Startups gain in H1, good news for hardware sector too

The country may still be reeling under the impact of the second wave of COVID-19 and the word “caution” was recently reiterated by the Health Ministry and experts from Indian Council of Medical Research. And while a majority of businesses in India were trying to recover from the shock several startups in the country – specifically in the digital platform space – managed to raise massive investments from venture capitalists (VC) and private equity firms in the first six months of this year.

Media reports quoting Venture Intelligence indicate that the total investment during H1 2021 has already overtaken the overall investments made in CY 2020 – up from USD11.1 billion from 764 deals for the full year ending 31 December 2020 to USD12.1 billion (Rs 90,278.22 crore) from 31 deals. The unhindered flow of funds also meant that the country has already produced 15 unicorns so far, up from a total of 11 unicorns in the year 2020.

According to available reports, while there were several USD100 million-plus funding rounds during the period, the leaders in the pack included edtech player Byju’s that raised USD1 billion. Close on its heel were food delivery platforms Swiggy and Zomato, at USD800 million and UD576 million respectively. The ban on Chinese apps also led to a positive impact on the ecosystem in India with regional language social media app ShareChat raising USD502 million and fantasy gaming startup Dream11 garnering USD400 million in investments.

In another development that could have a major impact on the digital sector in India, the Ministry of Electronics and Information and Technology recently approved 14 companies under the Production Linked Incentive Scheme (PLI). Those in the approved list include Dell, Wistron, Flextronics, Rising Stars Hi-Tech (Foxconn), Lava International, Dixon Technologies, Info power Technologies, and Micromax, among others. Of these, companies under the IT hardware category have proposed a total production of Rs 84,746 crore, while those under the domestic category have committed production of Rs 76,007 crore. The scheme is expected to bring an additional investment of Rs 2,517 crore to the IT hardware manufacturing sector.

While the balance between the software and hardware sector in India is still tilted in favor of the former, there certainly is a change in mindset as the industry is now ready to reap the benefits of the present Y2K period of electronic hardware in the country. The PLI scheme also indicates the government’s intent to create a very strong component ecosystem, something that had been missing so far – an extremely important first step to make India the manufacturing hub for the world.

shubhendup@cybermedia.co.in