The Unstoppable Sharks: What India Needs to Do to Foster Entrepreneurial Spirit in 2025

In 2025, the landscape for fostering entrepreneurship in India remains challenging. While the drive and ingenuity are palpable, roadblocks continue to stifle the growth of game-changing businesses. What must India do to cultivate an environment that can finally turn entrepreneurial dreams into world-renowned success stories?

​​India is the Land of Startups — with Caveats

India’s startup story is one of great promise, but it has clear limitations. While the country boasts thousands of startups, it struggles to produce globally dominant, homegrown companies like Apple or Salesforce.

The venture capital space has been active, and we’ve seen over 100 unicorns emerge in recent years, but that number is declining. In 2023 and 2024, the growth of unicorns began to slow down, and companies like BYJU stand as cautionary tales.

Why?

I proffer that there’s a fundamental gap between being a startup hub and a scale-up engine. Many of India’s startups focus on replicating models that have succeeded elsewhere or function as service providers for more extensive international companies.

However, there is a ceiling to this type of growth, as I have seen first-hand in my experience guiding companies in leadership positions.

Also, outsourcing and back-office functions dominate, rather than an indigenous product-first mentality. Sure, India excels at exporting talent and providing back-end support to global giants, but where are India’s own disruptive, world-leading tech companies?

The reasons are multifaceted. Indian entrepreneurs often face challenges ranging from rigid regulations and funding shortages to a cultural aversion to risk. Furthermore, the mindset in many sectors still leans toward imitation rather than innovation.

Some regions, such as Bangalore and Hyderabad, have emerged as tech hubs, and they are even struggling to foster the kind of business culture that can create the next Amazon or Google.

India’s startup ecosystem, while significant, is at a crossroads. It needs to break through and establish lasting brands with global clout; the country needs to recalibrate how it fosters entrepreneurial spirit.

Measures to Foster Entrepreneurial Spirit in 2025: A Roadmap

So how do we get there? Here are the critical measures India must adopt to nurture the entrepreneurial mindset and environment in 2025:

1. Streamline regulatory processes and minimise red tape

Complex regulations often deter entrepreneurs from starting or scaling their businesses. The government must simplify the regulatory landscape, making establishing, operating, and growing a company easier. Initiatives like single-window clearances and eliminating redundant regulations can help remove unnecessary obstacles.

2. Focus on innovation, not imitation

Indian startups must move beyond copying successful models from the West and instead focus on creating indigenous products and solutions. A shift in focus toward research and development in areas like AI, biotech, and renewable energy will enable Indian entrepreneurs to pioneer new sectors rather than follow existing ones.

3. Improve access to capital, especially in Tier 2 and Tier 3 cities

Access to funding in India’s metropolitan cities is somewhat developed, but we cannot say for smaller towns. Venture capital, angel investors, and incubators must actively scout and support entrepreneurs from less saturated markets to unlock India’s entrepreneurial potential.

4. Encourage risk-taking by cultivating a failure-friendly culture

Failure is a stigma in Indian society, but entrepreneurship thrives in an environment where financiers encourage risk-taking. Educational institutions, corporations, and the media must promote stories of entrepreneurs who failed multiple times before finding success.

5. Build world-class infrastructure to support entrepreneurship

Entrepreneurs will find it challenging to scale their businesses without robust digital and physical infrastructure. India must ramp up investments in high-speed internet, power supply, transportation, and logistics to ensure startups can operate seamlessly and scale efficiently.

6. Foster collaboration between academia and industry

Bridging the gap between universities and business can drive more significant innovation. Universities must partner with industries to promote entrepreneurship as a viable career option. Offering entrepreneurial programs and research opportunities can push students to build businesses.

7. Develop policies that incentivise R&D

India must incentivise research and development through tax breaks, grants, and subsidies to become a global innovation leader. Creating specific funds to support R&D will encourage more startups to focus on deep tech and disruptive innovations.

8. Increase mentorship and guidance programs for first-time entrepreneurs

Many startups fail because of a lack of mentorship. Governments, industry associations, and seasoned entrepreneurs should set up mentorship networks to guide first-time founders through the difficult journey of building a business.

9. Promote diversity and inclusion in entrepreneurship

India’s entrepreneurial ecosystem has the potential to become even stronger by promoting diversity. Encouraging women, underrepresented communities, and rural populations to enter the entrepreneurial space will diversify innovation and create a more dynamic ecosystem.

10. The Risk of Shallow Thinking

Generative AI tools like ChatGPT and MidJourney can generate content, solve problems, and create ideas quickly. While these tools augment high-cognition roles, they also risk over-reliance on AI, wherein professionals may bypass deep thinking and rely on AI-generated insights without critical assessment. It leads to a loss of creativity as AI excels at replicating patterns but needs more original human creativity.

A SWOT Analysis of India’s “Ease of Doing Business” Landscape

Here are the fundamental insights on which we could build the next chapter of India’s growth story:

● Strengths: India has a young population, a large pool of tech talent, and a growing middle class with increasing spending power. Digital adoption is accelerating, and the government has introduced various reforms to make doing business easier, such as the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code.

● Weaknesses: Bureaucracy remains a significant barrier to entry. Funding is disproportionately concentrated in urban centres, leaving more miniature cities and rural areas underserved. Additionally, the cultural stigma around failure discourages risk-taking and innovation. Need to foster cognitive flexibility, creativity, and emotional intelligence across all disciplines.

● Opportunities: India can become a leader in emerging technologies like artificial intelligence, renewable energy, and biotech. The rise of digital platforms and the gig economy also presents new opportunities for entrepreneurship across various industries. Introduce AI tools early in education to teach collaboration, not dependence.

● Threats: Global economic instability, geopolitical tensions, and an over-reliance on outsourcing as a business model could hamper the development of a self-sustaining entrepreneurial ecosystem. If India doesn’t act quickly, other countries may outpace it in innovation. The lack of critical educational shifts to develop metacognition and critical thinking as core learning components is missing.

Conclusion: How Organisations Can Build and Benefit from Employees’ Entrepreneurial Spirit

It’s not just startups that need entrepreneurial spirit. Established organisations can benefit from it, too.

Encouraging intrapreneurship — where employees act like entrepreneurs within the organisation — can lead to innovation, new product development, and increased competitiveness. But how can companies foster this?

The key is to create a culture that values curiosity, allows for calculated risk-taking, and doesn’t penalise failure. Are your employees empowered to think outside the box, or are they confined to rigid job descriptions?

To continue the discussion, email me at Arvind@AM-PMAssociates.com.