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India’s rise from an emerging economy to a global startup leader has been rapid and impressive. In a short time, it has become the third-largest hub for innovation and entrepreneurship. A key example is fintech, which has transformed thanks to the JAM trinity. DPI has paved the way for the private sector to innovate. To make India the world’s No 1 startup nation, bold strategies are required.
Future is tech Indian startups must lead innovation in deeptech areas like AI, ML, blockchain, quantum computing and robotics. We need to build multilingual and multimodal AI models using our unique data, free from biases. We should innovate quickly, cheaply and efficiently, and embrace open-source solutions to do more with less.
India also imports clean-tech products: 80% of solar tech, 85% of batteries, 65% of EVs, and 50% of wind power equipment. By 2030, the value of these imports could hit around $100 bn, and by 2040, it could rise to $225 bn each year. To secure our economy and protect the environment, it’s vital that India develops and produces these technologies locally, in a way that’s cost-effective and competitive.
Deeptech and clean-tech sectors need patient investment. To help them grow, we need a fund of funds (FoF) that can share risks and invest money into smaller funds called AIFs. These smaller funds will then invest in innovative startups. This has been announced in the budget and needs quick implementation.
Indians for Indians Currently, about 80% of funding for Indian startups comes from foreign investors. India must mobilise its own resources – like insurance companies, pension funds and large family businesses – to invest more. Ideally, around 2.5-3% of their funds should go into startups.
Academia meets industry Professors should be allowed to own equity in startups in exchange for expertise, encouraging more innovation. In 2024, India paid $14.3 bn in IPR royalties but only earned $1.5 bn from IPR licences – indicating that we need to do much better at turning patents into market-ready products. Strengthening the link between research and business will help ideas become real, marketable innovations.
Policy for innovation India has made key changes in sectors like space, geospatial mapping and drones. Startups like Dhruva, Agnikul, Skyroot, Pixxel and Cosmos are leading in space tech. Now, we need reforms for small modular reactors (SMRs).
Diaspora dividend Amid tightening immigration policies in the West, India must tap into its diaspora. To do this, India should launch ambitious programmes, inviting 500 distinguished academics from the top 100 universities to spend at least six months a year at Indian institutions over five years. They should be provided with a substantial one-time research budget to set up labs or start new projects, with teaching optional.
Additionally, we should create 1,000 research sabbaticals for faculty from the top 200 universities, supported by attractive budgets and annual top- ups. Both initiatives must encourage collaboration with local academics and mentorship for PhD students, and are integral to the ₹1 lakh cr investment in R&D.
Bridge skill gap India produces around 2.5 mn STEM graduates each year, but there’s a mismatch between skills these graduates have and the needs of the startup ecosystem – especially in AI, ML, big data, product development and cybersecurity. To bridge this talent gap, we must upskill workforce, update curricula and tailor course offerings to match the changing demands of markets.
Ethics and trust Startup founders and entrepreneurs must follow high standards of corporate governance, financial management and ethical behaviour – ideally through self-regulation. This will help startups gain trust with stakeholders, attract investors and ensure sustainable growth.
If India aims to become a developed nation and reach a $30+ tn economy by 2047, startups will need to be the main drivers. To achieve this, the focus must be on building cutting-edge tech, developing self-reliant industries, strengthening academia-industry links, reforming key sectors like space and nuclear, attracting top global talent, and rewarding a culture of long-term investment and ethical growth.
The writer is India’s G20 sherpa
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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