India has witnessed a positive trend of rising numbers of start-ups in recent years. While analyzing the factors responsible for the same, highlight the challenges that remain. Also, suggest some remedial measures.

A Start up is defined as a newly incorporated business entity (less than five years old) which operates in a niche/unique market segment, often with the use of technology.

The Ministry of corporate affairs has reported a four-fold increase in the number of registered start-ups in recent years.

Factors responsible:

• Proliferation of high speed low-cost internet connectivity.
• Reduction in cost of mobile handsets – wider market reach in tier 2 and tier 3 cities for start-ups.
• Rising disposable incomes – allowing greater leisure spending (e.g. food ordering apps, entertainment apps, etc).
• Preference for convenience among consumers (e.g. cab aggregators, household service apps, etc).
• Large pool of IT trained human resources engaging in development.

Challenges in existing ecosystem:

• Regulatory compliance burden (e.g. labour, taxation, permissions, etc).
• Data storage threats – European GDPR mandates stringent data storage norms.
• Taxation issues – recent concerns about Angel tax.
• Rapid development in technology is unable to keep up.
• Cut-throat competition from foreign start-ups.

Measures to resolve:

• Simplifying regulatory requirements, permissions.
• Higher capital access through initiatives like startup India.
• Provision of incubators in colleges to have early age start-ups.
• Development of robust data protection policy.

Start-ups have the potential to create high value and employment in the current economic scenario. It should be ensured that their growth is encouraged.