Startups to account for 4-5% of India’s GDP over 3-5 years: Study | The Financial Express

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Gig workers replace permanent employees

Startups to account for 4-5% of India’s GDP over 3-5 years: StudyIndia is the third-largest startup ecosystem, behind only the US and China.

Startups are expected to contribute about 4-5% to India’s gross domestic product (GDP) over the next three to five years, up from 2.5-3% currently, according to a report by StrideOne, a tech-enabled NBFC.

The government recently said there were 84,012 startups registered in the country till November 2022, up from 452 in 2016. It also said the success rate of startups in India was much higher than in other countries. India is the third-largest startup ecosystem, behind only the US and China.

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There were over 14,500 startups that registered themselves in 2020, which increased to just over 20,000 in 2021, and there were 24,682 new-age companies that came into the system in 2022 alone, the report showed. The number of startup registrations was further projected to grow at a compound annual growth rate (CAGR) of 25% between 2022 and 2027, it added.

“The Indian startup ecosystem has matured considerably not just in terms of capital infused but also the level of sophistication and capacity to unlock global scale,” said Abhinav Suri, co-founder of StrideOne. 

The report further said the ecosystem had also brought in more jobs in the economy. In 2022, there were about 0.23 million jobs that new-age companies created, up from 0.19 million in 2021. That was expected to increase further, going forward. The total number of jobs created by startups grew at a CAGR of 78% from 2017-22 and is projected to grow at a CAGR of 24% from 2022-27, the report noted.

Ishpreet Singh Gandhi, co-founder, StrideOne, said: “The rapid growth phase and maturity of the ecosystem have unlocked tremendous appetite for scalability, alternate funding options, expansion into the global market and the capacity to enable millions of jobs.” 

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Not all were formal employees on the company’s payrolls, though. Of the over 500 respondents surveyed, over 90% founders – of companies such as Zepto and Dunzo – said more than 70% of their total employees were gig workers. Further, 25% of the gig workers, employed on these platforms, reported an increase of more than 50% in their monthly income when compared with their previous mode of livelihood. 

“Startups are limiting their hiring of permanent employees. Gig workers have begun to replace these permanent employees. The total number of enterprises who have shifted to a semi-gig workforce model has increased by 15% since Oct 2021,” the report concluded. 

The report analysed three key themes to arrive at the findings on job creation and financial inclusivity, among other data points: textile and apparel, the gig economy and B2B logistics. 

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