on government support and initiatives that can provide valuable resources and funding.

VIII. AUTHOR’S BIOGRAPHY

I am Pragati Gupta, pursuing PhD program in Faculty of Commerce at Central University of Allahabad,
Prayagraj. I have qualified the UGC net exam twice and have been awarded with JUNIOR RESEARCH
fellowship(JRF). My awards and achievements also includes CHANCELLOR’S GOLD MEDAL for
acquiring the first position in the overall graduation. My research domain lies in financial management,
marketing management and allied areas. I look forward to contribute more of my knowledge and skills in
good academic writings.

IX. REFERENCES
1. https://www.forbes.com/advisor/investing/what-is-a-startup
2. https://economictimes.indiatimes.com/small-biz/startups/indian-startups-challenges-
andopportunities.
3. www.managementstudyguide.com
4. https://blog.mygov.in/youth-entrepreneurship-an-emerging-trend-in-india/
5. https://startuptalky.com/startup-failure-success-rates-statistics/
6. https://marathistandard.com/startup-ecosystem
7. www.startupindia.gov.in

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8. https://blog.mygov.in/editorial/startup-india-what-it-means-for-the-youth/
9. Kshetri, N., & Kshetri, N. (2016). Fostering startup ecosystems in India. Asian Research Policy, 7(1),
94-103.
10. Baporikar, N. (2014). Youth entrepreneurship in Indian scenario. International Journal of Asian
Business and Information Management (IJABIM), 5(2), 74-84.
11. Andaleeb, U., & Singh, S. D. (2016). A study of Financing Sources for Start-up Companies in India.
International Review of Business and Finance, 8(1), 1-4.
12. Manshani, S., & Dubey, A. (2017). Startup women in startup India: A study of women entrepreneurs
in India. International Journal of Business Management (IJBGM), 6(4), 91- 100.
13. Jha, S. K. (2018). Entrepreneurial ecosystem in India: Taking stock and looking ahead. IIMB
management review, 30(2), 179-188.
14. Kalyanasundaram, G. (2018). Why do startups fail? A case study based empirical analysis in
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15. https://www.researchgate.net/publication/342370217_Linking_sustainable_development_to_startup_
ecosystem_in_India_-_a_conceptual_framework
16. Garg, M., & Gupta, S. (2021). Startups and the growing entrepreneurial ecosystem.
17. Misha, V. (2022). Indian Startup Ecosystem–Challenges and Opportunities. International Journal of
Research in Science, Commerce, Arts, Management and Technology, 7-11.

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