Incentivizing R&D in start-up ecosystem – The need of the hour for a boom in country’s economy

Recently, Shaktikanta Das, RBI governor identified five growth drives that the government can prioritise for the overall economy boom of the nation, among which is the start-up ecosystem of the country. This inevitably begs the question – Why start-ups and why not the MNCs?

Role of start-ups in economic prosperity

Among the many significant contributions start-ups make is the creation of new job opportunities. In fact, global data has revealed that start-ups create more jobs in our country than the large scale enterprises. In addition, the proliferation of start-up ecosystem will lead to more revenue generation domestically and an increased flow of consumer’s capital within the Indian economy.

An obvious example of a once-a-home-grown business that has elevated India’s economy is the e-commerce giant Flipkart. Currently, it makes over 40 million deliveries in a month and houses around 1, 20,000 employees across the country. In addition to this, it has facilitated a favourable ecosystem for MSMEs and local manufacturers but this is just the beginning. The company is all set to take the driver seat to boost India’s economy and create a million more jobs in the future.

How has the start-up ecosystem of India fared so far?

The past year may not have been a turning point with respect to funding and deals however, the start-up ecosystem of India has undoubtedly matured as a whole. The sector witnessed a growth in funding amount by 15 percent, bringing India on the globe against the world’s leading start up hubs.

According to Indian Tech Start-up Funding Report 2019, the country has emerged as the fifth most start up-friendly economy in the world based on five factors – human capital investment, R&D, entrepreneurial infrastructure, tech workforce and policy dynamics. However, the R&D funding in start-up ecosystem is comparatively low, leading to lack of innovation. Result? Refraining the sector from reaching new heights.

The lack of innovation is obvious from the fact that many well-established foreign start-ups have become blueprints for Indian start-ups today. Thus, cost-effective innovation solution is the need of the hour and more importantly, India needs to be infrastructure-ready to facilitate the growth of innovation.

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