India’s Startup Engine: Igniting a $30 Trillion Economy Through Innovation
India is poised for an extraordinary leap from an emerging economy to a leading global startup powerhouse. In a remarkably brief period, it has evolved into the third-largest hub for innovation and entrepreneurship. But can we truly build a $30 trillion economy driven by innovation? Let’s explore how India can harness its potential to become the world’s No. 1 startup nation.
The Tech Frontier: Leading Innovation
The Future is Tech
Indian startups stand at the forefront of technological innovation, with a pressing need to excel in deep tech areas like AI, machine learning (ML), blockchain, quantum computing, and robotics. To achieve this, we must develop multilingual and multimodal AI models equipped with our unique data, steering clear of biases. Innovation must be rapid, cost-effective, and efficient, embracing open-source solutions to maximize impact.
The Clean-Tech Challenge
While India is making strides in technology, it still heavily relies on imported clean tech: 80% of solar technology, 85% of batteries, and 65% of electric vehicles (EVs). By 2030, these imports could skyrocket to approximately $100 billion, growing to $225 billion by 2040. To secure our economy and protect the environment, it’s essential to cultivate and produce these technologies locally—competitively and cost-effectively.
Funding the Future: Investment Strategies
A Fund of Funds for Innovation
To nurture the deep-tech and clean-tech sectors, patient investment is crucial. The proposed Fund of Funds (FoF) aims to mitigate risks while channeling capital into smaller funds known as Alternative Investment Funds (AIFs). These AIFs will, in turn, support innovative startups. This initiative, already highlighted in progressive budgets, requires swift implementation.
Mobilizing Domestic Resources
Currently, around 80% of funding for Indian startups stems from foreign investors. It’s time for India to mobilize its own financial resources! Insurance companies, pension funds, and large family businesses should aim to allocate about 2.5–3% of their funds towards startups, empowering local innovations.
Bridging Academia and Industry Gaps
Strengthening Connections
For real innovation to flourish, academia must collaborate with industry. Allowing professors to own equity in startups in exchange for their expertise can bridge this gap. In 2024, India incurred $14.3 billion in Intellectual Property Rights (IPR) royalties but earned a mere $1.5 billion from IPR licenses. This disparity highlights the urgent need to convert patents into market-ready products.
Policy Innovation: Setting the Stage
Transformative Reforms
India has made significant strides in sectors like space exploration and drone technology. Startups such as Dhruva, Agnikul, Skyroot, Pixxel, and Cosmos are pioneering advancements in space tech. However, further reforms are necessary, especially regarding small modular reactors (SMRs), to ensure sustained growth and innovation.
Unlocking the Diaspora Dividend
As immigration policies tighten in Western countries, India must leverage its diaspora. Launching programs to invite 500 distinguished academics from top universities for six-month stints can stimulate innovation. Allocating a substantial one-time research budget for setting up labs or initiating new projects will further enhance this initiative.
Closing the Skills Gap: Workforce Development
Upskilling for Tomorrow
India currently produces 2.5 million STEM graduates annually, yet a significant skills mismatch exists—particularly in AI, ML, big data, product development, and cybersecurity. Addressing this talent gap requires upskilling the workforce and tailoring educational curricula to align with industry demands.
Ethics and Trust: Building a Sustainable Future
Emphasizing Governance
Startups must adhere to rigorous standards of corporate governance, financial management, and ethical behavior. Emphasizing self-regulation can foster trust with stakeholders, attracting investors and facilitating sustainable growth.
The Road Ahead: Vision 2047
If India aims to transition into a developed nation with a $30 trillion economy by 2047, startups must emerge as the primary drivers of this transformation. This ambitious journey calls for:
- Cutting-edge technology development
- Self-reliant industries
- Strengthened academia-industry links
- Transformative reforms in key sectors
- Attracting global talent
- Cultivating a culture of long-term investment and ethical growth
Conclusion
India stands on the precipice of an incredible transformation fueled by innovation and entrepreneurship. By aligning strategies across technology, funding, education, and policy, we can not only envision but also build a $30 trillion economy on the pillars of innovation and creativity.
The writer is India’s G20 sherpa.
Disclaimer: The opinions expressed in this column belong to the writer and do not reflect the views of Economic Times.
