Can Start-ups Help India Achieve the $5 Trillion Goal by 2025? Much distance still remains to be covered to reach the goal though

By Bhavya Kaushal

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According to a recent report by Ministry of External Affairs and Economic Diplomacy and States Division, India is currently the world's sixth largest economy at $2.6 trillion. India is half way already towards the government's target of becoming a $5 trillion economy by 2025. The robust ecosystem of start-ups have a huge role in ensuring that India reaches this ambitious mark of $5 trillion-dollar. Prime Minister Narendra Modi at the convocation of IIT-Madras recently announced that India is on the third spot in the top start-up nations of the world, with more than 7,000 startups in the ecosystem.

However, much distance still remains to be covered and industry experts should explore the ways in which start-ups can contribute to the target of a $5 trillion economy.

Foreign Investment in India

Foreign names such as Goldman Sachs, Sequoia, Accel, SoftBank, AET have become common names with them hitting the headlines every second day, thanks to the amount of investments they have done in Indian start-ups. Experts believe that all the foreign investment has bolstered the economy to a large extent.

Kaushlendra Singh Sengar, Founder and CEO of, says, "With the channelization of investment from developed economies to an economy like India which possesses a lot of potential due to its untapped markets, Indian start-ups can help achieve the ambitious mark."

The advantages of having foreign investments are multiple. From deploying better technology to investing in research and development, FDI can give start-ups the infrastructural edge where India falls short.

Capital Formation

According to Sengar, the road charted out for India to become a $5 trillion economy is going to be a bumpy ride. He says, "Becoming a $5 trillion economy by 2024 seems difficult with the current GDP, it has to grow at a compounded annual growth of above 10.5 per cent. However, it is achievable if we can increase our economic activities and the rate of capital formation, we can increase the pace of economic growth. That means, the savings need to be invested for capital formation." He believes that financial institutions play a vital role in increasing retail investments and supply of capital.

EV Start-ups

Electric Vehicles are the future of India and undoubtedly, the future of the world. Sandeep Singh, Founder of, says that transforming India into a $5 trillion economy by 2024 would be more challenging than thought, especially, because of the current slowdown in India, "Startups will contribute to the economy indirectly by doing cutting edge research that leads to the development of successful world-beating products."

According to Singh, one area in which startups in India have an edge is in the development of technology that makes electric vehicles (EVs) possible. He says, "Demand for EVs is expected to grow dramatically in the future and research by Indian startups will help develop EVs that can be mass-produced in India. This will play a part in the Indian growth story."

Unlocking the Power of Digital Technologies

The Indian government has time and again highlighted the importance of "going digital' or making India a digital economy. The fact that digitization can help India achieve their economic targets remains unchanged. Digvijay Singh, COO of Indian Angel Network, says, "Recent reports point towards the fact that digital technologies alone can unlock additional economic value to the tune of $1 trillion in India by 2025." He further added, "As a key driver of digitization in the Indian economy and one of its most high-potential segments, the start-up ecosystem will surely play a key role in optimally realizing this opportunity."

The proliferation of smartphones and affordable internet has transformed India's digital ecosystem. Dharamveer Singh Chouhan, Co-Founder, and CEO of Zostel, says, "India has made great advancements in the recent past on the infrastructure level that can only be effectively utilized by fast, ever-evolving companies. India is a data-rich country before actually being rich, i.e. GDP per capita. Startups using our strengths of the smartphone, internet, technology, payments, and data are going to be the core around which India will make its move for the $5 trillion target."

The role of investors, here, holds great significance because they are the ones who are supporting the growth of Indian startups. He said, "I believe that industry stakeholders, from the government to investors to established market players, will have to come together to drive continued growth for start-ups with disruptive business models and solutions. Doing so will be essential to powering India's progress towards becoming a $5 trillion economy by 2025."

Employment Generation & Wealth Creation

Start-ups are the hope of India when it comes to employee generation, wealth creation and spurring innovation. According to a report by TIE and Zinnov, Indian start-ups have immense potential when it comes to job creation. Sector specifically, according to the report, travel and hospitality industry will create 52.3 million jobs by 2028, the food and foodtech industry will disperse 9 million jobs by 2024.

Rachana Lokhande, Co-CEO of Kinetic India, feels that the constant evolution in the standards of living, employment, especially in the blue collar job bracket, will greatly impact the economy. She further adds, "Investing in professional learning and skill development will help create jobs, thereby increasing consumption and enhancing revenue generation – all resulting in a healthy cycle that improves the general standard of living in India."

At the moment, India is raging against the waves of economic slowdown and generation of jobs can help in bridging the gap to a large extent. But start-ups can channelize and monetize the resources they have much more judiciously, says, Mayank Maheshwari, Co-Founder & COO at University Living. He further adds, "Start-ups generate employment, spur innovation, champion optimal utilization of limited resources to generate domestic revenue and boost consumer capital flow."

Ankit Jain, Co-founder of Skootr feels that start-ups are the "vessels" through which entrepreneurs act as catalysts, serving as centers of innovation which support and utilize highly the skills of India's talent pool. He says, "Employment generation, wealth-creation, innovation and problem solving with a global applicability in mind, these are some of the most-desired outcomes from a strong economy and start-ups play an integral role in achieving the same."

Wavy Line
Bhavya Kaushal

Former Features Writer

I am a work-in-progress writer and human being. An English graduate from Delhi University, writing is my passion and currently, I was Entrepreneur India's start-up reporter. I love covering start-ups and weaving their stories into unforgettable tales with the power of ink! 

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