Startup Deficiency in NE: Poor Inclusion Demands Urgent Solutions

The North Eastern Region of the country contributes only around 1.21% of the total startups in the country. Also, the Foreign direct Investment in NER, which plays a crucial role in economic development, is less than 1% of India's total FDI. Taking a note of this, the Department for the Development of Startup Ecosystem in North Eastern Region has received a call to action from a Department Related Standing Committee on Development of Trade and Industries in North Eastern Region. 

The committee's report emphasizes the need for concerted efforts to bolster the startup ecosystem in the region. The committee's recommendations span promotional strategies, institutional support, educational outreach, and increased funding for startup initiatives.

Is North Eastern Startup Ecosystem Lacking Momentum?

India's startup ecosystem has expanded dramatically over the past decade, with a remarkable rise from 14,056 startups in 2018 to a staggering 98,119 by April 30, 2023. However, the Department's report highlights a discrepancy, revealing that the NER contributes only around 1.21% of the total startups in the country, totalling 1,190 startups as of the same date.

“The Committee takes note of the steps taken by the Department for the development of startup ecosystem in NER and expresses concern that the startups in NER comprise merely 1.21% of the total startups of the country as per the information provided by the Department.

The Committee observes that there is tremendous potential for growth of startups in the NER in sectors such as agritech, biotech, entertainment, tourism etc.

The Committee, therefore, recommends that the Department should make concerted efforts to encourage the startup ecosystem by taking more promotional measures, providing better institutional support, creating awareness in educational institutions and also allocation of sufficient funds to the schemes supporting startups of the region,” the Standing Committee Report highlights.

What's the Scale of Startups in the NER?

The Department has introduced several initiatives focused on nurturing startups in the North Eastern States. Workshops, including the ASCEND Startup Workshop Series and Women for Startups Workshops, have been organized to empower entrepreneurs and students in the region. Additionally, programs like Azadi Ka Amrit Mahotsav, incubator capacity building engagements, and the Startup India Yatra Initiative have been launched to sensitize and support startups in the NER.

Are Startup Support Initiatives Taking Root in NER?

The committee acknowledges the Department's efforts but expresses concern over the limited representation of NER startups in the national ecosystem. The committee identifies substantial potential for growth in sectors such as agritech, biotech, entertainment, and tourism within the NER.

FDI in NER: A Distant Dream?

Foreign Direct Investment (FDI) plays a pivotal role in a country's economic development. The Standing Committee acknowledges that FDI plays an important role in the economic development of a country. The Northeast Desk also works closely with different national initiatives such as Startup India, One District One Product (ODOP), India Investment Grid (IIG), India Investment Land Bank (IILB), Industrial Park Rating System (IPRS), National Single Window System (NSWS), Accelerating Growth of New India’s Innovation (AGNIi), Waste to Wealth Mission, etc.

However, the NER's FDI inflow remains disproportionately low compared to other states. Over two decades, from 2000-01 to 2020-21, the NER received less than 1% of India's total FDI, a contrast to states like Maharashtra and Karnataka, which attracted 28.65% and 23.60% respectively.

Can FDI Flourish in NER?

The committee underlines the urgency to assess and rectify the schemes designed to attract FDI to the NER. Suggesting the establishment of Investment Promotion Agencies in NER states, the committee believes this could serve as a catalyst for increased FDI. Furthermore, the report suggests conducting investment summits abroad to promote the NER as an investment-friendly destination, particularly in sectors like food processing and agro industries.

Is Ease of Doing Business a Roadblock?

The report underscores the struggle of the NER states in terms of Ease of Doing Business parameters, attributing it to issues like geographical isolation, inadequate infrastructure, and policy implementation challenges. The committee recommends active consultation with stakeholders to improve these parameters and prioritize sectors like tourism, healthcare, education, IT, and skilling for accelerated growth.

The Standing Committee recommends, “…that improving ease of doing business parameters is crucial for industrialisation of the region.”

The Committee has recommended “the Government to focus on advancing in the EODB ranking by active consultation with the relevant stakeholders. Further, development of tourism, healthcare, education and skilling, IT and ITES should be accorded due importance to fast-track growth in the region. The Committee also recommends setting up of single window system for simplifying the processes for obtaining approvals and licenses for setting up of business and overhauling complicated tax registration, filing and payment mechanism in the NER to improve ease of doing business.”

Simplifying Business Processes: A Solution?

To address the challenges faced by businesses, the committee proposes the establishment of a single window system for obtaining approvals and licenses, along with simplifying tax registration, filing, and payment mechanisms. This overhaul aims to significantly enhance the ease of doing business in the NER.