A startup is nothing but a company which is in its early stages of development. These are entrepreneurial ventures which develop a product or service which is believed to have demand or serve as a solution to some problem that exists in the society.

But startups are often confused with small businesses which are very different. Startups are driven by revenue and growth potential whereas small businesses are driven by profitability and stable long term value. Startups focus more on creating customer value but the small businesses focus more on earnings.

Now, since you know the difference between startups and small businesses, we can study in brief how government and startups are coming together for a better future of citizens.

The following are the ways in which startup helps society and hence are the reasons why government should support them:

  • INNOVATION:  Startups are known to come up with innovative solutions to most of the problems pertaining to the society. The highly skilled and creative entrepreneurs are the reason behind this. The products created by them or the services offered by them help people in getting their job done in a much easier way. For eg: Transportation was a big problem before UBER came. UBER not only made it easy for people to travel from one point to another by overcoming the disadvantages of public transport but also created value for the environment by promoting car pooling.
  • COMPETITION:  India is the third-largest startup eco-system in the world. Over 1300 startups were added in 2019 i.e almost four new startups coming up every day. This shows the amount of competition that exists in the industry and to survive in the competition, startups have no option other than offering high-quality products or service to customers. This survival of the fittest scenario has ensured that society gets the best from them.
  • EMPLOYMENT: Another reason why governments support startups is that they provide employment to various skilled and unskilled labor in the country. In 2019 alone, startups created over 60,000 direct and 1.3-1.8 lakh indirect jobs, according to a report by Nasscom. In a scenario, where the government is always criticized for failing to provide 100% employment, there would be no reason for the government to not support such startups.

Now since you are aware of the reasons why government should support startups, let us look into the ways how government is already doing so..

STARTUP INDIA:  This is an initiative by government of India to promote entrepreneurship culture in India . The initiative focuses on three areas

  1. Simplification and Handholding.
  2. Funding Support and Incentives.
  3. Industry-Academia Partnership and Incubation.

   A lot of registration process and setup process has been made very simple, thus promoting entrepreneurship culture in our country. Let us look into this in detail


As we saw in the earlier section of this article, the government by launching a startup India campaign has made the process of registration and setting up easy. Not only that, but the government has also helped IITs, NITs, and IIMs in setting up startup support hubs. There are 75 such hubs in India.


       A 10,000 crore rupees fund is set-up by the government to provide funds to the startups as venture capital. The government is also encouraging banks and other financial institutions to provide funds and act as venture capitalists for promoting startup culture.


   The government is also providing entrepreneurs an option to close business within 90 days from the date of application of winding up. This helps startups in avoiding huge losses, in case the business doesn’t perform as expected.


    The government is also organizing annual national and international startup fests. This helps various stakeholders of numerous startups meet each other and build a much-needed network.


   Startups will be getting a 3 years income tax exemption provided they get certification from INTER MINISTERIAL BOARD.