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Startup Ranking of States for 2022

By Amigos IAS

Why is it in the news?

  • The Department of Industrial Policy & Promotion recently released the Startup Ranking of States for 2022, assessing the performance of 33 states and Union territories in building robust startup ecosystems.
Category A States (Population more than 1 crore):

·       Best Performers: Gujarat, Karnataka, Kerala, Tamil Nadu

·       Top Performers: Maharashtra, Odisha, Punjab, Rajasthan, Telangana

·       Leaders: Andhra Pradesh, Assam, Madhya Pradesh, Uttar Pradesh, Uttarakhand

·       Aspiring Leaders: Bihar, Haryana

·       Emerging Ecosystems: Chhattisgarh, Delhi, Jammu and Kashmir


Category B States (Population less than 1 crore):

·       Best Performer: Himachal Pradesh

·       Top Performers: Arunachal Pradesh, Meghalaya

·       Leaders: Goa, Manipur, Tripura

·       Aspiring Leaders: Andaman and Nicobar Islands, Nagaland

·       Emerging Ecosystems: Chandigarh, Dadra and Nagar Haveli and Daman and Diu, Ladakh, Mizoram, Puducherry, Sikkim


Startup Ecosystem in India

  • The startup ecosystem is described as a network of interconnected entities, organizations, and resources supporting the growth, development, and success of startups within a specific geographical location.
  • Over the past seven years (2015-2022), there has been significant growth in the startup ecosystem, reflecting a dynamic and evolving landscape.

Regulatory reforms are needed to enhance ease of doing business, ease of raising capital and reduce compliance burden for the startup ecosystem. These include:

  • Startups can be registered as a private limited company, partnership firm, or a limited liability partnership.
  • The startup should not be more than 10 years old.
  • Turnover should be less than 100 crores in any of the previous financial years.
  • A certificate of an eligible business from the Inter-Ministerial Board of Certification of DPIIT is a prerequisite for availing tax benefits.
  • The Ministry of Labour & Employment has allowed startups to self-certify compliance under various Labour Laws.


Significance of Startups

  • Startups are contributing economically, creating wealth, and generating employment.
  • Majority of startups have been growing at a rate of more than 35% for the last two years.
  • About 50% of Department for Promotion of Industry and Internal Trade (DPIIT) recognized startups are from Tier II & Tier III cities, highlighting the decentralized growth of the startup ecosystem.
  • Startups are creating a manifold impact in society by introducing innovative solutions, creating large-scale employment, contributing to economic growth, and garnering huge demand from the private and government sectors.
  • Over the past five years, the number of startups in India driven by women has increased by 4%.
  • About 49% of all DPIIT recognized firms have at least one-woman director.


Challenges associated with Startups in India

  • There are thousands of startups competing for funding, talent, and customers across various sectors.
  • High taxes, stringent labour laws, and bureaucratic delays in obtaining licenses and permits pose significant challenges for startups.
  • Inadequate healthcare and educational facilities, insufficient power supply, inadequate water and sanitation, and poor transportation networks are hindering factors.
  • Despite achieving recognition as Best and Top Performers, Indian states still face challenges in incubation and mentorship support, fostering innovation and entrepreneurship, and planning for a sustainable future.


Related Initiatives

1) DPIIT Schemes inlcude:

  • Fund of Funds for Startups (FFS)
  • Startup India Seed Fund Scheme (SISFS)
  • Credit Guarantee Scheme for Startups (CGSS)


2) Other Initiatives:

  • Innovations for Defence Excellence (iDEX)
  • Innovation and Agri-Entrepreneurship Development Program
  • Atal Innovation Mission (AIM)
  • Promoting Innovations in Individuals, Start-ups and MSMEs (PRISM)


3) Make in India


Way Forward

  • The government is actively promoting initiatives such as ‘Make in India,’ ‘Startup India,’ and MUDRA to boost grassroots GDP growth.
  • There is a need to continually refine and streamline regulatory processes to make it easier for startups to register and operate.
  • Introducing policies that provide tax incentives, subsidies, and other financial support for startups is crucial for their sustenance and growth.
  • Promoting entrepreneurship education and skill development programs is essential to equip aspiring entrepreneurs with the necessary knowledge and skills.

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