India has emerged as the world’s third-largest startup ecosystem, trailing only the United States and China. According to a report by Meta, the country now hosts over 1.4 lakh startups, with more than 30,000 of them being tech-focused. From just 500 startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) in 2016, the number has grown to over 1.59 lakh by January 2025.
Key Drivers of Startup Growth
The report identifies six major levers driving startup momentum in India:
- Widespread adoption of artificial intelligence (AI)
- Expansion into international markets
- Strong omnichannel presence
- Deeper penetration in Tier 2 and Tier 3 cities
- Entry into new product and service categories
- Growth of creator-led brand building
Artificial Intelligence Integration
Over 70% of Indian startups are actively integrating AI into their operations. Sectors such as healthcare, edtech, and beauty are leading in AI adoption, using it for customer service automation, predictive analytics, and personalised experiences. The government’s IndiaAI Mission, launched in 2024 with a ₹10,300 crore budget, aims to accelerate this shift further through computing infrastructure, AI innovation hubs, and the development of India-specific language and problem-solving models.
Tier 2 and Tier 3 Cities Driving New Growth
Startups are now actively focusing on smaller cities, using vernacular content, regional influencers, and WhatsApp-based commerce to reach new customer bases. Service-based startups, in particular, are expanding into these regions faster than product-based ones. This approach is helping bridge the digital divide and ensure more inclusive growth.
Contribution to Employment and Economy
Between 2016 and 2024, startups recognised by DPIIT have created over 16.6 lakh direct jobs. They also significantly contribute to India’s GDP by fostering innovation, improving productivity, and supporting related industries. In 2024 alone, India added six new unicorns to its growing list of high-value startups.
Attracting Global Capital and Promoting Inclusivity
India ranks fourth globally in terms of funding raised by tech startups. The country has become a major destination for venture capital and private equity investments. Additionally, rural-focused startups and social enterprises are addressing vital gaps in areas such as education, healthcare, and agriculture, helping uplift underserved communities.
Government-Led Startup Support
Several government schemes and missions are playing a key role in strengthening the ecosystem:
- Startup India: Launched in 2016 to nurture innovation and entrepreneurship
- Startup India Seed Fund Scheme (SISFS): Supports startups with funding for development and market entry
- Credit Guarantee Scheme for Startups (CGSS): Provides credit support through loans
- Atal Innovation Mission (AIM): Includes school-level tinkering labs and nationwide incubation centres
- MeitY Startup Hub (MSH): Coordinates among tech incubators and Centres of Excellence
Digital Infrastructure and AI Push
India’s Digital Public Infrastructure (DPI) model combines government funding with private innovation to support startups. Dedicated AI Centres of Excellence are being established across the country to assist AI startups and research, further strengthening the digital innovation framework.
Shifting Towards a Mature Ecosystem
India’s startup ecosystem is now evolving into a more mature and strategically driven landscape. It is marked by smarter use of technology, increased focus on regional inclusivity, growing global outreach, and a shift towards sustainability and consumer-centric services.
These developments represent more than just a digital boom. They signal a deeper, more strategic transformation in how India approaches entrepreneurship and innovation.
