• Gujarat and Karnataka have been ranked as the best performers in developing startup ecosystem for budding entrepreneurs, according to the ranking of states and Union territories by the Department for Promotion of Industry and Internal Trade (DPIIT).

• Among smaller states having a population of less than one crore, Meghalaya has been adjudged as the best performer.

• The rankings are based on the initiatives taken to develop the startup ecosystem for promoting budding entrepreneurs.

• For the third time in a row, Gujarat was ranked as the best performer.

• Kerala, Maharashtra, Odisha, Telangana and Jammu and Kashmir were categorised as the top performers.

• Punjab, Tamil Nadu, Uttarakhand, Uttar Pradesh, Andaman and Nicobar Islands, Arunachal Pradesh, and Goa are in the leaders category.

• States and UTs in the aspiring leaders’ category include Chhattisgarh, Delhi, Madhya Pradesh, Rajasthan, Chandigarh, Puducherry and Nagaland.

• According to the rankings, the emerging startup ecosystems category includes Andhra Pradesh, Bihar, Mizoram and Ladakh.

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.

• The Indian startup landscape has shown tremendous growth over the past decade and has become the third-largest startup ecosystem in the world.

Key statistics:

- 67,128 startups registered with DPIIT

- 643 districts with startups

- 30 states and UTs with startup policy

- 720K+ employment through startups

• Startups do not thrive in isolation. While innovative business ideas are key to the success of a startup, support from various other organisations speed up the growth journey of a startup.

• The essential players that provide support to startups are Incubators, Accelerators, Mentors, Research Institutes, Local and Global markets, and Funding organisations.

Incubators: Incubators are facilitators that help startups grow their businesses, especially in the early stages. An Incubator is like a college for startups. Their focus is to provide support to startups in the form of providing financial assistance, workspace, training, networking, mentoring, marketing, and business management opportunities. Incubators can be state-funded or private, and within various Higher Education Institutions (HEIs).

Accelerators: Startup accelerators provide support to startups in their growth stages. This is usually done through a cohort-based program, providing support through education, mentorship, and funding. Acceleration programs usually culminate in a graduation or demo day. These programs are organized by corporates, incubators, state and central governments, and even HEIs. There are numerous accelerators in India, more than 150 of which are registered on Startup India Hub. 

Mentors: Mentors guide startups throughout their growth journey by sharing knowledge and experiences with young entrepreneurs. They also provide networking opportunities for startups founders. Mentorship is provided by a wide range of experts, including corporate leaders, government officials, academic researchers, and various business leaders. Mentors can also register themselves on Startup India Hub and provide support to startup founders. HEIs also have dedicated mentorship programs for budding entrepreneurs.

Research Institutes: Research institutes provide knowledge support to startups to improve their products and services. In India, IITs have taken the lead and established centres to provide research support to the startup ecosystem.

Local and Global Markets: Access to markets is key to the growth journey of startups. Three major market resources for startups are corporates, government, and foreign markets. The government has been a proactive player in providing market access support to startups by simplifying public procurement rules and giving startups access to the Government e-marketplace (GeM) portal. Startup India has collaborated with various international stakeholders to promote startups in the international market. This initiative has enabled Startup India to support over 150 corporate and government departments in scouting startups and providing dedicated support and benefits worth Rs 25 crore. The government, corporations and investors support startups with initiatives such as soft-landing programs, which help in the launch of products and services in new markets in a controlled manner.

Funding: Funding refers to the money required to start and run a business. It is a financial investment in a company for product development, manufacturing, expansion, sales and marketing, office spaces, and inventory. There are multiple sources of funding available for startups. However, the source of funding should typically match the stage of operations of the startups. Raising funds from external sources is a time-consuming process and could take over six months to convert. The type of funding can be in the form of equity, debt, or grants.

Ranking of States’ Exercise 2021

• States’ Startup Ranking Framework (SRF) is an ever-evolving tool aimed at identifying the relevant parameters to grade the startup ecosystem of States and UTs. The categorisation of states and UTs into two different categories was introduced in SRF 2019, to bring all states and UTs on a level playing field.

• The Department for Promotion of Industry and Internal Trade (DPIIT) has been conducting the States’ Startup Ranking Exercise since 2018 to facilitate the ease of building a startup and doing business across the country. 

• The exercise has grown in its impact over the last three editions, with 31 participating states and UTs this edition, the highest till date. 

• The State Startup Ranking Exercise aims to support states and UTs in developing their startup ecosystem and learn from the best practices in each state and union territory.

• The consideration period for the third edition of the States Startup Ranking Exercise was  October 1, 2019 to July 31, 2021. 

• The evaluation committee across 14 meetings assessed each document and was composed of representatives from 19 government departments and 29 non-government startup ecosystem stakeholders, for fair and transparent evaluation.

• The participants were evaluated across seven broad Reform Areas consisting of 26 Action Points ranging from Institutional Support, Fostering Innovation and Entrepreneurship, Access to Market, Incubation support, Funding Support, Mentorship Support to Capacity Building of Enablers. The exercise plays a crucial role in easing the business environment for startups in the country.

• The States Startup Ranking 2021 highlighted the support being extended by over 30 states and UTs through startup policies to the ecosystem. 

• There were only four states with startup policies prior to 2016. The state startup teams have been extending support across mentorship, incubation and funding. Moreover, feedback was gathered from more than 7,000 beneficiaries through surveys made in 13 different languages to grasp the real situation at the execution level.

• Four states of West Bengal, Sikkim, Haryana and Jharkhand and UT Lakshadweep did not participate in the exercise.

• The states and UTs were also ranked under these five categories based on the population of less than one crore.

• The states and Union Territories have been placed alphabetically within each category. Additionally, in each reform area, the states who are recognised as Leaders for their exceptional work in the particular reform area are also shared.

Performance categorisation

Based on the performance of the states and UTs in various reform areas, they have been categorised into five groups. The score of each state and UT is converted into percentiles which shows the relative performance of each state and UT compared to others.

i) Best Performers (Percentile: 100)

ii) Top Performers (Percentile: 60-99)

iii) Leaders (Percentile: 30-59)

iv) Aspiring Leaders (Percentile: 11-29)

v) Emerging Startup Ecosystems (Percentile: Up to 10).

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