Literature Review Example: Startup Ecosystem of India: A Literature Review

Startup Ecosystem of India: A Literature Review

1. Introduction

1.1 Context and significance of India’s startup ecosystem

India has ascended to the world’s third-largest startup ecosystem, hosting over 100 unicorns and more than 73,000 women-led ventures recognized under the Startup India Initiative (Press Information Bureau, 2024). Startups have generated over 1.6 million jobs and contributed to GDP growth through innovation-driven productivity, while attracting significant foreign investments (Press Information Bureau, 2024). Affordable internet access, a burgeoning young workforce, and vibrant sectoral innovation—particularly in fintech, edtech, and health-tech—underscore its global significance (Press Information Bureau, 2024).

1.2 Objectives and scope of the review

This literature review synthesizes recent government press releases, market intelligence reports, and industry analyses to examine definitions, funding trends, policy frameworks, and regional clusters shaping India’s startup ecosystem. It highlights strengths, identifies challenges, and proposes avenues for future research. The review also explores cluster formation and sectoral strengths to identify pathways for sustainable growth.

2. Theoretical Background

2.1 Definitions and key concepts

A startup ecosystem comprises the network of entrepreneurs, investors, academic institutions, support organizations, and regulatory bodies that collectively enable venture creation and growth (KPMG, 2024). Key concepts include resource mobilization, knowledge spillovers, and policy-driven incentives sustaining ecosystem vibrancy. Digital infrastructure and a skilled workforce represent critical ecosystem enablers (KPMG, 2024).

2.2 Frameworks for ecosystem analysis

Analytical frameworks often draw on network theory and policy evaluation models—such as the Triple Helix—to assess interactions among academia, industry, and government. Assessment tools frequently involve qualitative and quantitative metrics, including startup density, funding per capita, and policy efficiency. These models emphasize the importance of cross-sectoral collaboration in driving innovation.

Note: This section includes information based on general knowledge, as specific supporting data was not available.

3. Key Findings

3.1 Funding landscape and investor trends

In H1 2025, Indian tech startups raised $4.8 billion—a 25% decrease from H1 2024—yet maintained their status as the third-largest global tech funding hub (Startup Story, 2025). Notable mega-rounds, including Erisha E Mobility’s $1 billion Series D, underscore ongoing investor interest in capital-intensive sectors amid a shift toward value-driven funding. The funding climate is evolving from valuation-focused to fundamentals-based investments, prioritizing sustainable business models over rapid scaling (Startup Story, 2025).

3.2 Role of government policies and support

The Startup India program, launched in 2016, has recognized 157,066 DPIIT‐certified startups and facilitated ₹10,000 crore in early-stage funding through the Fund of Funds for Startups (Press Information Bureau, 2024). Sector-specific policies for biotechnology, agriculture, and renewable energy have catalyzed innovation in targeted domains. Complementary initiatives—Atal Innovation Mission, NIDHI, and SAMRIDH—provide incubation, mentorship, and sector‐specific incentives (Press Information Bureau, 2024).

3.3 Regional clusters and sectoral strengths

Epicenters such as Bengaluru, Mumbai, Hyderabad, and Delhi–NCR have emerged as innovation hubs supported by robust digital infrastructure and talent pools (Press Information Bureau, 2024). Incubators, accelerators, and mentoring networks further reinforce cluster efficacy in these regions. Simultaneously, tier-II and tier-III cities are cultivating niche sectors like agritech and cleantech to address local challenges and expand ecosystem depth (KPMG, 2024).

4. Evaluation

4.1 Strengths and opportunities

India’s startup ecosystem leverages a sizeable domestic market, targeted policy incentives, and an expanding venture capital landscape (KPMG, 2024). Emerging technologies such as AI, blockchain, and IoT provide avenues for deeptech startups, offering high-growth potential. Opportunities abound in sustainable innovation and international partnerships that can diversify funding sources and enhance global scalability (KPMG, 2024).

4.2 Challenges and research gaps

Key challenges include cyclical funding patterns, regulatory complexity, and regional disparities in support infrastructure. Data on early-stage failure rates and ecosystem spillovers remains under-explored, and empirical studies measuring the longitudinal impact of government initiatives are limited.

Note: This section includes information based on general knowledge, as specific supporting data was not available.

5. Conclusion

5.1 Summary of insights

This review highlights the synergistic roles of policy frameworks, funding instruments, and regional clusters in fostering India’s dynamic startup ecosystem. Government programs and private capital have collectively fueled sectoral diversification, innovation, and measurable contributions to employment and GDP growth, illustrating a dynamic environment where public and private stakeholders coalesce to drive entrepreneurial outcomes.

5.2 Directions for future research

Future studies should employ longitudinal methodologies to assess policy efficacy over time, explore ecosystem dynamics in emerging tier-II/III regions, and evaluate the social inclusion impacts of startup-driven growth. Research must also develop frameworks for measuring ecosystem health and mechanisms to integrate underrepresented founders.

Note: This section includes information based on general knowledge, as specific supporting data was not available.

References

Press Information Bureau. (2024, December 25). Startup Nation: India The Future Hub of Global Entrepreneurship. Press Information Bureau.

Startup Story. (2025, June 28). India’s Startup Funding Falls 25%—But That’s Not the Whole Story. Startup Story.

KPMG. (2024, December 10). Exploring India’s dynamic Start-up Ecosystem. KPMG.