Why East India is the Hotbed for Start-ups?

Posted on April 19, 2017

Yes, we, at Brandshoots, are betting big on East India to become the next source of exciting start-ups in the coming years. Many people will say that when compared to number of start-ups operating out of Delhi and Bangalore, there are very few that have grown out of East, so how can we be so sure of it.

Well, to give you a clear picture, let us first analyse the ecosystem that a start-up needs to become successful:

a. Access to Infrastructure: In 2014-15, the economy of West Bengal grew at 10.5%, almost 3% higher when compared to the national average. Industrial sector of West Bengal also grew at a higher pace, at 8.3% compared to the national rate of 5.6%. Further, The Brookings Institution (an American think tank) ranked Kolkata second on the overall economic performance among the Indian metros in 2013-14. Kolkata offers 24 hours electricity to its households and industries. Add this to the fact that Kolkata and East India are well connected with the rest of the country through roads, train networks and major national and international airports. Further, out of 12 major ports in India, 3 are located in east India. This shows that government is providing access to high-quality infrastructure that will help the next wave of start-ups to grow and succeed in Eastern India.

b. Access to Qualified Manpower: Eastern and North-Eastern region of India is house to some of the premier universities, colleges and schools in the country. One of the earliest Indian Institute of Management came up in Kolkata. However, due to lack of employment opportunities, most of the people have to migrate to other parts of the country to find employment. Thus, start-ups originating in the East will have direct access to quality human resource at a nominal cost.

c. Access to Investments: As per a 2016 report by Kotak Wealth Management, around 55% of High Networth Households (HNH) are based in Delhi, Mumbai, Kolkata and Chennai. Further, India is growing at a much better pace when compared to the rest of the world, and thus the HNH will continue to rise in the near future. Also, because of the initiatives taken by the government, it is likely that more and more HNHs will invest in start-ups. With a high number of HNH based in Kolkata, it is imperative that the budding entrepreneurs will be able to access capital in an easy manner.

d. Growing and Consuming Population: As per Census India, around 27% of the total population of our country reside in the Eastern and North-Eastern region of India. [1] Around 25% of this population stays in urban areas and the literacy rate of most of the states in this region is more than 75%. This shows the huge market that exists in the Eastern and North-Eastern region of India. Further, with the rise in disposable income (per capita income increased by 12.8% in 2014-15 in West Bengal), and the focus of Indian government on Digitalisation, a lot of new avenues have come up for start-ups to work on. Thus, start-ups can bet big on these regions and start to focus on innovative products and services to cater the population of this part of the country.

e. Government Regulations and Political Stability: Government of West Bengal has tied up with IIM Calcutta to provide start-ups with incubation support. Further, it has created an INR 200 crore venture capital fund for helping the small and medium industries. Also, given the fund requirement of small and medium industries, government has also tied up with National Stock Exchange to help the companies to raise money from the market.[2] Startup Bengal, an initiative by the Government of West Bengal has also been set up to foster a culture of entrepreneurship in the state. It helps a start-up to understand the statutory obligations, gain access to finance, technology support, WB MSME venture capital fund, mentorship and find out policies for future growth. Thus, when it comes to providing a helping hand to start-ups, the Government of Bengal is taking up a lot of initiatives, and it only points to the growth of start-up support ecosystem in the east.

Looking at the above aspects, it is only rational to believe that the next wave of start-ups will be from Eastern India.

[1] – http://censusindia.gov.in/Census_And_You/age_structure_and_marital_status.aspx
[2] – http://timesofindia.indiatimes.com/city/kolkata/Govt-ties-up-with-NSE-IIMC-to-help-startups/articleshow/46639263.cms

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