Back-to-back announcements by textiles ministry & DRDO augur well for growth for startup economy

On June 13, the textiles ministry said it has approved funding for 7 startups engaged in the technical textiles arena under the National Technical Textiles Mission’s (NTTM) GREAT (Grant for Research and Entrepreneurship across Aspiring Innovators in Technical Textiles) initiative to promote innovation. Under the GREAT scheme, the Union government would provide a maximum funding support of Rs 50 lakh to each startup.

On June 14, the Defence Research and Development Organisation (DRDO) said that a woman entrepreneur-established startup—which had received funding support under the Technology Development Fund (TDF) scheme of the DRDO—has successfully developed an artificial intelligence (AI) tool that “marks a significant advancement in biometric authentication technology, offering enhanced accuracy and reliability in identifying individuals.” The DRDO added that one of its laboratories, the Centre for Artificial Intelligence and Robotics (CAIR), had provided technical guidance and mentoring for the development of the AI tool by this startup. 

Following these back-to-back announcements by the textiles ministry and the DRDO, which, by themselves, augur well for the growth of India’s startup ecosystem, the question that naturally arises is whether, going forward, more ministries and departments of the government would also come forward with their own show of support for India's new-age business arena.

Given the vital role that startups can play in the India growth story, it may be presumed that the decisions taken by the textiles ministry and the DRDO would be emulated by other ministries and departments of the government also, and that too soon. 

The expectation in this connection is based on two factors. With Startup India being a signature initiative of the Narendra Modi-led government, authorities are likely to adopt a whole-of-government approach to ensure that local startups can achieve their highest potential. The other reason for optimism on this front arises from the fact that startups had found a prominent mention in the BJP’sManifesto for the just-concluded general elections.

So, what could be the possible gains from more ministries and departments following in the footsteps of the textiles ministry and the DRDO when it comes to doing their own bit for the startup domain?

Multiple ministries and government departments stepping up support for startups may further add to the vibrancy of India's startup ecosystem. It could make the startup culture establish deeper roots outside the traditional startup hotspots in India, with more innovative startups potentially coming up even in the smaller towns and cities. Moreover, such a measure could have a positive impact on the creation of more, new, and better-quality jobs even in tier-II and tier-III towns and cities.       

The likely availability of increased government funding for startups working on the big national challenges could also encourage a larger number of young entrepreneurs across India to focus their attention on addressing the tough issues rather than choose to focus only on the comparatively easier sectors. The reason for this being that a rise in government funding for startups engaged in devising solutions for complex national problems would result in these businesses being provided with the patient capital necessary to become viable and scalable propositions.

The investor fraternity in India’s startup arena – which includes the venture capital (VC) funds, private equity (PE) firms, etc. – have thus far largely shown a preference for pumping in big money in startups based in select locations and operating in specific businesses. Until now, startups in the edtech, fintech sectors, etc. have been the biggest recipients of funding from VC funds, PE firms,et.al.

Startups have already emerged as one of the best examples of what India’s young people can achieve and given us plenty of reason to go ‘vocal for local’.  These new-age businesses deserve to be backed more in their growth journey so that they, in turn, can contribute further towards improving our quality of life.

Increased government funding support for startups is one of the best ways to do that and one would hope that authorities would not hesitate to take all the appropriate steps in this regard. 

(Sumali Moitra is a current affairs commentator.)