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Journalism of Courage
Even as Indian start-ups went on a layoff spree that started in 2022 and has continued well into the beginning of the current year, the number of direct jobs created by these new-age firms rose 36 per cent to around 2.7 lakh last year, according to the Economic Survey for 2022-23, tabled in Parliament on Tuesday.
About 48 per cent of the start-ups in the country come from tier II and tier III cities, the Survey said.
The number of start-ups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) has increased from 452 in 2016 to 84,012 in 2022, which includes more than 1,000 start-ups in the agricultural technology space and over 500 working in millet value chains, it added.
The Survey also said that the rate of job creation by start-ups in 2022 was 64 per cent higher than the average of the previous three years. As per the latest report, in 2020, start-ups created around 1.6 lakh jobs; around 2 lakh jobs in 2021; and close to 2.7 lakh jobs in 2022, a year where start-ups are estimated to have collectively let go of more than 20,000 workers. The Survey also said that the rate of job creation by start-ups in 2022 was 64 per cent higher than the average of the previous three years.
Overall, labour markets and employment recovered beyond pre-Covid levels, and the increase in the women workforce and the decline in school dropouts will aid in socio-economic development, the Survey said.
Quarterly urban employment data shows progress beyond pre-pandemic levels as the unemployment rate declined from 8.3 per cent in July-September 2019 to 7.2 per cent in July-September 2022. “The noticeable rise in Rural Female Labour Force Participation Rate (FLFPR) from 19.7 per cent in 2018-19 to 27.7 per cent in 2020-21 is a positive development,” said the Survey.
According to a survey conducted by the Labour Bureau, manufacturing had 122.5 lakh employees, education came in second with 69 lakh, and IT/BPO employed 38.3 lakh people during January-March 2022.
The Survey also highlighted that net addition to Employees’ Provident Fund Organization (EPFO) is “steadily moving upward after swiftly rebounding from Covid-19”, with a large portion coming in from young people.
Encouraging Indian start-ups based abroad to return
The Survey also noted that due to a number of inherent challenges faced by start-ups including fundraising options, revenue generation struggles, lack of easy access to supportive infrastructure, and wading through the regulatory environment and tax structures, several of these firms have been setting up their headquarters in foreign jurisdictions like Singapore and the United Arab Emirates (UAE), in a phenomenon it called “flipping”.
“European jurisdictions, such as the Netherlands, provide for participation exemptions on dividends and capital gains (based on certain shareholding thresholds, i.e., 5 per cent and other tests). These exemptions are currently unavailable in India, and any migration of existing structures to India triggers capital gains tax,” the Survey said.
However, it said that with the recent trend of easy access to capital, some start-ups are returning to the country, in a process it described as “reverse flipping”. To accelerate that process further, the Survey suggested undertaking certain measures such as: simplifying the process for grant of Inter-Ministerial Board (IMB) certification for start-ups; further simplification of taxation of Employee Stock Options (ESOPs); simplifying multiple layers of tax and uncertainty due to tax litigation; simplifying procedures for capital flows. For instance, countries such as the US and Singapore have easier corporate laws, with lesser restrictions on the inflow and outflow of capital and treatment of hybrid securities; facilitating improved collaboration and partnerships with established private entities to develop best practices and state-of-the-art start-up mentorship platforms; exploring the incubation and funding landscape for start-ups in emerging fields like social innovation and impact investment.
Land-mapping through drones
Drones of many start-ups such as Aereo (previously Aaraav Unmanned Systems), Garuda Aerospace, and others have been helping in the government’s flagship Survey of Villages and Mapping with Improvised Technology in Village Areas (SVAMITVA) scheme, which was launched in 2020. Under the scheme, land mapping surveys using drones have been completed in 2.15 lakh villages, facilitating the preparation of over 1 crore property cards as of 2022, the Survey said.
The Economic Survey said that the surveys have been completed in states such as Haryana, Uttarakhand, Goa and Union Territories such as Lakshadweep, Andaman and Nicobar Islands, Puducherry, Dadra and Nagar Haveli, and Daman and Diu.
