India’s bid to kickstart innovation ecosystem in SCO

The Department of Promotion for Industry and Internal Trade (DPIIT), Ministry of Commerce, held the third edition of the Shanghai Cooperation Organisation (SCO) Startup Forum in New Delhi in May 2023 to promote cross-border incubation for startups and innovation for building knowledge-exchange systems within the member countries. The Indian startup ecosystem has undergone a rapid metamorphosis, embodying the intricate interplay of technological advancement, economic dynamics, and government initiatives. Under such transformations, New Delhi strongly pitched for the “Special Working Group on Innovation and Startups” in SCO. The first two meetings of SCO’s Startup Forum were held virtually to lay the foundation for multilateral engagement for identifying areas of cooperation. The Indian startup ecosystem exemplifies the quest for innovation and disruption, fueled by a talented workforce hailing from diverse backgrounds, has much to offer to SCO member countries, especially the Central Asian Republics (CARs). Likewise, innovation and startup engagement in different geographies also provide an opportunity for global investors to take part in the Indian transformative power of digital connectivity. 

The Indian startup ecosystem exemplifies the quest for innovation and disruption, fueled by a talented workforce hailing from diverse backgrounds, has much to offer to SCO member countries, especially the Central Asian Republics (CARs).

Indian Startup Ecosystem and SCO

Over the years, India has built a strong ecosystem of entrepreneurial prowess and technological ingenuity by nurturing startups and entrepreneurs. The entrepreneurial zeal for disruption was nurtured among highly talented professionals since the early 1990s. This pivotal juncture materialised in 2014, with the launch of the government-led "Startup India" campaign. This initiative aimed to nourish startups through transformative policies, fiscal incentives, and the establishment of supportive infrastructures. The availability of skilled engineers, technologists, and business professionals has catalysed a wave of entrepreneurial endeavours, reshaped industries and redefined the rules of the game. Its impact has reverberated across the nation, solidifying a culture of entrepreneurship and forging a path for further development. With government support and increased investments, Indian startups rose from 471 in 2016 to 72,998 in 2022 and created more than 700,000 jobs. India, the world’s third-largest startup ecosystem after the United States (US) and China, raised US$27 billion via 1,355 deals between January 2022 to October 2022. In 2023, this ecosystem is expected to raise US$180 billion. Digital Public Infrastructure (DPI) like Aadhaar and Unified Payments Interface (UPI) has revolutionised the Indian landscape, providing a strong foundation for startups and enabling secure authentication, streamlined transactions, and increased financial inclusion. Leveraging these digital platforms, startups have developed innovative solutions, harnessing digital identity and frictionless payments to propel the ecosystem's growth. On 13 May, SCO member states unanimously adopted New Delhi’s proposal of “DPI as the right way for deploying digital technology among member states," for inclusive growth within the region. India’s UPI is currently used in Nepal, Bhutan, France, Singapore, the UK, UAE and Mauritius, as a secure platform for digital transactions. DPI within the SCO region can enhance commerce by lowering the existing costs, facilitating the prompt movement of goods, and boosting tourism.

India’s AYUSH exports to these countries were worth US$16 million in 2022. Startups can deliver pure AYUSH goods to Central Asia without encountering usual challenges like fake medicines and cross-border payments.

The pharmaceuticals and health tech sector has emerged as another focal point of innovations in India. In 2021, there were 3,548 active startups that had secured funding of US$2.2 billion. This is estimated to reach US$21.3 billion by 2025, thereby showcasing the transformative potential of startups in reshaping healthcare accessibility and delivery. In 2022, India’s pharmaceutical exports to Russia, Uzbekistan, Kazakhstan, Tajikistan, Turkmenistan, and Kyrgyzstan were US$ 597.8, 128.16, 72.6, 27, 25.4, and 16.15 million, respectively. The Indian startups can form joint ventures with Central Asian countries for quality control, digitisation and delivery of pharmaceuticals. Central Asian countries are also increasingly importing AYUSH goods—traditional and homoeopathic medicines—from India. India’s AYUSH exports to these countries were worth US$16 million in 2022. Startups can deliver pure AYUSH goods to Central Asia without encountering usual challenges like fake medicines and cross-border payments. In 2022, Eurasian countries started the promotion of digitisation for regional integration under the Central Asia Regional Economic Cooperation (CAREC). CAREC programme aims to integrate digital technologies for widening access to education, and healthcare and create better opportunities in trade, finance and tourism for Central Asia and beyond. Similarly, the CAREC digital strategy 2030 seeks to promote paperless information via e-logistic platforms, improving cross-border cargo movement through automated payment systems. It will also strive toward regional digital literacy and scale-up digital technology for sustainable development. The Indian startup ecosystem can potentially offer valuable assistance to other nations in their pursuit of fostering entrepreneurial landscapes. The Indian startup ecosystem can contribute through knowledge sharing, technology transfer, market expansion, collaboration, investment, policy advocacy, and social impact initiatives. Indian institutions like iCreate, Dev IT and NTPC are cooperating with their counterparts in Uzbekistan to promote startup culture, DPI, and other innovations, through bilateral agreements. The CAREC programme has opened more and more converging opportunities between India and SCO member countries to exchange knowledge and innovations through startup ecosystems.

The Indian startup ecosystem can potentially offer valuable assistance to other nations in their pursuit of fostering entrepreneurial landscapes.

India has accumulated valuable expertise in navigating complex markets, which can be shared to help startups in SCO countries. Innovative solutions tailored to the Indian market can be transferred to address the needs of these nations. By forging partnerships, the Indian startup ecosystem can provide funding, mentorship, and access to a wider network of investors to support startups abroad. Additionally, Indian startups can advocate for favourable policy changes and guide other countries in developing supportive ecosystems. DPI has enabled India to strengthen the delivery system of public goods and services and also provided data-driven insights for the redressal of grievances. The use of DPI can also help some of the SCO countries, especially in Central Asia, to expand social and financial assistance to the downtrodden sections of society. The Indian startup ecosystem has the potential to foster a global network of innovation and entrepreneurship, creating a mutually beneficial environment for startups across borders.

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Ayjaz Wani is a Fellow in the Strategic Studies Programme at the Observer Research Foundation.  Sauradeep Bag is Associate Fellow at the Observer Research Foundation.

• International Affairs
• Domestic Politics and Governance
• India
• Digital integration
• DPI
• entrepreneurship
• health
• Investment
• Pharmaceutical
• SCO
• startup ecosystem
• tech sector

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