India’s startup landscape is witnessing a transformative shift, with nearly half of all recognised startups now emerging from Tier 2 and Tier 3 cities, indicating a move away from metro-centric entrepreneurship toward more balanced regional growth. The trend underscores the increasing role of smaller cities in shaping the nation’s innovation and economic development.
Ahead of National Startup Day, government officials highlighted the crucial contribution of startups in bridging rural-urban gaps. Innovative ventures across sectors such as agri-tech, telemedicine, microfinance, tourism, and ed-tech are creating sustainable livelihood opportunities while addressing longstanding developmental challenges in semi-urban and rural regions.
The role of women in the startup ecosystem is also expanding significantly. As of December 2025, over 45% of recognised startups have at least one woman director or partner, positioning women-led enterprises as key drivers of inclusive economic growth. This development reflects the integration of innovation with social equity, ensuring entrepreneurship contributes to broader regional and societal development.
Over the last decade, India has emerged as one of the world’s largest startup ecosystems, with over 2 lakh recognised startups across the country. Traditional hubs such as Bengaluru, Hyderabad, Mumbai, and Delhi-NCR remain significant, but smaller cities are steadily asserting their presence, highlighting the democratisation of entrepreneurship.
Central to this growth is the Startup India initiative, led by the Department for Promotion of Industry and Internal Trade (DPIIT). The program provides policy support, funding mechanisms, and ecosystem-building tools that have enabled startups to scale domestically and internationally. The initiative also supports the development of high-value startups, with India now hosting over 120 unicorns collectively valued at more than $350 billion, up from just four in 2014.
Financial mechanisms such as the Fund of Funds for Startups (FFS), managed by the Small Industries Development Bank of India (SIDBI), have strengthened the ecosystem by channeling capital through SEBI-registered Alternative Investment Funds (AIFs). To date, the FFS has committed its Rs 10,000 crore corpus to over 140 AIFs, which have invested more than Rs 25,500 crore into over 1,370 startups spanning diverse sectors and geographies.
Experts say that this shift toward regional startups presents opportunities for remote and island territories such as the Andaman and Nicobar Islands. Improved digital connectivity, funding access, and policy support could enable local entrepreneurs to leverage regional strengths in eco-tourism, fisheries, agri-tech, and services, linking local innovation to the national startup ecosystem.
As India observes National Startup Day, the message is clear: entrepreneurship is no longer confined to metro cities. Smaller urban centres and women-led enterprises are emerging as key drivers of innovation, employment, and inclusive economic growth, reinforcing India’s position as a global leader in startup-driven development.
