The Indian startup ecosystem has been growing at a staggering rate of 12-15% year by year. In 2019, 1,300 new startups were incepted, out of which 43% operate in the B2B space. There are currently around 20,000 active startups, with 4,750 of them being technology-driven startups.
But what has made the Indian startup sector so appealing that it has risen to the third biggest in the world? According to a survey conducted by Innoven Capital, there are three main factors that have made India an attractive startup destination:
- Cost of doing business
- Proximity to customers/vendors
- Size of domestic market
Indeed, the Indian market offers large untapped opportunities. Especially, the fintech, eductech and healthtech sectors are emerging verticals startups can cater to, whereas e-commerce startups and aggregators have matured. Other upcoming sectors include supply chain management & logistics, mobility, real estate & construction, travel & hospitality, and media & entertainment. Many German startups are already catering to these sectors. 30.2% of German startups are ICT-driven startups, offering products, services or business models for different sectors. Approximately 8.5% of all German startups are active in the healthcare sphere and 6.7% in the area of mobility, automobile and logistics.
German startups seeking to expand to India have access to +280 incubators/accelerators/co-working spaces. Every year the startup infrastructure in India is growing by 40%. Interestingly, already today there are more than 480 startups with non-Indian HQ that work in India to build global products, an increase of 14% compared to 2018.
Some of the German startups working in India or having opened office there include PEAT, Educaro and Canostix:
- PEAT is a Berlin-based startup that has developed Plantix, an AI mobile crop advisory app for farmers, extension workers and gardeners supporting to detect plant diseases and nutrient deficiencies and at the same time offering corresponding treatment measures.
- Educaro is a one-stop-shop for students and young professionals aiming for careers in Germany. The consistently technology-driven claim enables the Educaro to effectively coordinate migration for career purposes, from initial selection abroad to full integration with the provider.
- Canostix is a Berlin-based startup that exploits the interaction of light and matter combined with state-of-the-art data analysis in order to detect cancer early, when it can be cured.
German startups seeking to expand to India can access a variety of service offerings that facilitate their market entry. One of the first addresses to contact is the Indo-German Chamber of Commerce. Located in almost all bigger Indian cities, they serve as a one-stop-shop for companies planning to do business with India or Germany. On the Indian side, Startup India (https://www.startupindia.gov.in/) managed by Invest in India is the right address to approach. Here you can register your startup and avail different benefits including income tax exemptions, easy winding up of a company and self-certification for three environmental and 6 labour laws, among other things.
There are also various programmes supporting German startups to expand to India. Besides GINSEP, the German Federal Ministry of Economic Affairs and Energy recently launched the Next Step India Programme (https://nextstepasia.de/locations/india/) implemented by the German Accelerator. Next Step India features a deep-dive into India’s high-growth areas and is open to all Germany-registered startups from any sector. In 2020 startups from sectors such as healthcare & life sciences, logistics & mobility, smart city, agritech & sustainability and enterprise tech & smart manufacturing will have the chance to go to India to explore the local market.
However, before going to India, German startups should keep a few business insights in mind. India remains a price sensitive market. Many consumer decisions are made based on the price rather than the quality. While the registration process has been eased over the last years, the process can be tiresome. Thus, some German startups that have already entered India gave the advice to first hire a local staff to explore homegrown regulations and initiate the registration process, before opening a dedicated office. Lastly, India is a cultural hotbed. Business transactions are often based on personal relations that take time to be build. This can sometimes be challenging for Germans that have a tendency to build business relations on figures and rationality.
Nevertheless, with India being a growing market, there are a lot of opportunities for German startups to get engaged. The GINSEP ambassador network is here to help you in this endeavour.