Tier 2, 3 cities now home to 45% of startups in India

Economic Survey 2024

More than  45 per cent or around 56,000 Department for Promotion of Industry and Internal Trade (DPIIT)-recognised startups are emerging out of Tier 2 and 3 cities, the Economic Survey for the financial year 2023-24, tabled on July 22 in Parliament, has said.

From around 300 startups in 2016, the number of DPIIT-recognised startups increased to more than 1.25 lakh by the end of March 2024, the pre-Budget document said.

"Start-ups filed more than 12,000 patent applications from 2016 to March 2024,," it said.

The survey also said more than 47 percent of the recognised startups have at least one woman director.Follow our live blog for the latest on the Economic Survey 2024

Under the fund of funds for startups (FFS), more than Rs 10,500 crore has been committed to more than 135 Alternative Investment Funds, which invested more than ₹18,000 crore in start-ups by the end of FY24, Economic Survey highlighted.

The FFS scheme was approved and established in 2016 with a corpus of Rs 10,000 crore, with contributions spread over the 14th and 15th Finance Commission cycle based on the progress of implementation, to provide a much-needed boost to the startup ecosystem and enable access to domestic capital.

Under FFS, the scheme does not directly invest in startups instead provides capital to SEBI-registered AIFs, known as daughter funds, which in turn invests in growing Indian startups through equity and equity-linked instruments.

Small Industries Development Bank of India (SIDBI) has been given the mandate of operating this Fund through selection of suitable daughter funds and overseeing the disbursal of committed capital. AIFs supported under FFS are required to invest at least 2 times of the amount committed under FFS in startups.