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Business News/ Companies / Start-ups/  How Indian startups are contributing to India's $5 trillion economy goal? Explained
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How Indian startups are contributing to India's $5 trillion economy goal? Explained

Indian startups driving economic growth through sectors like EV, Fintech, and job creation. India's startup ecosystem is contributing to the country's $5 trillion economy goal.

Role of startups in India's $5 trillion economy goalPremium
Role of startups in India's $5 trillion economy goal

Indian startups have witnessed remarkable growth in recent years, with the country emerging as the third-largest ecosystem for ventures globally. The Indian government has been proactive in supporting aspiring entrepreneurs through various initiatives including the Startup India scheme. 

In 2022, Indian startups attracted a whopping $42 billion in funding, a substantial leap from the previous year's $16 billion which underscores their pivotal role in India's aspiration to achieve a $5 trillion economy goal. However, India's tech space has seen a huge decline in funding this year. Despite this, India remains one of the top-performing tech ecosystems globally.  

Today, startups are catering to every need of consumers, that is, from B2B to B2C. Several sectors that shine in India include fintech, e-commerce, SaaS, D2C, Autotech, and others as these areas have consistently topped the investment charts, constituting a staggering 89% of total funding in H1 CY23.

The government’s roadmap to making India a $5 trillion economy comprises measures like focusing on inclusive growth, promoting a digital economy, fintech, technology-enabled development, energy transition, and climate action, and relying on a virtuous cycle of investment and growth. 

Prime Minister Narendra Modi has recently also said, “India is the fastest-growing major economy in the world despite turbulence in the global economic situation. India will soon become a $5 trillion economy."

Amidst the pool of 92,683 startups recognized by DPIIT, here are a few sectors that contributed to a massive boost in the Indian economy and further hold the potential to drive a $5 trillion economy by 2024:

1) Electronic Vehicles (EV): Startups are helping the EV space to create a sustainable ecosystem in collaboration with the government to further boost the transition, said Vaibhav Kaushik CEO and Founder of Nawgati. 

“The EV market is expected to reach 17 million units sold by 2030. Today, over 486 EV startups are exploring opportunities and challenges in charging infrastructure, battery recycling, and energy storage solutions to enable green mobility in the country."

2) FinTech: It is one of the most disrupted sectors in India with more than 87% adoption rate, said Kaushik, adding that around 6,386 startups have popped up over the last decade catering to distinct financial needs of consumers in India, ranging from insurance technology, digital lending, cashless economy, wealth management to blockchain. 

“The fintechs have included consumers from Tier 2, Tier 3, and rural areas, strengthening the overall financial technology market opportunity, which is estimated to reach $1.3 trillion by 2025."

3) Jobs Creation: Recognized start-ups have created over 10.34 lakh direct jobs for people in the country, according to Ravi K Ranjan, the founder of SuperAngels Summit 2023. He believes that India’s current accomplishments in the entrepreneurial sector are marking an influence worldwide with a potential that could cross the growth of 100,000 unicorns in India.

“These entrepreneurial ventures will act as dynamic catalysts, propelling economic growth through their innovative solutions and job creation. They infuse fresh ideas and technologies into the market, enhancing competitiveness and attracting foreign investment."

4) Technology: One of the critical ways startups are contributing to India's $5 trillion economy vision is through their foray into cutting-edge technologies. “They are not just disruptors, they are transformers," Balaji Jagannathan, Co-founder and Director of Paycorp.io told Livemint.

“From advanced battery technologies, electric vehicle components, and self-driving technology to charging infrastructure, Indian startups are driving the EV space. Apart from this, it's a diverse landscape encompassing various sectors, including FinTech, EdTech, E-commerce, Social Networks, FoodTech, Logistics, Media, Entertainment, D2C Brands, SaaS, and HealthTech."

5) Bilateral Trade: Navneet Singh, Founder and CEO of Avsar said that startups bolster India's exports, with software services exports hitting $156.7 billion in 2021-22. He believes that the US-India defense deals help in the growth of the Indian startup ecosystem. 

“Collaborations with the US, indicated by the $191 billion bilateral trade and investment in 2022, and initiatives like the US-India Defence Acceleration Ecosystem, further ignite the startup ecosystem's growth."

6) Healthcare: There are numerous innovative ideas focused on better patient management, patient data analysis, and insurance claim management that startups are addressing to boost the healthcare sector in India, the Nawgati founder told us. 

“Current trends further suggest a 45.06% increase in the total investments in health tech startups, encompassing telemedicine and telecommunication services, robotic surgeries, AI-based medical solutions that assist in detecting diseases, and more."

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Published: 07 Oct 2023, 01:09 PM IST
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