Over 1k Incubators Fuel India’s Startup Boom, KPMG Report Reveals

KPMG in India has released an in-depth report titled ‘Democratisation of Entrepreneurship in India,’ which highlights the transformative changes in the country's entrepreneurial landscape. The report emphasises the growing accessibility and inclusivity of entrepreneurship, marking a shift towards wider participation across socio-economic groups and regions.

One of the key drivers of this movement has been government initiatives like Startup India and the Atal Innovation Mission, which provide startups with essential resources such as funding, mentorship, and infrastructure tailored to local needs. Additionally, the report underscores the growing importance of digital technologies and online platforms, which have opened up new opportunities for startups, particularly in tier II and III cities. These cities now account for nearly 45 per cent of the startups in India, reflecting a significant shift towards regional entrepreneurial growth.

The report also highlights the increasing role of women in entrepreneurship, with women now owning 20.5 per cent of all micro, small, and medium enterprises (MSMEs) in the country. This indicates a growing trend towards gender inclusivity, with women entrepreneurs making significant contributions to India's startup ecosystem. Programs like the Women Entrepreneurship Platform (WEP) and the Pradhan Mantri Mudra Yojana have been instrumental in empowering women and low-income entrepreneurs, helping foster local growth and encouraging future female leadership.

India’s startup ecosystem has also benefited from the rapid expansion of over 1,000 incubators nationwide, which provides startups with the necessary resources, mentorship, and funding. These incubators are particularly important for startups in underserved regions, offering them access to tools and networks that were once limited to larger cities. Alongside these efforts, programs like the Start-up Village Entrepreneurship Programme (SVEP) have been pivotal in helping rural entrepreneurs establish non-farm businesses by providing them with business support, funding, and essential information.

The collaboration between government-backed initiatives such as the Atal Innovation Mission (AIM) and private-sector efforts has played a critical role in democratising entrepreneurship. These collaborations are helping to create an inclusive entrepreneurial ecosystem that reaches across the country, providing opportunities for all. The economic impact of this growing ecosystem is significant, with India now being home to the third-largest startup community globally. This vibrant ecosystem has made a substantial contribution to India’s GDP, showing remarkable resilience despite various challenges.

Supreet Sachdev, Office Managing Partner – Bengaluru at KPMG in India, emphasised the importance of inclusivity in India's entrepreneurial transformation, stating, "The democratisation of entrepreneurship is not just a trend but a movement toward sustainable economic growth. The report highlights the collaborative efforts of the government, private sector, and grassroots innovators in creating a favourable environment for entrepreneurship, paving the way for a more resilient and innovative economy."

Akhilesh Tuteja, Partner and Head of clients and Markets at KPMG in India, added, “Entrepreneurship in India is undergoing a paradigm shift towards inclusivity, which is a key factor in driving economic growth. Women entrepreneurs, in particular, represent an often-overlooked segment of the workforce. By empowering entrepreneurs from all parts of the country, we can build a more resilient ecosystem that fosters innovation, value creation, and sustainable development.”

However, the report also acknowledges several challenges that continue to hinder the growth of startups in India. One such challenge is the dominance of large tech companies, which often restrict competition and make it difficult for smaller startups to thrive. Additionally, the report highlights the digital divide, especially in rural areas, which limits access to resources and opportunities for many potential entrepreneurs. Furthermore, startups in tier II and III cities often struggle to secure funding, further exacerbating regional disparities.

To address these challenges, the report calls for measures such as transparency in competition, digital literacy programs, and expanded access to technology in rural areas. It also recommends increasing the number of angel networks and incubators in tier II and III cities to help bridge the funding gap and provide startups with the necessary support to scale.

Looking ahead, the report outlines a strategic roadmap for India’s entrepreneurial ecosystem. Key long-term goals include establishing AI-powered startup ecosystems with substantial funding, setting up regional hubs and decentralized innovation ecosystems, and creating a global Indian startup network. Focusing on sustainable entrepreneurship will be essential for maintaining growth, and the report suggests that global alliances will play an important role in India’s journey towards becoming a leading innovation hub.

As India’s startup ecosystem continues to evolve, the KPMG report highlights the importance of fostering an inclusive, innovative, and sustainable environment for entrepreneurs, which will not only help drive economic growth but also contribute to creating a more resilient and equitable society.