India is urbanizing at an unprecedented rate. By 2036, its towns and cities are expected to accommodate 600 million people, or nearly 40% of the country's population, up from 31% in 2011. With urban regions accounting for about 70% of GDP, the subject of how to manage urban transformation efficiently has become crucial. Leading the charge in this transformation are startups— innovative and dedicated to rethinking urban living by focusing on sustainability across economic, environmental, and social dimensions. Startups are taking the lead in sustainable urban development by reshaping how cities operate and grow. From innovative housing solutions to revolutionizing the urban mobility and transportation sector with smart infrastructure and green energy, they’re addressing some of the most pressing urban challenges with agility, fresh perspectives, responsible business models, and cutting-edge technology.
Tackling Climate Change with Tech-powered Solutions
Climate change, one of the most pressing issues of our time, has spurred urgent calls for sustainable urban development across the globe. Innovators worldwide, including Indian startups, are stepping up with tech-driven solutions that align with Sustainable Development Goal 11: to build cities that are safe, inclusive, resilient, and sustainable.
Electric vehicles (EVs) are transforming urban mobility, with clean energy-powered cars, bikes, and buses that reduce emissions while easing urban traffic problems. Startups are pioneering these green alternatives and refining smart transportation solutions, using data analytics to alleviate congestion and minimize idle emissions. In India, with over 150 two-wheeler EV startups and around 3,300 climate-focused ventures, the landscape of urban transportation is shifting towards a greener horizon.
In addition, technologies like Artificial Intelligence and Machine Learning (AI/ML) are reshaping the automotive sector, enabling virtual and remote experiences to minimize the need for travel and promote sustainability across operations. These tech-driven solutions exemplify how technology, when aligned with ecological goals, creates a path toward more sustainable cities.
Embracing a New Era of Sustainable Growth and Financial Discipline
Today’s startups are acutely focused on unit economics and this approach is not just driven by investor expectations for financial prudence but also reflective of a more mature ecosystem. Gone are the days of unbridled spending and chasing user growth at the expense of profitability. Contrary to the traditional “winner takes all” mentality that justified prolonged cash burn and deferred revenue, today's startups now recognize the importance of balancing growth with profitability.
India’s total addressable market (TAM) is also emerging as a more nuanced picture than initially perceived. While the country boasts a population of 1.5 billion, the consumer base for many products and services hovers around 200–300 million, prompting startups to recalibrate growth projections and control customer acquisition costs (CAC). This new economic reality is reshaping how startups allocate resources and define growth.
Leading the Charge in Social Sustainability
Beyond economic and environmental dimensions, startups are driving social sustainability by creating jobs, enhancing per capita income, and promoting diversity in the workforce. The shift is evident in the rise of women entrepreneurs, contributing to a more diverse entrepreneurial landscape and driving the socio-economic growth of the new-age Bharat. According to the Department for Promotion of Industry and Internal Trade (DPIIT), the number of women-led startups in the top 3 D2C sectors i.e., Personal and Home Care, Food and Beverages, and Fashion, is 3644, which is nearly 52% of the total startups in these sectors. As of December 2023, 48% of startups in India have at least one women director, totaling over 67,000 women directors across 55,000 startups. This shift not only supports socio-economic growth but also closes long-standing socio-economic gaps.
The rapid expansion of India's startup ecosystem is ushering in promising employment opportunities for the nation’s youth. A recent report by Reserve Bank of India highlights that India has provisionally created 46.7 million jobs in the fiscal year 2023/24, elevating the total employment in the country to 643.3 million. India's startup ecosystem has been a major contributor to the country's employment growth. As per the data, over 1.4 lakh startups have generated over 15.5 lakh direct jobs across the country to date. With the number of startups expected to increase 2.6 times over the next six years, startups are emerging as a powerful engine for job creation in India.
Socially aware startups are also finding ways to improve the quality of life in urban communities by offering accessible services, housing, and healthcare solutions, making these essential needs affordable and attainable for wider demographics. This, in turn, reduces socioeconomic gaps, fosters more cohesive societies, and enhances the resilience of communities to withstand future challenges.
Road Ahead
India’s startups are redefining what it means to build thriving, sustainable cities. However, despite the progress, some challenges persist, such as high energy demands, pollution challenges, and the need for greater public awareness. Going forward, the combined efforts of startups and the government can remove these obstacles and turn cities into “living labs” for digital transformation—where data-driven pilots can be tested, refined, and scaled.
Moreover, with the rise of “impact investing,” which integrates sustainability into funding decisions, startups have access to the capital needed to expand their influence and impact. By focusing on financial discipline, environmental stewardship, and social inclusivity, India’s startups are expected to shape a sustainable future for urban life, demonstrating that development can indeed align with responsibility.
(The above given article has been written by Karan Jain, Founder, Carrum)
