India is the 7th largest and the fastest growing economy in the world, growing its GDP at 7.1% annually. This economy is still however 1/8th the size of the U.S or a fifth of the size of neighbouring China and still has a long way to go to be a global leader. It is very hard for a country of the size of India to maintain the growth rate as it has to navigate the quagmires associated with any emerging economy. I personally feel that a catalyst, in the form of increasing entrepreneurial activity, is much needed and will bring with it a radical change to the economy.

India currently ranks third in the number of startups per country and the number is growing every day. In the last few years, the activity has been spurred because of an increase in awareness, better economic reforms, and foreign investment. Close to $3.5 billion has been invested in startups in 2015 helping to boost the entrepreneurial interest. The country’s development has benefited largely from this spurious growth. eCommerce has seen the highest number of startups followed by other consumer services, the Internet, and mobile applications.

Entrepreneurial activity is the much-needed shot in the arm for a country’s development. It brings with it a flurry of innovation, technological development, and employment at a much rapid pace compared to traditional legacy businesses. Startups help to challenge the status quo by aiming to improve the standard of living or ease of doing business. These entrepreneurs need to have the necessary support systems in place to ensure that they can operate easily and quickly. The entrepreneurial ecosystem is responsible for transforming a country’s technological development single-handedly. There are examples of places like the Silicon Valley where the government and the tech companies simply provided the right environment and support which led to entrepreneurial activity making the Valley lead the world in global technical innovation.

The impact of innovative entrepreneurial activities has been far reaching on the country’s development. Recently, Paytm, an eCommerce and digital wallet platform, has been in news after the demonetisation move. Such innovative solutions are helping the country’s move towards promoting cashless transactions. Companies such as Ola and Flipkart have helped in revolutionising the transportation and online shopping industry in India. Housing.com has helped to digitise the tiresome process of finding real estate and cutting out the brokers and middlemen. These nimble startups help to solve problems quickly which big corporations are not able to tackle. In New Delhi, for example, to solve the problem of extreme air pollution, many entrepreneurs have come up with innovative masks and purifiers which are much more efficient than the industry standard and have helped to preserve the health of the citizens. Entrepreneurial ventures like Bookmyshow have eliminated the need of long queues for cinema-goers and events.

All these ventures have brought about a radical improvement in their sectors. Once the process of innovation is kicked off, it challenges the current industry standard making it mandatory for all the participants to innovate faster and come up with better products to solve the industry’s problems. For example, after a startup introduced the facility to call a cab from your smartphone, it has challenged the long dormant taxi and rickshaw agencies to re-invent their offering and come up with better solutions and services.

India, however, has a global ‘ease of doing business’ rank of 130 amongst 190 countries. A number which lays bare the challenges entrepreneurs have to face. India will have to build an ecosystem to support the cause. Through a study conducted by Economic Times, the major problems which entrepreneurs face were noted as having fewer exit options, high valuations compared to the actual revenue, concerns about the maturity of the market, and regulatory and tax hurdles. India will need to create an environment where an entrepreneur’s intent is not crushed by red-tapism.

The government in the last two years has however realised the contribution of entrepreneurs to the development of the country and has been taking steps to improve the ecosystem. The Digital India campaign plans to digitise citizen’s personal identification records, payment records and transactions, e-KYC, etc. This in itself will provide entrepreneurs a gold mine to build value added services on. There are also initiatives like Smart Cities which are opening up a lot of opportunities for startups. The Ministry of Science and Technology has declared a 450% increase in their investment towards developing the ecosystem. The government is helping to setup startup incubators and entrepreneur parks. The Ministry of Finance has also jumped in and offered tax reforms in favour of entrepreneurs.

All these things show that the ecosystem in India is improving and is making it conducive for encouraging entrepreneurial activity. India is fast growing into a startup hub and expects to boast of about 2,000 new startups every year by 2020. If this truly does happen, it will go a long way in ensuring that India retains its spot as the fastest growing economy.