The growth of India as one of the top four start-up nations globally has made the world take notice of our innovation prowess. Perhaps, India being an entrepreneurial nation traditionally, the start-up landscape in India is very different and in a way more secular compared to that of the west.

Numbers, growth rate

Globally, start-ups are dominantly seen in technology sectors. However, in India, start-ups have been actively created in different sectors of the economy, apart from technology and related sectors. Based on an analysis of the number of start-ups formed during 2016-25, three of the top eight sectors in India were sectors such as food processing, food & beverage, and construction.

The top sectors by growth rate in the formation of start-ups includes sectors such as social impact, toys, pet care products and building materials. These are not the sectors that one usually associates with start-ups and have been unique to the Indian context. For example, India has now become known as the epicentre of Impact start-ups — founders who adopt entrepreneurial approaches instead of the traditional philanthropic route to solve challenges in the social sector. While the top sectors reflect the market opportunities for innovation products in the Indian context, it is also a manifestation of the traditional entrepreneurial strengths taking a start-up approach.

Funding flows

Fund raising from investors is an important activity for start-ups, since in most cases founders would be unable to bring in substantial capital on their own till the start-ups achieve sustainability. The top sectors by number of start-ups funded as well as quantum of funding shows that there are variations in the sectors where we see highest start-up activity vis-a-vis where we see maximum funding interest. For example, sectors such as clean tech, mobile apps, SAAS, AI, e-commerce, medical equipment, fintech do not feature in the top sectors in terms of start-up formation, though they attract significant funding from investors. This goes on to show that start-up formation is not just a function of funding availability, but also depends on expertise, perceived market opportunities and the carrying capacity.

Start-up density

Sub-sectors such as lending, diagnostics, medical equipment, payments and biotechnology have large number of start-ups as well as a high percentage of funded start-ups. There are also certain ‘specialised’ sub-sectors, which may have very few start-ups, but have very high funding percentage, such as nephrology and AI in logistics.

In summary, the Indian start-up landscape is dominated by sectors that are reflective of the local context and may be at variance with global trends; also, start-up formation has not necessarily been a function of funding popularity. As they say, the most fund-able sector isn’t always the most crowded one, sometimes it’s the quiet niche where almost everyone who shows up, wins.

The writer is Professor, IIT Madras and Head, CREST, and Founder, YNOS Venture Engine. Research inputs from Chinni Chaitanya and Dr Vamanie Perumal

Published on June 11, 2026