The brutal reality is this: over 28,000 Bharat startups shut down during 2023–24, while just 125 new firms launched in 2025 so far—according to Tracxn data cited by The Wire and Financial Express (The Wire, The Financial Express). This is not a statistical quirk; it’s a market-wide warning alarm. Most stakeholders focused on headline unicorns, while tens of thousands of projects quietly shut—or limped on inactive. India is now deeply in a startup deficit, and it needs capital depth, global mindset, and policy agility to scale globally”
Ecosystem Under Pressure
Despite global ambitions and policy push, Bharat’s startup system suffers from chronic dysfunction with major issues related to:
No trust framework for deep-tech & AI startups: Banks refuse loans to software-first ventures. Grants are missing or only PR. Rs 100 cr ARR visionaries get ghosted. Many fail not for lack of talent but lack of trust.
Making manufacturing & innovation secondary: Most capital flows into clone models like D2C consumer brands—not foundational deep-tech or hardware. Investors still back Uber‑style models over chip design.
Ease of doing business is largely mythical: Taxes are high. Compliance is tedious. Many founders cite state harassment and opaque rules, especially in small towns and new tech zones.
Institutional support for research & innovation is near absent: IITs, CSIR labs and central universities do not connect with startups. Tech transfer offices remain optional or cursory.
That list, stripped of jargon, is India’s core innovation gap. Most startups build velocity but not durability.
Why Failure Harms Bharat
When startups collapse, the human toll is high—even if we only watch headlines. Entire families break; founders go bankrupt emotionally and socially. Employees lose jobs and careers. Investors lose capital. Suppliers and partner firms vanish. The unorganised economy—complementing gig workers, informal vendors, micro-entrepreneurs—also gets hit. With no safety net or retraining, the damage lives on.
Hiccups in the Surge
Take BluSmart, once hailed as India’s EV mobility leader. Tens of thousands of investors and public stakeholders trusted it. In 2025, SEBI accused its management of misusing hundreds of crores in loans to buy real estate — not electric vehicles — through affiliates. The fallout included defaults, board exits, an 85 percent stock drop, and a complete breakdown of trust. As one report said: vision and capital can go only so far; long-term success requires integrity, governance and transparent reporting (TICE News).
The pattern is alarming. VCs poured money into metro‑only consumer plays; capital-intensive platforms like electric vehicles or deep tech got overdrafted on related-party agreements and collapsed fast. This isn’t isolated—it’s systemic erosion of investor discipline.
Innovation Starved: Why Most AI & Tech Platforms Die Early
Real-world anecdotes (confirmed in many founder circles) tell the story:
A Bangalore-based pre‑seed AI-infrastructure startup was gated by five Indian banks outright—for being “too risky” — yet a small German VC showed interest without even meeting them.
A fintech platform aimed at Bharat MSMEs was asked for three years of income tax returns—even before it had formally registered its company.
A generative AI‑based edtech startup got offered only a Swiggy-style restaurant loan, not a loan for software development.
These are from startups which had clear product‑market fit. They failed—not for lack of innovation, but because the system does not trust innovation. India wants to be tech-first—but does not behave that way toward deep-tech.
A Global Perspective: Learning from China and Japan
China’s Thousand Talents Plan incentivised diaspora scientists and engineers to return home, often with lucrative grants, labs and technology clusters at their disposal. Within years they jump‑started new labs, deep-tech startups, and domestic R&D — accelerating the ecosystem faster than venture capital alone can.
China also reversed brain drain into brain circulation—-returnees brought new skills, global linkages and credibility back home, structurally upgrading the domestic talent pool.
In Japan, Nobel-prize overhead teaching norms (lifetime faculty jobs, industry-linked R&D, discipline-oriented education) build research durability. Students accept failure as iterative—processing foundational work over ecommerce “quick wins”.
In the United States, especially Silicon Valley, a culture of failure, immigration-driven risk-taking, integration of PhD labs with venture capital, and massive global markets allow innovation at scale. As a Nature research article put it: one-third of Silicon Valley scientific workforce is immigrant—and Indian‑Chinese founders run 25 percent of tech firms; their networks power venture and trade.
Israel, the “Startup Nation”, combines mandatory tech-skills-based military service, government-sponsored R&D programs, university‑industry partnerships, and a culture that does not stigmatize failure in entrepreneurship.
India Must Reboot—Here Is The Collective Action Plan
A. Build a Trustworthy Innovation Infrastructure
Appoint research fellows and tech commercialization cells in every centrally funded university.
Launch an India-specific version of the Thousand Talents Plan, aimed at returning Indian-origin scientists from abroad by giving guaranteed lab space, capital, and tax clearances.
Enable India Stack for Software — where “software collateral” loans feature under RBI regulation with risk assessments rather than requiring physical/security.
B. Simplify Compliance and Financing
Create a digital single-window startup licence card that covers factory licence, software registration, data privacy, and export insurance at once.
Declare taxation on venture income neutral for exits up to $50 million ARR, and reduce minimum turnover-linked tax burdens for deep-tech.
C. Strengthen Governance & Ethics
Make mandatory startup board composition include at least one independent mentor (someone who has scaled a Bharat enterprise or managed deep-tech before).
Introduce a Zero-Cash-Burn Mentor Scheme: startups that meet governance norms and independent board oversight get access to capital protection pools—a reversible reserve fund for continuity in downturn.
Include mentorship incentives for ecosystem coaches—business school professors, regional CEOs, retired captains of industry—who can prevent misgovernance. This echoes the safety-net coaching ideas already discussed among startup founders.
D. Integrate the Informal Economy
India’s largest “startup” economy isn’t only digital apps—presswalas, kirana owners, dabbawalas stand for millions of entrepreneurial dreams. A post by Shobhit Mathur calls them India’s real backbone: working 14 hours a day, vulnerable to harassment and licensing red tape (linkedin.com). Build Viksit Startup Hubs in towns: clusters where micro-entrepreneurs can register in minutes, get credit at micro-rates, file GST annually and move into the formal economy. That unleashes a billion small-scale startups—none high-tech, but all self-sufficient.
E. Celebrate and Learn from Failure
Promote “Failed Startup Stories” seminars in all top 100 colleges, where founders share mistakes transparently, as in Israeli hackathons.
Launch a public fund: a grant for founders who fail but show promise in learning—not to incentivise failure, but to reward adaptation and regroup.
F. Government Must Focus Buy-In, Not Only Grants
Government schemes like Startup India, Atmanirbhar Bharat or Deep-Tech Accelerators must be evaluated not on the number of grants awarded, but the number of surviving scale-ups after five years. Funding should come post-PMF validation—once a startup demonstrates traction in Bharat’s real customer segments.
Youth & Middle-Class: Why Your Role Matters Most
You—the graduates, the middle‑income families, the city‑second‑tier youths—are the stakeholders here. Here’s how you shape the reboot:
As job seekers, demand equity and transparency information from your startup employer—ESOPs, vesting schedule, burn rate, governance.
As aspiring founders, choose mentors early—preferably coaches who have built Bharat mid-sized enterprises, not only digital apps.
As citizens, call for policy intervention that supports micro-entrepreneurs’ formalisation, not just showpiece startup summits.
As voters, ask local MPs and MLAs about innovation infrastructure at district universities, not only roads and metros.
Because the current system kills founders psychologically, emotionally, and financially—not because they lack ideas or talent, but because the system lacked trust or guardrails. Youth-driven pressure can fix that.
Conclusion: Bharat’s Startup Promise Beckons
The true power of a startup ecosystem is not the number of unicorns, but the health of innovation pipelines, research-driven ventures, and regenerative learning from failures. Bharat’s startup promise is not dead—it just needs a surgical reboot.
We must build platforms where big ideas—no matter how early—are not met with a brick wall, but with governance, mentors, measurable milestones, and a formal ecosystem of deep tech, manufacturing, global R&D, and inclusion for unorganised micro-entrepreneurs.
When every presswala can elevate his shop into a registered micro-enterprise; when every AI founder goes from ghosted to backed by proper capital; and when youth press for governance not glamour—then Bharat will not only survive its startup crisis but transform it into a decade of real, resilient growth.
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