Startup India Revamp: What Founders Need From Policymakers

Startup India was launched in 2016 to encourage entrepreneurship, create jobs, and ease access to capital. The policy did contribute to building a visible startup culture in India. More than 1.2 Lakh startups have been officially recognised. New ventures have created employment across sectors.

More than 100 startups have crossed the billion-dollar valuation mark. Reforms such as digital company registration, support for patent filings, tax exemptions, and access to digital public infrastructure have made it easier to start up.

Yet, the experience on the ground varies. Founders often deal with vague regulations, limited access to funding, and compliance work that takes up time and resources. While awareness and policy intent have improved, the next phase needs to focus more on practical issues that young businesses face daily.

The Driving Force

Over the last ten years, several measures have made starting up more accessible. Company registration has become faster. DPIIT recognition gives early stage ventures access to some tax benefits and investor confidence. Filing for patents has become more approachable with online systems. These changes have helped create more startups and bring formality into what was earlier a fragmented ecosystem.

Digital Public Infrastructure has also enabled new business models. Platforms like UPI, DigiLocker, and Aadhaar have created a base for innovation, especially in fintech, logistics, and digital-first services.

However, structural bottlenecks remain. Many founders outside the top three metros still struggle to access quality support, mentors, or investors. State-level startup policies often replicate central guidelines without tailoring them to local industries or needs.

Ongoing Challenges For Founders

Complex Compliance Processes

Even with digital tools, startup teams still spend too much time on compliance. Registrations, approvals, GST filings, and audits take up energy that could go into building products or talking to customers, especially for lean teams with limited bandwidth.

Funding gaps In smaller cities

Scrapping the angel tax for DPIIT-recognised startups was a good move, but early stage capital remains hard to access beyond Delhi, Mumbai, and Bengaluru. Many founders outside these hubs lack investor connections or formal angel networks, making it harder to get started.

Skill gaps In hiring

While India produces plenty of graduates, few are job-ready for startup roles, especially in areas like AI, climate tech, or hardware. Startups either have to train new hires themselves or compete with bigger companies to attract experienced talent, both of which stretch limited resources.

Slow IP support

For startups building in research-heavy or product-based sectors, intellectual property is important. Filing patents or copyrights, however, remains costly and slow. Delays in IP processing can affect growth and investor confidence.

Lack Of Feedback Mechanisms

Policy design often excludes direct inputs from active founders. As a result, several schemes miss practical issues or don’t reach the intended audience effectively.

Limited Access To Mentorship

Many early stage founders, especially in smaller towns, operate without guidance. This increases the chances of basic but costly mistakes, whether in market understanding, pricing, legal structuring, or product development.

Investor Accountability

Founders are expected to follow norms related to governance and reporting. But there’s no corresponding framework for investor conduct. This imbalance leads to issues such as unclear expectations, slow decision-making, and misaligned goals.

Uneven Access To Capital

Founders without established networks often find it difficult to get investor meetings or raise funds. Opportunities are shaped more by familiarity than by actual business strength, which affects those outside known circles.

Misaligned Metrics

There is more attention on the number of deals, valuations, and funding rounds than on business stability or outcomes. Startups that create jobs, generate revenue, and build for the long term do not always receive the same visibility or support.

What Founders Expect From Policymakers

Founders are not asking for special treatment. What they want is clarity, consistency, and systems that work. Many of them feel that current policies still treat all startups the same, without recognising how different sectors operate.

A fintech startup dealing with lending rules faces very different challenges from an agritech company working with farmers, or a climate tech startup tracking carbon data. When the rules are not clear or change without notice, it slows things down. It also makes it harder to raise funds or plan.

There is also a gap between how metro cities and the rest of the country experience support. Delhi, Mumbai, and Bengaluru have strong ecosystems, and investors, mentors, legal help, and media attention are easier to access. But if you are building something in Indore, Coimbatore, or Bhubaneswar, the basics are harder. Some programmes, like Startup India Yatra, have reached smaller cities, but many founders say these efforts lose steam quickly. States need to build their approach based on what their local industries need, not just replicate what is happening at the centre.

Even after digitisation, the actual processes are not simple. Registering a company, getting approvals, or applying for schemes often involves going through several departments, repeating documents, and waiting weeks without clear communication. Founders do not want shortcuts; they just want fewer delays and clearer steps.

Raising early stage capital still takes time and connections. While removing the angel tax helped, Indian investors are cautious, and many founders without networks struggle to even get meetings. ESOPs, which are meant to reward and retain employees, often turn into a tax burden. Many team members don’t fully understand how they work, and the tax system makes it harder for them to benefit.

Startups working in product or tech-heavy areas say that filing patents is too slow and expensive. Many do not even try because they cannot afford the time or legal costs. And when things go wrong, when the business does not take off or runs out of money, shutting it down is confusing and drawn out. Most systems are not built to help people exit cleanly and start over.

Finally, a lot of founders feel left out, those from smaller towns, underrepresented groups, or without the right connections. They face the same challenges, but often with less support and visibility. That is something policy needs to address directly.

The first decade of Startup India has changed how entrepreneurship is viewed. It has made risk-taking aspirational, created jobs, and set the foundation for innovation. However, the primary objective needs to change from identifying unicorns to building a large number of sustainable businesses for the ecosystem to reach maturity.