A decade ago, India did not lack innovation; it lacked pathways for new sectors to grow. Early-stage ideas faced thin capital, closed markets, regulatory uncertainty, and high penalties for failure, making sectoral emergence the exception rather than the norm. Startup India altered this landscape fundamentally. Instead of chasing isolated success stories, itfocused on building the scaffolding for new industries to take root. Over time, this approach enabled emerging sectors, from defence and space to AI and agritech, to move from the margins into the mainstream of India’s growth story.
From Isolated Entrepreneurship to a National Innovation Base
Startup India’s first structural impact was scale. India moved from a fragmented startup presence in 2014 to a nationally distributed ecosystem that now counts over 2.09 lakh DPIIT-recognised startups. This expansion was not cosmetic. These firms have generated more than 21 lakh jobs and positioned India as the world’s third-largest startup ecosystem, growing steadily at 12-15% annually. The ecosystem’s breadth became most visible in 2025, when over 44,000 startups were added in a single year, the highest annual addition since the programme began.
Crucially, growth did not come at the cost of stability. Startup shutdowns fell sharply in 2025 to a five-year low, indicating that the ecosystem had begun to mature. Startups were no longer forming only to test ideas, but to build businesses that could endure. This transition from volume to viability created the foundation on which new sectors could be developed with confidence.
Capital as Policy, Not Just Finance
Once scale was achieved, the challenge shifted to risk. Emerging sectors require patient capital, early support, and protection from premature market pressures. Startup India addressed this through direct state intervention in the capital stack. The Rs945 crore Startup India Seed Fund Scheme enabled early-stage firms to move from idea to prototype to market entry, particularly in sectors where private capital typically arrives late. At the other end of the spectrum, the Rs10,000 crore Fund of Funds for Startups, managed by SIDBI, worked as a multiplier rather than a substitute. By anchoring investments through regulated AIFs, the government catalysedover Rs22,900 crore in downstream capital,supporting more than 1,270 startups across technology, manufacturing, and deep-tech domains. Debt access was also normalised through the Credit Guarantee Scheme for Startups, allowing collateral-free lending and restoring balance-sheet credibility for innovation-led firms.
Together, these instruments transformed capital from a constraint into an enabler, particularly for sectors that required long gestation periods.
Defence Innovation Moves from Periphery to Capability
Defence was among the first sectors to reflect this shift. For decades, innovation in military technology remained confined to public institutions and large incumbents. Startup India, combined with defence-specific reforms, altered that structure. Today, more than 1,000 defence startups operate across drones, surveillance systems, electronic warfare, and advanced materials.
The inflection point came when innovation was tied directly to operational demand. Through the iDEX framework, startups were not merely funded but contracted, with nearly 400 projects awarded by 2024-25. This linkage between innovation and procurement ensured that solutions were built for deployment, not demonstration. During Operation Sindoor, Indian startups supplied field-ready technologies across air, sea, land, and cyber domains, marking a decisive transition from experimentation to execution.
Space Opens Up, and an Industry Emerges
Space followed a parallel but distinct trajectory. From a state-dominated model, the sector was deliberately opened to private participation through regulatory reform, foreign investment liberalisation, and the creation of IN-SPACe. The impact was immediate and visible. From a single space startup in 2014, India now hosts over 380 such firms working on launch vehicles, satellites, propulsion systems, and downstream applications. Government backing provided scale and confidence. A Rs13,416 crore space budget and a Rs1,000 crore venture fundsignalled long-term commitment, while ISRO’s role evolved from sole operator to ecosystem enabler. Private launches by Indian firms now coexist with national missions, indicating that space has transitioned from a closed programme to a competitive industry with global relevance.
Technology Moves Into the Real Economy
As strategic sectors opened up, technology also began to embed itself into India’s core economic systems. Agriculture offers a clear example. Nearly 5,000 agritech startups now operate across the value chain, from farm-level decision tools to logistics, credit, and digital marketplaces. Over 735 funded agritech firms have raised more than USD 6.4 billion, and the sector is projected to cross USD 24 billion in market value by 2026.
This was not a story of digitisation alone. It reflected the absorption of technology into supply chains that affect millions of producers. Precision farming, climate risk management, and price discovery moved from pilots to scale, reshaping how agriculture functions rather than how it is marketed.
Artificial Intelligence as Infrastructure, Not Experiment
Artificial intelligence followed a similar path. Instead of being confined to niche startups, AI became a horizontal layer across the ecosystem. Nearly 89 percent of new startups launched in the past year integrated AI into their products or services, signalling that intelligence had become baseline infrastructure. India now hosts close to 900 generative AI startups, making it the world’s second-largest GenAI hub. Importantly, the momentum has shifted towards vertical AI, with startups solving domain-specific problems in finance, healthcare, logistics, and governance. The IndiaAI Startups Global programme extended this ecosystem outward, enabling Indian AI firms to access European markets early in their growth cycle. What emerged was not an AI bubble, but an applied AI economy rooted in real-world use cases.
Creating Markets Where None Existed
Perhaps the most underappreciated lever of Startup India has been market creation. By relaxing prior turnover and experience requirements in government procurement, the state repositioned itself as an early customer. Through the Government e-Marketplace in Startup Mahakumbh 2025, over 30,000 startups have executed transactions worth more than Rs 38,500 crore, spanning defence, electronics, services, and manufacturing. This shift mattered because it replaced validation with demand. Startups no longer had to prove credibility abroad before scaling at home. Public procurement became a bridge between innovation and revenue, accelerating growth in sectors that private buyers approach cautiously. Startup India’s most enduring contribution is not the number of startups it helped create, but the kinds of sectors it helped build. It was the result of a deliberate sequencing of reform, capital, and market access. As India enters its next phase of growth, the startups born under this framework are no longer peripheral actors. They are sector builders, capability creators, and increasingly, standard-setters. That is the real story Startup India tells.
