Startups - The Driving Force for Nextgen Innovations in India

Passionate about innovation and entrepreneurship and deeply involved in building the startup ecosystem, Naveen is an entrepreneur and actively training and mentoring upcoming entrepreneurs. Additionally, he was instrumental in setting up the TiE Hubballi chapter and has also founded an incubation facility named Sandbox Startups.

AI, bio-science, and climate change have taken over the imaginations of tech professionals worldwide. The global economy, which now stands at $100 trillion, is looking to reorganize itself to be more prudent towards carbon emissions. At the same time, AI is disrupting the industry and changing how we innovate. The recent COVID pandemic has made us all realize the importance of bio-science. Thus, the amalgamation of climate change, AI, and bio-science will drastically alter the global entrepreneurship landscape in the coming days.

Diversification of the Startup Ecosystem
Entrepreneurship in India has gained momentum with the emergence of IT outsourcing, where Indian companies have started providing services to countries in the US and Europe. The second major boost came through imitation entrepreneurship, wherein business ideas that tasted success in the West, such as ride-sharing, bookings, food ordering, and logistics, were adopted by Indian startups. The third significant driver for the Indian startup ecosystem is the digital public infrastructure that the Indian government has built, especially pertaining to Aadhar authentication, onboarding customers by BFSI & fintechs, digital payments through UPI, and other digital product integrations. During the same period, Global companies started setting up Global Capability Centers (GCCs) in technology, consulting, Bio-science and Health care, Manufacturing, logistics, retail, and others. As a result, India became a major destination for the Forbes 2000 global companies' Global Capability Centers (GCCs). Owing to such encouraging advancements, the Indian startup ecosystem has already developed strong diversification and is now making major strides toward semiconductor design, electronics manufacturing, defense, and other emerging technology verticals. It seems the Indian startup ecosystem is now undergoing diversification around technological innovations in different sectors and industries, expanding to different geographies, funding sources, growing diverse founders' backgrounds, business models, etc.

Entrepreneurial Challenges in Fostering Innovation
I believe there are three major challenges for fostering innovation in India: availability of talent, capital, and culture of innovation in academics. Although India has abundant skilled technology talent, most of it is employed by large, established organizations. This leads to a scarcity of workforce for startups, resulting in limited

technological innovation in the startup ecosystem. As a result, many startups and entrepreneurs in India need to catch up in technology innovation. To ensure entrepreneurship's future success in India, investing in innovation and development is crucial. India spends less than one percent of its GDP on research and development. However, to achieve higher growth in the future, we should aim to increase our investment to three percent of GDP. It is high time for industry, philanthropists, and central and state governments to work together and contribute towards the country's future growth. Additionally, it is essential to integrate creativity into the education system through strategic investments in academics. The New Education Policy provides effective frameworks that can foster innovation at all levels of education. Since technology is driving the current industrial revolution, developing a culture of innovation at the academic level is crucial to drive economic growth in India.

To ensure entrepreneurship's future success in India, investing in innovation and development is crucial.

The Government’s Role
The Indian government is supporting over 1000 incubation centers through the Atal Innovation Mission, the Department of Science & Technology (DST), and the Department of Biotechnology (BIRAC). Many state governments are also taking initiatives to develop specialized tech ecosystems within their states, such as Kerala's Hub & Spoke model, T-Hub and TSIC in Telangana, CIMP-B-hub in Bihar, and Mission Startup Karnataka in Karnataka. Additionally, the top 100 government academic institutions have incubators, set up for the past two decades, which conduct entrepreneurship courses, hackathons, boot camps, and other events. The government has been playing an active role in fostering the country's startup journey.

However, it is essential for the government to incentivize the funding ecosystem, particularly at angel and seed levels. For example, the central government should consider angel investing like Income tax 80G benefit, capital can be tax-exempt, which will turbocharge the angel investment ecosystem. As tier-II cities like Pune, Surat, and other places are fast evolving into tier-I cities, there is enormous potential for these regions to be the next economic and technological growth engines of the country. Although the central government has ambitious plans of developing 100 smart cities across the country, focusing more on developing the tier-II cities with the help of local governments will result in the creation of a stronger entrepreneurial ecosystem within the country and drive rapid economic growth.

Future Prospects
In the future, the manufacturing and infrastructure sectors will receive greater emphasis, but the necessary capital will come from existing businesses. Consequently, most startups will likely avoid these industries. However, the technology sector, particularly in AI, fintech, and other niche areas, has enormous potential for growth and innovation in the coming days.