Gujarat has again emerged as the best performer in developing startup ecosystem for budding entrepreneurs, according to the ranking of states and Union Territories (UTs) in 2019 done by the department for promotion of industry and internal trade (DPIIT).

Among all the northeast states except Assam and all UTs except Delhi, Andaman and Nicobar Islands has emerged as the best performer.

The ranking was released by Commerce and Industry Minister Piyush Goyal.

Startup ecosystem in India

Startups in India are now spread across the length and breath of the entire country. The shift in global focus is on promoting women entrepreneurs and fostering an inclusive and innovative environment. 

Efforts are also being made by diverse stakeholders in the Indian startup ecosystem to elevate domestic policies in concurrence with global trends.

Two decades ago, there were only a few active investors and a limited number of support organisations, such as incubators and accelerators. However, in the past decade. There has been a significant increase in both investment activity and infrastructure facilities to provide the much-needed impetus to the expansion of the Unicorn tribe. 

A Unicorn is a term used to indicate a privately held startup company with a valuation of over $1 billion. In 2014, there were only five Unicorns in India. The number has increased significantly to 32 as of 2019, thereby making India the third largest ecosystem of Unicorns in the world after the US and China. 

It is estimated that the number of Unicorns in India will increase by three times, to 95 in 2025 with a cumulative valuation of approximately $390 billion. 

Startup ecosystem expansion is driven by rapid growth of startup hubs in tier 2 and tier 3 cities such as Ahmedabad, Jaipur, Kolkata, Kochi, Kanpur Chandigarh and Coimbatore. 

The role of the state government becomes very important in developing the necessary infrastructure and support to foster the startup ecosystem. Due to the given constraints of infrastructure and supporting services, India needs to build upon low-cost and high-impact solutions.

Although there has been an increase in angel and venture capital funding, the amount invested must be augmented. It is crucial that the ecosystem is well integrated to connect startups to fund houses and other stakeholders.

The startup ecosystem in India comprises a multitude of stakeholders. While the founders, entrepreneurs and their companies play the most important role in the pyramid, other stakeholders have proven to be drivers of growth in their entrepreneurial stories.

These stakeholders include – funding organisations, governments, universities, service providers, local and global market forces, intellectual property drivers and other support organisations. 

Startup India

Startup India initiative was announced by PM Modi on August 15, 2015.

It is a flagship initiative of the government intended to catalyse startup culture and build a strong and inclusive ecosystem for innovation and entrepreneurship in India. The Startup India Action Plan was launched on January 16, 2016 with the objective of supporting entrepreneurs, building a robust startup ecosystem, and transforming India into a country of job creators instead of job seekers. 

Department for Promotion of Industry and Internal Trade (DPIIT) acts as the nodal Department for coordinating the efforts of all central government departments and state governments in carrying this plan forward.

The definition of startups was modified in 2019 with a view to include more entrepreneurs in its ambit. An entity is now considered as a startup up to ten years from the date of its incorporation/registration, with an annual turnover not exceeding Rs 100 crore for any of the financial years since incorporation/registration.

As many as 28,978 startups across 565 districts had been recognised under Startup India as on March 31, 2020. 

As on December 31, 2019, an employment data of 306,848 jobs has been reported by 24,848 startups with an average number of 12 employees per startup.

State/UT Startup Ranking Exercise

The major objectives of the ranking exercise are:

* Highlight the policy intervention by states for promoting startup ecosystem.

* Foster competitiveness among states to create the best startup ecosystem.

* Facilitate states to identify, learn and replicate good practices.

The ranking exercise is aligned to the objective of the Startup India initiative that seeks to have a ‘startup in each block and each zila in the country’. 

The States’ Startup Ranking initiative has provided the required momentum to the startup initiatives by channelising efforts through a guiding framework for states.

The second edition of State/UT Startup Ranking Framework was launched on February 18, 2019. The framework is spread across seven areas of intervention with a total of 30 action points, as compared to the 38 action points in previous years’ ranking framework. 

The seven pillars are: 

Institutional Support

Simplifying Regulations

Ease of Public Procurement

Incubation Support

Seed Funding Support

Venture Funding Support

Awareness & Outreach.

Each pillar has been assigned weightage as per its importance and post-consultation with startup ecosystem stakeholders.

To establish uniformity and ensure standardisation in the ranking process, states and UTs have been divided into Category-X and Category-Y. 

The Y category entails all UTs, except Delhi, and all states in northeast India, except Assam. Whereas, Category X contains all other states.

This years’ ranking exercise saw participation from 22 States and three Union Territories.

All the states/UTs have been grouped into five grading categories based on the percentile score ranges.

Best performer: 100 percentile

Top performers: More than 75 to less than 100 percentile

Leaders: More than or equal to 30 to less than or equal to 75 percentile

Aspiring leaders: More than 10 percentile and less than 30 percentile

Emerging startup ecosystems: Less than or equal to 10 percentile.

States/UTs Startup Ranking Results 2019

Category X

Best Performer: Gujarat

Top Performers: Karnataka and Kerala

Leaders: Bihar, Maharashtra, Odisha and Rajasthan

Aspiring Leaders: Haryana, Jharkhand, Punjab, Telangana and Uttarakhand.

Emerging Startup Ecosystems: Andhra Pradesh, Assam, Chhattisgarh, Delhi, Himachal Pradesh, Madhya Pradesh, Tamil Nadu and Uttar Pradesh.

Category Y

Best Performer: Andaman and Nicobar Islands

Leader: Chandigarh

Aspiring Leader: Nagaland

Emerging Startup Ecosystems: Mizoram and Sikkim.

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