The Economic Survey 2024 tabled today highlighted that BFSI came third in terms of the top sectors for startups in India, with digital payments and UPI contributing to this growth.
The top sectors for start-ups in 2023 were EdTech (16 per cent), EnterpriseTech (12 per cent), BFSI (10 per cent), Advertising and Marketing (7 per cent), RetailTech (6 per cent), Media and Entertainment ( per cent), ConsumerTech (5 per cent), Professional services (4 per cent) and Gaming (4 per cent), revealed the report.
Several factors have contributed to the rise of start-ups in various sectors. The BFSI sector saw a surge in start-ups starting in 2016, driven by significant events such as the introduction of UPI. The demand for scalable and efficient cloud solutions led to the growth of Software as a Service (SaaS) start-ups, resulting in 21 unicorns since 2014.
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As per NASSCOM, India’s tech start-up ecosystem ranks third globally and has performed considerably better than the USA and the UK. The strength of the Indian tech start-up ecosystem lies in its large pool of start-ups, unicorns, and ability to scale. With 16 per cent of the world’s AI talent, India positions itself as an innovation hub, showcasing rapid adoption of AI skills.
Global Capacity Centres
Global Capacity Centres (GCCs) in India have grown significantly, from over 1,000 centres in FY15 to more than 1,580 centres, with over 2,740 units by FY23. These centres contribute to economic growth by providing high-quality employment, highlighted the report.
In FY23, the total talent employed in Indian GCCs exceeded 16.6 lakh. Of this workforce, over 42 per cent are engaged in engineering, research, and development (ER&D), 34.5 per cent in business process management (BPM), and 23.4 per cent in IT services.
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The software, internet and banking, financial services, and insurance (BFSI) sectors collectively account for about 58 per cent of India’s IT GCC talent. Revenue from India’s GCCs has increased from USD 19.4 billion in FY15 to USD 46 billion in FY23, growing at a compound annual growth rate (CAGR) of 11.4 per cent, the report added.
GIFT IFSC – A dominant gateway for India
The IFSC in GIFT City, Gujarat, is envisaged to be a unique international financial jurisdiction in India, set up with a dual objective of onshoring India-centric international financial services business as well as serving as a preferred gateway for channelising global capital flows into and out of the country.
Over the last few years, GIFT IFSC has made great strides in achieving both of these objectives. The initiative is a shining example of India’s firm commitment to undertake deep, bold and ambitious financial sector reforms to attract the global financial services business and gradually become a global leader in international finance, revealed the economic survey.
The Banking ecosystem in GIFT IFSC is rapidly evolving with a healthy mix of foreign and domestic banks, primarily catering to the foreign currency borrowing requirements of Indian corporates and public sector enterprises through external commercial borrowing, trade finance, etc.
Transactions under these heads, previously booked from foreign financial centres such as Singapore, Dubai, Hong Kong, etc., are now being booked out of GIFT IFSC.
As of March 2024, the total asset size of IFSC Banking Units (IBUs) crossed USD 60 billion, and the cumulative value of transactions undertaken by IBUs crossed USD 795 billion, highlighted the report.
The robust funds industry in GIFT IFSC has a transformative impact in catalysing global capital inflows into India, including the start-up ecosystem. In the last three years, there has been rapid growth in Fund Management Entities (FMEs) and AIFs registered with IFSCA.
As of March 2024, the cumulative FMEs and funds registered rose from 39 and 33 as of September 2022 to 114 and 120, respectively, as of March 2024. Previously, the pooling of international capital for investments in India was structured through funds (private equity, venture capital, hedge funds, etc.) set up in offshore jurisdictions.
Now, with enabling regulations, a competitive tax regime, and beneficial cost of operations, GIFT IFSC is emerging as a preferred jurisdiction for the pooling of global capital by foreign and Indian fund managers.
