Prime Minister Narendra Modi recently launched an ambitious programme called Startup India Standup India. This was aimed at revolutionising and accelerating the startup revolution in India, which is already witnessing strong traction. There was an earlier era in India where manufacturing startups dominated in the 70s and the 80s, and these were supported through seed capital and soft loans by the development financial institutions (DFIs) both at the centre and the state level.
Entrepreneurs who were keen at setting up factories were supported in their endeavours and several companies which are today household names were beneficiaries of this ecosystem. To name a few Reliance, Biocon, Infosys etc. are some of the big names. However, the DFIs supported predominantly through loans and earned healthy returns when a company did well. Otherwise they ended up writing off the loans – a model that was unsustainable. While they did not make significant gains on successful companies, they lost money on failed ventures. As a result of this and subsequent economic liberalisation since mid-90s, we did not have a startup ecosystem.
In the past decade, we have seen the rebirth of the startup ecosystem with a more sustainable business model in the form of venture capital. This is now taking strong root in the tech related areas and we are now seeing the results of this in cities such as Bengaluru and Gurgaon. India’s economic future lies in encouraging startups which will bring dynamism, new thinking and create jobs to the Indian economy