The Indian startup story has been a beacon of hope and innovation for the country’s economy. But a recent data reveals that not everything is as rosy as it seems. More than 5,000 startups registered under the Startup India program have shut down. It means about 3.3% of the total startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) have closed. The figure was lately shared by Jitin Prasada, Minister of State in the Commerce Ministry.
Maharashtra tops the list with 929 closures followed by Karnataka, Delhi and Uttar Pradesh. The numbers might seem small compared to more than 1.5 lakh startups registered. Lack of funding, unclear market strategies and intense competition are just a few reasons for the closures.
Startups have made an undeniable impact and created more than 16.6 lakh direct jobs across industries like IT services, healthcare and education. IT startups alone contributed more than 2 lakh jobs and it shows the immense potential of this sector. However, job creation is just one piece of the puzzle.
The problem is not just limited to startups alone. MSMEs are also facing difficulties. More than 61,000 MSMEs registered through the Udyam portal have shut down since 2020 and more than 12,000 closures were just in the last four months.
The closures are a wake-up call and initiatives like Startup India need to do more. Startups need access to mentorship, better funding channels and also policies that encourage sustainable growth and not short-term results.
The Indian startup ecosystem has the potential to drive innovation and create lasting change. We must address the challenges head-on. The problem is just the first step and finding the solutions to ensure India’s startups survive as well as thrive are required.
