Startup jobs YoY growth rate contracts sharply; Maharashtra, Karnataka, Delhi corners nearly 50% share

The year-on-year growth rate of the number of people employed at the Department for Promotion of Industry and Internal Trade (DPIIT) recognized startups across India has contracted sharply. From 58.6 per cent rise in startup employment from CY2018 to 2019, the growth rate plunged to only 13.8 per cent for CY 2019-2020 period, according to the data shared by MoS Commerce and Industry Som Prakash in the Lok Sabha on Wednesday. The employment volume had jumped massively from 96,528 in 2018 to 1,53,126 in 2019 but faltered with a relatively marginal increase to 1,73,315 in 2020 amid Covid impact across sectors due to which majority businesses including startups had either slowed down or paused hiring.

The information of employment was furnished by startups during their filing of recognition form, Prakash said. The leading states in startup employment in 2020 were Maharashtra, Karnataka, and Delhi with 34,008; 28,840; and 19,511 people employed respectively. In fact, the three startup hubs accounted for 47 per cent of India’s total startup employment. On the other hand, states with the least number of people employed at startups in 2020 were Arunanchal Pradesh with zero employment; Sikkim, Meghalaya, and Mizoram with two people employed each, Ladakh with three and seven people employed in Lakshadweep.

According to a report on the National Startup Awards 2020 by Startup India last year, 12 jobs on an average have been created per startup. 43,149 startups were registered with DPIIT as of February 3, 2021, according to the Startup India portal. This is up from 24,927 recognized startups as of November 17, 2019. The DPIIT recognised startups are entitled to self-compliance under three environmental and six labour laws, exemption from paying income tax for three consecutive years along with exemption on capital gains and investments above fair market value. The benefits include up to 80 per cent rebate in filing patents and winding up within 90 days under Insolvency and Bankruptcy Code, 2016.

However, startups registered on the Startup India portal don’t directly qualify for DPIIT benefits even as they can apply for different acceleration, incubator programmes, and other challenges on the website along with accessing resources such as like learning and development programmes, government schemes, state polices for startups, and more. Startups are required to apply separately for DPIIT recognition to avail other benefits including access to intellectual property services, relaxation in public procurement norms, easy winding of company, access to SIDBI Fund of Funds.