Over Rs 1,100 crore and counting: Rajasthan Unveils Plan For Startup Boom

Key takeaways:

• Rajasthan has announced a Rs 1,000 crore budgetary provision for setting up Atal Innovation Studios and Accelerators in Jaipur, Bharatpur, Bikaner, and Udaipur
• Budget initiatives include Rs 25 crore corpus for procurement and subcontracting from startups
• Rajasthan has proposed a Rs 100 crore fund of funds as financial support via equity for startups
• The state has also set aside Rs 10 crore for an i-Start Fund under the Atal Entrepreneurship Programme

Startups are a prominent catalyst in Prime Minister Narendra Modi's vision to transform India into a developed nation by 2047. The Rajasthan government has been among the foremost to recognize the critical role entrepreneurs can play and is taking swift steps to nurture startups in the state. Rajasthan has over 4,780 DPIIT-recognised startups already, of which at least 2,272 are notably led by women. Startups in the state reported the creation of 13,724 direct jobs in 2023 alone.

The 2024-25 state budget, announced on July 10, backed by Rajyavardhan Singh Rathore, the minister of Information Technology and Communications, ​​underscored the Rajasthan government’s intention to build a conducive environment for existing founders and budding entrepreneurs. The government set aside over Rs 1,100 crore for startups and technological innovation for the year in the state, where data shows startup activity has been booming in the construction, engineering, food processing and business support sectors.

Outlining a series of initiatives for the welfare of the state’s youth, the government stated its intention to instil an entrepreneurial spirit among them. The initiatives are expected to power the ‘Viksit Rajasthan 2047’ mission to become a developed state by 2047.

To lead the youth to a future where they can be founders and job creators, the state has launched the Atal Entrepreneurship Programme. Up and coming founders need a sense of community and connection to see their ideas through to fruition. Through the Atal Entrepreneurship programme, which includes financial as well as non-financial incentives, young founders will get the opportunity to be mentored by successful Indian and international CEOs as well as gain outreach exposure.

Improving access to investments, projects

Absence of funding continu Jo es to be a barrier for startups in their endeavour to grow and scale. In fact, a global study from 2022 showed that lack of financing and investors was among the major reasons for startup failure. “The youth of our state are very innovative and entrepreneurial but the journey of a startup is full of ups and downs,” noted the state finance minister in her speech.

As such, the Rajasthan government has embarked on a multifaceted path towards establishing a self-sufficient and long-term funding funnel for startups.

But that’s not all. Equity financing, an instrument that helps pool funds from investors into high-potential startups, is another facility on the anvil. The state proposes to set up a Rs 100 crore fund-of-funds to offer equity funding to startups in Rajasthan.

Beyond enhancing investment opportunities, the state’s initiatives also focus on helping startups to get business. An i-Start Fund under the Atal Entrepreneurship Programme will offer funding up to Rs 10 crore for selected startups to gain outreach and exposure.

Government recognition — in the form of state-led projects and procurement — can be vital for nascent startups to be noticed in an ultra-competitive market. So the Rajasthan government intends to create a Rs 25 crore corpus fund under the i-Start Fund where startups can receive work orders directly from various departments. In addition, startups will directly be enlisted as subcontractors to procure work from government departments.

The dual emphasis on the expansion of financing streams and the inclusion of the startup sector in government projects is expected to allow startups to hit the ground running and increase the pace of their go-to-market strategy.

Generating niche employment opportunities

Technology can be a force for good in India’s future development and young people have the potential to create innovative digital solutions. These solutions will not just bring advancements but also generate new avenues for employment over the next several years.

To further these efforts, the Rajasthan government has introduced an AVGC-XR Policy that covers animation, visual effects, gaming, comics, and extended reality. As nearly half of recognized startups in India are now based in emerging cities, Rajasthan plans to set aside a whopping Rs 1,000 crore to establish Atal Innovation Studios and Accelerators in Bharatpur, Bikaner, Jaipur, and Udaipur. As part of the same plan, an Agriculture Accelerator Mission is also proposed to be set up which will spark innovation in agribusiness.

These budgetary proposals are expected to create 50,000 new jobs over the next five years. Moreover, the prominence given to in-demand technologies will instil confidence among the state’s youth to gain insights and build a future career in these technologies.

Enabling innovation and skilling

New startup ideas germinate from identifying potential product and service opportunities in the market. Having said that, entrepreneurs face several challenges including market volatilities, talent crunch, and changes in skill demands.

Given this context, the launch of a Learn, Earn, and Progress (LEAP) Programme by the Rajasthan government with an outlay of Rs 25 crore will help founders upskill and hire skilled manpower.

Entrepreneurship is synonymous with innovation. And the sooner the youth cultivate an innovative mindset, the better it is. To inspire entrepreneurial development from an early age, the Rajasthan government will set up business innovation programmes for schools and rural startups at the district level, with a budgetary allocation of Rs 20 crore. A further Rs 300 crore corpus will enable upgrades at technological institutions in Bharatpur, Bikaner, and Ajmer, transforming them into Rajasthan Institutes of Technology.

Strengthening a startup-first Rajasthan

Rajasthan has slowly risen to the ranks of the top-performing states for startup promotion in India. According to the States Startup Ranking Framework 2022, Rajasthan was adjudged one of the top performing states in India when it came to startup creation. In addition, two startups from Rajasthan also won in the National Startup Awards 2023 under the rural areas’ impact and sustainability champion categories.

The state has taken a series of steps to improve the ease of doing business among startups — including i-Start, a nodal platform for startup registration and networking in Rajasthan. The platform has facilitated Rs 901 crore worth of investments and helped create over 32,800 jobs already. Startups registered and recognised by i-Start are also eligible to get work orders from government departments up to Rs 25 lakh without the need to apply via tenders. So far, i-Start’s e-bazaar has awarded 70 work orders worth more than Rs 11 crore.

Such existing initiatives as well as the foresight reflected in the Rajasthan government’s budget announcements offer a clear message to entrepreneurs: “Come, build in Rajasthan. We’ve got your back.”

Be it the capital boost through financial and non-financial incentives or startup promotion, Rajasthan has created a vibrant socio-economic support system for startups to grow and thrive. The unwavering vision to motivate entrepreneurs to “Start Up” will eventually become a force multiplier, helping Rajasthan become the destination of choice for entrepreneurs, foster impactful ventures, and improve employability. With the foundational pillar for startups strengthened, it is over to Rajasthan’s entrepreneurs to build the next billion-dollar business.