During the pandemic, the importance of startups in fostering innovation in response to the fast-shifting global environment was made abundantly clear. They not only helped save lives but also paved the road for the recovery of the economy.

Start-ups are poised to become India’s economic backbone in the next 25 years. India’s start-up scene is blazing a trail to the top of the world’s economic ranks. With over 100 unicorns and counting, valued at a staggering $340 billion, India’s start-up ecosystem is already the third-largest in the world. But this is just the beginning.

Start-ups now achieve $100 million in revenue in just five years, a significant improvement from the 18 years it took in 2000, reveals a new report by RedSeer Strategy Consultants. As these young companies continue to mature and grow, they are expected to have a significant impact on both financial growth and societal progress, propelling India forward on the global stage.

Startups - The Future of India
Source: Memoori.com

Role of Startups in the growth of the Indian Economy

  1. Employment Creation

India has 112 million working-age people between the ages of 20 and 24, compared to China’s 94 million. In the absence of government jobs, this demographic dividend is accelerating the country’s startup culture. As of August 29, 2022, India had emerged as the world’s third-largest startup ecosystem, with over 77,000 DPIIT-recognized startups spread throughout 656 districts.

These startups are simultaneously enabling more jobs than large companies or enterprises in the same industry. Therefore curbing the unemployment problems in developing nations like India.

  1. Better GDP

Despite elevated inflation pressures owing to rising global food and fuel prices, Indian Gross domestic product (GDP) is expected to grow by 6.9% in the fiscal year (FY) 2022-23 and 6.2% in FY 2023-24.

As GDP plays an important role in a country’s economic development, it will become feasible to increase revenue domestically and consumer capital can also circulate throughout the nation if we keep promoting and supporting more start-up initiatives.

  1. Democratizing the Technology Benefits

Many startups not only drive innovation and technology but also demonstrate how their benefits reach the most remote customers. Fintech startups are now reaching out to remote areas with their solutions and making financial solutions easily accessible in tier 2 and tier 3 cities. 

Startups - The Future of India
Source: Maritime Gateway

The subtle influence of start-ups on the Indian Economy

  • When a startup creates employment for locals, they also begin to purchase goods and services, increasing the influx of cash and revenue to the government and thus boosting the economy.
  • When several startups are blooming in one location, the market of that geography rises as well. Since many individuals desire to reside there to work, this dramatically changes the infrastructural facilities of that city.
  • When infrastructure upgrades, numerous guesthouses, homestays, food outlets, and transport service unlocks, creating countless job opportunities and increasing the city’s revenue.


Startup-friendly policies in India do not always necessitate large sums of money or incentives. They do, however, need help from successful founders and strategic angels in all stages of development, such as business strategy, community building, and connecting with skilled business mentors.

As India has a massive, diverse population with many talented individuals in search of work, it is essential to develop state ecosystems by establishing a startup policy, startup portal, and helpline within every state. Creating incubation centres, co-working spaces, and entrepreneurial cells, and instilling an entrepreneurial spirit in every student at a young age is even more necessary.

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