India has a very high potential for startups, however, there has been limited success because of various challenges. Discuss.

There is no common definition for startups in India, however, the Income Tax Act defines startups as those companies, that are registered for less than 10 years and have a total turnover not exceeding 100 crores in any of these years.

India is a young country with an average age of around 28-29 years. Thus, there is an immense potential for entrepreneurship in India.

Opportunities:

  • A large pool of educated workforce in IT skills, etc
  • Policy push by the government by improving ease of doing business, startup India programme, etc
  • Tax rebates, huge potential for export especially in Pharma, IT and electronics sector
  • Population in rural areas can be kept for non-agriculture employment in agri-processing-based startups.
  • Push for innovation with policies like make in India

However, to tap the full potential, there are several challenges that need to be overcome:

  • Linkages to market, export, supply chains, etc.
  • Bank credit
  • Logistics cost is very high
  • Text issues like angel tax on investors.
  • Issues of intellectual property rights. A long time is taken by the patent office to clear an application.
  • cost of electricity, raw material, labour laws, clearances.
  • Economies of scale not achieved.

India has immense potential for startup development, it provides a chance to transition from an agrarian economy to a knowledge economy.

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