Delhi has replaced Bengaluru as India’s startup capital, adding over 5,000 recognized startups between April 2019 and December 2021, ahead of Bengaluru’s 4,514, the Economic Survey released on Monday showed.
According to the survey, Maharashtra has the highest number of recognized startups at 11,308. In 2021, 555 districts had at least one new startup, a sharp rise from 121 in 2016-17.
To be sure, Bengaluru has been one of India’s top software hubs for years. It is home to software majors such as Infosys and Wipro, and hundreds of startups in the information technology (IT) and knowledge-based sector, the survey showed.
Technology firms got a major fillip in 2020 as the pandemic spurred demand for digital services. Companies rushed to raise funds to tap the demand surge. VCCircle reported in December that India’s IT sector has raised funds over $25 billion in 2021, up from $20 billion in 2020.
The space sector, too, saw disruption last year. It added 47 startups, taking the number of startups in the sector to 101.
The survey also noted that the government recognized over 14,000 new startups this fiscal, up from 733 in 2016-17. With this, the total number of recognized startups has crossed 61,400. India has thus turned the third-largest startup ecosystem globally after the US and China, the survey said.
India has also beaten the UK in number of unicorns, with a record 44 companies turning unicorn in 2021, the survey showed. The country now has the third-highest number of unicorns, and only trails the US and China. As of 14 January, India had 83 unicorns with total valuation of $277.77 billion.
Further, the survey said India had a record 44 startups turning unicorns in 2021. Unicorns are privately-held startups valued at $1 billion or more.
India also overtook the UK to emerge as the country with the third-highest number of unicorns after the US and China, which added 487 and 301 unicorns respectively.
As of 14 January, India had 83 unicorns with a total valuation of $277.77 billion, according to the survey. Most of these unicorns are in the services sector, which contributes over 50% to India’s GDP, the survey showed.
The coronavirus outbreak in early 2020, which forced governments worldwide to impose restrictions on businesses and public mobility to curb the spread of the disease, compelled major central banks to open their liquidity taps.
Consequently, the banking system was flooded with liquidity, leading investors to crowd emerging markets like India, where typically fetch higher returns on investments.