A Study On Impacts Of Start-up On Indian Economy
By Nishigandha Gamare , MBA Marketing Batch 2021-23, Jankdidevi Bajaj Institute Of Management, SNDT Juhu.
Introduction:
Technical improvement significance made easy of our lives and changing the face of the staup. Startup has the essence and centers of innovation for Indian market that set to play vital role as a booster in the growth of economy and great way to enhance employment. However, more important aspects are the technical enhancement they bring to the country. Startup involves dealing with new technology which generally lies at the highest end of value addition chain. With more and more startups prepared India tends to world leader in skilled work. In the open world different countries are taking different initiative to link up their business with Indian startup in all sectors. Such joint venture can attract to foreign investors which can boost economy. The work made attempt analyses the contribution of startups in economy by the way of employment creation and GDP
Literature Review:
Startup India has been promised an initial capital of 10K crore over a period of four years from the government. This seed capital is capable of attracting tenfold investment by 2022. Credit guarantee for startup lending is another booster. Startup plan unfolded on January 16, 2016 in front of domestic and international entrepreneurs. Internet-based businesses from food to fashion, health to education, and travel to payment platforms- all have taken Centre stage recently. Industry expectation from the Government is reciprocal. Few industry leaders who are championing Startup India want high bandwidth, tax breaks on budget smartphones supporting vernacular languages, simpler KYC norms, and improved access to electricity and credits. They are interacting with policy makers to weed out regulations which act as a brake to investments. Crisp documentation is a pipedream for the young, technology savvy, smart entrepreneur. The developed countries have worked hard to make startup operations simple. It is this backdrop which makes policy making challenging and interesting enough for the government of the day. The Prime Minister unveiled a 19-point agenda to take forward the startup culture. The action plan included tax sops, ease-of-doing business, innovation to help entrepreneurs to startup and grow their business (Forbes India, Startup India, January 18,2016).
Government Initiative
Indian government is serious in promoting entrepreneurship at the startup level and has taken a
number of initiatives to ensure appropriate support. In this aspect it is relevant to mention ‘Make
in India’ campaign introduced in September’14 to attract foreign investments and encourage
domestic companies to participate in the manufacturing sector. The government increased the
foreign direct investment (FDI) limits for most of the sectors and strengthened intellectual
property rights (IPRs) protection to instill confidence in the startups .In order to make the country
as number one destination for startups, Government of India (GoI) has introduced a new
campaign called ‘Standup India’ in 2015 aimed at promoting entrepreneurship among women
and to help startups with bank funding. Another commendable and far reaching initiative is
‘Digital India’ introduced in 2015 to ensure government services are made available to every
citizen through online platform that aims to connect rural areas by developing their digital
infrastructure which translates into a huge business opportunity for startups
Indian government is serious in promoting entrepreneurship at the startup level and has taken a
number of initiatives to ensure appropriate support. In this aspect it is relevant to mention ‘Make
in India’ campaign introduced in September’14 to attract foreign investments and encourage
domestic companies to participate in the manufacturing sector. The government increased the
foreign direct investment (FDI) limits for most of the sectors and strengthened intellectual
property rights (IPRs) protection to instill confidence in the startups .In order to make the country
as number one destination for startups, Government of India (GoI) has introduced a new
campaign called ‘Standup India’ in 2015 aimed at promoting entrepreneurship among women
and to help startups with bank funding. Another commendable and far reaching initiative is
‘Digital India’ introduced in 2015 to ensure government services are made available to every
citizen through online platform that aims to connect rural areas by developing their digital
infrastructure which translates into a huge business opportunity for startups
Indian government is serious in promoting entrepreneurship at the startup level and has taken a number of initiatives to ensure appropriate support. In this aspect it is relevant to mention ‘Make in India’ campaign introduced in September’14 to attract foreign investments and encourage domestic companies to participate in the manufacturing sector. The government increased the foreign direct investment (FDI) limits for most of the sectors and strengthened intellectual property rights (IPRs) protection to instill confidence in the startups .In order to make the country as number one destination for startups, Government of India (GoI) has introduced a new campaign called ‘Standup India’ in 2015 aimed at promoting entrepreneurship among women and to help startups with bank funding. Another commendable and far reaching initiative is ‘Digital India’ introduced in 2015 to ensure government services are made available to every citizen through online platform that aims to connect rural areas by developing their digital infrastructure which translates into a huge business opportunity for startups
Indian government is serious in promoting entrepreneurship at the startup level and has taken a
number of initiatives to ensure appropriate support. In this aspect it is relevant to mention ‘Make
in India’ campaign introduced in September’14 to attract foreign investments and encourage
domestic companies to participate in the manufacturing sector. The government increased the
foreign direct investment (FDI) limits for most of the sectors and strengthened intellectual
property rights (IPRs) protection to instill confidence in the startups.In order to make the country
as number one destination for startups, Government of India (GoI) has introduced a new
campaign called ‘Standup India’ in 2015 aimed at promoting entrepreneurship among women
and to help startups with bank funding. Another commendable and far reaching initiative is
‘Digital India’ introduced in 2015 to ensure government services are made available to every
citizen through online platform that aims to connect rural areas by developing their digital
infrastructure which translates into a huge business opportunity for startups
Scope and Characteristics of the Indian Market
India is often described as “the posterchild of emerging markets” for its vast commercial potential for startups. In a country with a population of nearly 1.3 billion people, even niche products can have significant market potential. In the 1990s, economic reforms moved India towards a more market-based economic system. Since this liberalisation, the overall economic development has been dynamic and as of 2017, the Indian economy had a GDP of US$2.726 trillion. With a GDP growth of 7.0 percent in 2018 India is one of the fastest-growing large economies in the world. Therefore, the Indian market is perceived as being capable of offering an abundance of opportunities for startups.
As the Indian economy continues to grow, incomes and purchasing power are increasing steadily. Rising consumption is driven by the growth of upper-middle income and high-income segments of the population, which will grow from being one in four households today, to one in two households by 2030. Along with this, the demographics of the population are another advantage. Half of the country’s population are below the age of 25 years and the youth is aspirational.The nearly 700 million people born through the late 1980s to the 2000s carry material ambitions and have the ability to spend and make those goals a reality. On the other hand, if solutions are successful in addressing the needs of diverse customers pan-India, they can likely find market uptake in other geographies such as Africa and Latin America, and even the developed world. In addition, many Indian startups do not only look at Indian problems, but offer customised solutions for markets abroad. For instance, Indian startups often do pilots and serve customers in the United States, where the user base has a much higher ability to pay.
Technological Change
There is a huge need for innovative solutions, particularly those that alleviate poverty and benefit a large number of people. Given the scale of India and its resource constraints, low-cost, high-impact solutions are required. Technology startups play a crucial role in accomplishing this, because of their potential for scalability and exponential growth. Over the last few decades, technological change has reduced the cost of building digital products and has provided access to consumer markets. In the past, companies had to set up physical infrastructure to interact with customers, which implied high customer acquisition costs that proved prohibitive for small companies in the same field as established corporations. As India improved its digital connectivity, market access barriers have been brought down. The broadband penetration is increasing fast and the number of wireline subscribers in 2018 is expected to increase by 44 percent over the next four years. The number of internet users was pegged at 483 million in 2018 and is projected to reach 666.4 million in 2025. In addition, the government initiative, “Digital Saksharta Abhiyaan”, was started to promote digital literacy and help people become more knowledgeable about the digital world.Consumer Satisfaction and Loyalty
Online Shopping Motives during the COVID-19 Pandemic
Frommeyer, B., et al. (2020) stated that because of the COVID-19 Pandemic, existing ways of behaving and structures are being addressed. As emergencies can set off central financial and cultural changes, organizations need to figure out buyer conduct at this specific time. The patterns laid out during this emergency might stay stable into the future, causing genuine ramifications for physical stores because of a quick expansion in web based business. They accept that during the ongoing emergency, clients are investing more energy on the web, and we observe that libertine thought processes apply the most grounded impact on age Y and Z shoppers’ social aims to shop on the web. Moreover, they observe that outside regulating pressures impact people buy goals, while a nearby informal organization comprising of loved ones doesn’t. Their review recommends that organizations can instigate buying conduct by decisively tackling regulating impacts and that complex web-based stages and straightforward correspondence are critical during this emergency.
Companies Increasingly Seek to Engage in Open Innovation
In an increasingly uncertain and fast-moving business environment, large companies face pressures to innovate ever more rapidly. Their challenge is twofold: to innovate incrementally to grow their existing business, while understanding ongoing changes in their industry and making provisions for more radical innovations. The latter is proving to be difficult, and more large companies realise that they cannot simply rely on internally generated knowledge and on building everything themselves. As this ‘closed innovation’ paradigm loses its relevance, more companies turn towards open innovation approaches.Thus, companies in India are increasingly reaching out to startups to increase their own innovativeness. They enter into exchange and strategic partnerships with startups, while supporting them with various corporate-specific resources.[xix] These engagements can be mutually beneficial.[xx] While a few years ago, corporate managers needed to be convinced of the benefits of working with startups, there has been a recognisable change in attitudes and manyestablished companies today acknowledge the competitive advantages of startups, especially in terms of their speed and passion. Acceptance of Online Shopping
Tomar, R. S., et al. (2021) found out that perceived usefulness and perceived ease of use both dimensions have increased customer acceptance of online shopping. Perceived usefulness and ease of use of the online shopping has reduced post purchase dissonance of the customers. Also, these dimensions are very strong and playing significant role in reducing post purchase dissonance of the customers. It has been found that there is no difference in the post purchase dissonance of the customers across gender. While, there is a significant difference in the post purchase dissonance across age groups especially between youth of age group 17-20 years and 25 and above years.
Factors Affecting the Growth of Startup
Building and Scaling an Indian Startup The challenges faced by Indian startups begin with essentials such as hiring and managing a team, dealing with customers, and developing a marketing strategy. In particular, many Indian founders have a technical background and lack business knowledge. For running a startup, a significant amount of working capital is required. Many startups, especially at early stages, are bootstrapped, i.e. self-funded through the founders’ own savings, or using capital from friends and family. Some startups have enough paying customers, so that they are or become self-sustaining through the revenue and profits they generate and are able to grow organically. Thus, while not every startup needs external investment, many of them start looking for investors as they plan to scale their business.
Taking Products to Market and Low Willingness to Pay
A further challenge for startups is to take their products to the market as Indian markets appear difficult to penetrate. One reason is the competitive landscape: Often, many firms are already present and many more enter the market, including copycats. A second reason is that startups are at a disadvantage compared to large companies. On the one hand, this is due to the fact that big market players are more capable of dealing with bureaucratic regulations. On the other hand, public procurement is seen as weak and government prefers to sign contracts with established companies. However, if startups are promoted by large companies (for instance, through partnering with them in the context of their open innovation initiatives), they may find it easier to capture a market. A third reason is that communication with and retention of customers takes time and effort. Convincing Indian customers is difficult, especially if the startup develops innovative products and caters to new market segments.
Conclusion:
The success of Startup India campaign hinges on initiatives like faster and easier registration of Companies, self-certification for many legal requirements, zero inspection for three years, funding for patents, and speed of patent protection. It is important to add provisions which aid the closure of dead companies within 90 days. Indian lawmakers could do this under the new bankruptcy bill. The central theme is that ease of starting and ending is critical in the context high rate of startup mortality. This research paper found that respondents supported the idea of funding for incubation centers. The Government proposal do so, across Universities, innovation movements, research parks and industry parks is on similar lines. The promise of an initial capital of ten thousand crores over a period of four years from the government is capable of attracting tenfold investment by 2022. Credit guarantee for startup lending is the booster dose required to galvanize Indian industry. Incentives in the form of tax holiday for three years are a benefit worth considering. It is also apt to considerequating capital gains with the regime in the listed market. Most importantly, foreign exchange regulations are to be in tune with investor needs, so that the best do not register outside India. But in global market lots of challenges on sustainability, technology, regulatory and financial etc.
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