Answer

According to the Startup India Initiative, Tier-2 and Tier-3 cities contribute significantly to the startup ecosystem in India, with around 50% of recognised start-ups emerging from non-metro regions. Improved infrastructure and digital connectivity have fueled this growth, supporting inclusive entrepreneurship.

Enroll now for UPSC Online Course

Democratisation of Entrepreneurship is Transforming Socio-Economic Landscape

• Job Creation in Non-Metro Regions: Start-ups in Tier-2 and Tier-3 cities are creating significant employment opportunities, reducing migration to metros and promoting local talent retention.
  For example: The rise of AgriTech start-ups in cities like Indore has generated jobs in farming communities and improved agricultural productivity.
• Local Problem Solving: Entrepreneurs in smaller cities are addressing region-specific challenges, promoting solutions that resonate with local populations and sometimes scale nationally.
  For example: HealthTech start-ups like 1mg have developed affordable healthcare solutions tailored to semi-urban and rural populations.
• Boosting Rural Economy: The growth of start-ups in these regions has provided a boost to local economies, enhancing income generation and driving economic diversification beyond traditional sectors.
• Digital Transformation: The expansion of start-ups has accelerated the digital economy in smaller cities, fostering greater connectivity and digital literacy among populations that were previously underserved.
• Cultural Shift Towards Innovation: As more start-ups emerge, there has been a shift in societal attitudes, with entrepreneurship becoming a more acceptable and aspirational career choice, even in smaller cities.
  For example: Co-working spaces in cities like Jaipur have supported young entrepreneurs by providing collaborative environments for innovation.

Measures to Sustain Start-up Growth in Tier-2 and Tier-3 Cities

• Strengthening Funding Mechanisms: Expanding government-backed funds and creating regional investment hubs can help start-ups in these cities gain better access to capital.
  For example: The Fund of Funds for Start-ups (FFS) could target start-ups in cities to bridge the funding gap.
• Improving Digital and Physical Infrastructure: Developing robust logistics and digital infrastructure will ensure that start-ups in smaller cities can scale efficiently and compete on a national level.
  For example: The government’s Bharatmala Project aims to improve road connectivity, which will support the logistics networks of e-commerce start-ups .
• Enhancing Access to Skill Development: Introducing skill development programs tailored to the needs of emerging start-ups can address talent shortages.
  For example: The Samarth Scheme could be expanded to train workers in cities, providing a skilled workforce for start-ups.
• Raising Awareness of Government Support: Conducting awareness campaigns and providing access to government schemes can enable start-ups to fully utilise the available resources.
  For example: Organising Startup India workshops in smaller cities can help entrepreneurs in places better understand how to access funding and mentorship programs.
• Building Mentorship Networks: Expanding incubation centres and mentorship networks in Tier-2 and Tier-3 cities can offer essential guidance and support to budding entrepreneurs.
  For example: The Atal Incubation Centres can focus on expanding to cities , offering tailored mentorship for local start-ups.

Check Out UPSC CSE Books From PW Store

The rise of start-ups in Tier-2 and Tier-3 cities is transforming India’s socio-economic landscape by promoting inclusivity and regional development. To sustain this growth, continued government support, improved infrastructure, and better access to capital are essential. With the right measures, India can build a future where entrepreneurial opportunities are available to all, driving holistic national growth.

DOWNLOAD PDF