Indian start-up economy has the potential to become one of the biggest tech markets in the world

India has the potential and infrastructure to become one of the biggest tech markets in the world!

With +4.500 tech startups, India is the third-largest tech startup hub in the world already. In our view the increase of quality startups and initiatives by the Indian government indicates that the time-to-market to get involved is just right.

The last 2 years were driven by consolidation and transition in India, where tech startups went from a gold rush-like mentality into an ecosystem with more quality instead of quantity. We saw the spectrum of innovation by startups expanded across many verticals of the Indian economy. We think India is in full speed to scale up the startup ecosystem, creating new ways for wealth and job creation.

On the one side through government support (i.e. startup hubs, incubators, grants for startups etc.) and on the other side boosted by collaborations with big and established companies and Venture Capital.

India has around 1.3 billion people and a huge human capital. From our experience young Indians become more and more educated and have a great work ethic and innovative mindset. They have the potential to not only create new innovative startups regarding Drones, Waste Management, Artificial Intelligence, AR and VR but also scale established business models i.e. in e-Commerce.

Still, we see that many of the startups lack a long-term vision and were created with the goal to have a quick exit to larger companies. In our opinion copycat ideas, poor strategy and lack of funding and scalability affect the startup ecosystem.

A lot of startups try to replicate Western business models that don’t have a market in the country. Also, early stage startup still have limited access to capital and getting an investment without a working product is difficult. Many startups that raise funds have the challenge to keep the cash burn rate low.

Altogether, India reached the point where the advantages outweigh the disadvantages and the development of the country ensures a sustainable value creation in the tech startup sector in the long-term. In the short-term it is still a high-risk but also high-reward industry.

VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.

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