Relevance: GS-3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Key Phrases: NITI Aayog, AIM-PRIME, Atal Innovation Mission, Entrepreneurship, Make-In-India, Mentoring, Hiring, Funding, SAMRIDH scheme, Start-up India Seed Fund, Start-up India Initiative, ASPIRE.

Context:

• The Central government is committed to making India a leading global innovation economy, said Union Minister of State for health and family welfare while launching Atal Innovation Mission- Program for Researchers for Innovation, Market Readiness and Entrepreneurship (AIM PRIME) playbook & start-up showcase at Dr. Ambedkar International Centre on May 10th.
• The Central government has recognized ‘out-of-the-box thinking’ and initiated Make-In-India program that has boosted the health and medical technology sectors. In the coming decade, India is poised to be a major exporter of health care products including medical devices, diagnostics, protein-based biologics, traditional medicine, etc.
• During the pandemic when healthcare took the centre stage, the start-ups rose up to the occasion and made important contributions in diagnostics, PPEs, ventilators and last mile vaccine delivery. This demonstrated the potential of Indian start-ups in solving problems in the Indian healthcare sector.

Challenges Faced by Innovations and Start-ups in India:

• Culture: Entrepreneurship and startups are only a recent phenomenon in the country. It is only in the last decade and half that people in the country have moved from being job seekers to job creators. Doing a startup is tough and every country sees more failures than successes. More often than not an entrepreneur needs to be prepared to face failures and unprecedented hardship. However, culturally we are not groomed to fail and failure is frowned upon.
• Mentoring: For a startup, it is very important to have mentors who have been through a similar process of starting or have business experience. A great mentor is often what separates success from failure by providing valuable inputs. However, there is no formal mechanism to mentor startups in the country. Every mentoring that happens is on an ad-hoc basis.
• Policies: Government is the single largest enabler of the entrepreneurial ecosystem. The government’s role in ease of doing business and helping companies is vital to ensuring success. It is uncannily difficult to start a business in India and myriad laws and regulations mean it takes about 30 days to comply compared to just 9 days in OECD countries. For startups to thrive and succeed, the government has a lot to do and understand the importance of entrepreneurship in economic development.
• Hiring: In an uncertain economy where one is not sure about demand, for a startup, it is particularly difficult to make correct estimates of the number of employees needed. This, however, is a minor problem where the biggest issue is about finding skilled manpower.
• Funding: Capital and access to capital have been a perennial problem for startups. While, of late angel investors, venture capital, and private equity have brought succour to some extent, a large number of startups still grapple to raise funds from institutional setup.

Source: Live Mint

Mains Question:

Q. Discuss the challenges faced by Innovations and startups in India. Suggest measures to tackle these challenges.