Rajeev Chandrasekhar, Union Minister of State for Skill Development, Entrepreneurship, Electronics and Information Technology, has said that the next wave of startups will emerge from Tier-2 and Tier-3 cities.
According to the minister, the government would also launch a Digital India Startup Hub program and establish a Digital India Investment Fund to fund companies.
While interacting with the media in Ahmedabad on his three-day visit to Gujarat, Chandrasekhar said people used to believe that the United States or western Europe were the leading innovators. But according to him, India has demonstrated to the rest of the world that it has the greatest number of unicorns, innovations, investments and businesses in the last three years.
The minister also highlighted the fact that more than 1 lakh start-ups have been founded in the last three years, with 100 unicorns among them.
“Our focus is to see that startups are formed in Tier-2 and Tier-3 cities,” he added.
Bengaluru, Hyderabad, Gurugram, Pune, Mumbai and Chennai are among the cities that have them and these cities are home to 95% of the unicorns. So now, according to Chandrasekhar, the government is putting all of its efforts into ensuring that the next wave of 2-3 lakh startups comes from smaller areas. He noted that the government’s investments “will be on smaller towns”.
On a separate occasion, Piyush Goyal, Minister of Commerce and Industry, had recently urged the National Startup Advisory Council (NSAC) to focus on Tier-2 and Tier-3 cities for venture capital (VC) financing, capacity building, and public awareness of government programs that support startups in such locations.
According to a statement by the Commerce Ministry, “He [Goyal] urged the council members to focus on Tier-2 and 3 cities where limited VC funding is available.”
Goyal, while addressing the Global Unicorn Summit 2022 of the Confederation of Indian Industries, expressed similar thoughts in April this year, asking Indian entrepreneurs to incorporate and list their businesses in India rather than overseas tax havens.
“A little tougher ask probably. But I would once again urge all of you to incorporate in India and list in India. If you have an issue or problem, please tell us about it. We will…make every effort to resolve them,” he added.
New Initiatives
Chandrasekhar, while talking to the media in Ahmedabad, said India is preparing to launch a Digital India Startup Hub program and a Digital India Investment Fund to support startups.
“This year, large Indian companies were hiring from Canada and Australia… So in the coming days, the demand for skilled talent is going to be huge. In December, I was sent to Dubai. Today, UAE wants both blue-collared and white-collared employees from India…” he added.
Earlier in an interview which took place ahead of the Semicon India conference 2022 in Bengaluru, Chandrasekhar was asked how people from places outside Tier-1 cities will become a major part of the tech talent pool in India.
In response, the minister said: “It’s a priority task that the Prime Minister has given our ministry, which is to make sure that these digital opportunities are equally available to a young lad in Ghaziabad, Jharkhand, Srinagar, Kohima, Palakkad or Udupi as much as the youngsters in Bengaluru or Hyderabad.”
“We don’t want the concentration of digital concentration of these digital opportunities in 4-5 cities. It’s a 100% policy objective,” he added.
The Union minister then explained that India’s startup ecosystem is gradually dispersing and refocusing on Tier-II cities. According to him, there is a large network of Software Technology Parks of India (STPI) and startup hubs that are shifting their focus to Tier-2 and Tier-3 cities.
“We are working out a plan to incentivise, prod and encourage technology majors to create virtual developments in these smaller cities. With a mix of work from home and hybrid models, companies do not have to set up huge centers in these places,” he added.
According to Chandrasekhar, the government has approached large investment firms such as Sequoia and stated that “we will take you on the back of our start-up network”, which is now focusing on Tier-2 and Tier-3 cities.
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