Why Are Indian Startups Imploding?
Layoffs, shriveled IPOs, suddenly scarce funding — the “backbone of New India” is laying bare some of the country’s fundamental flaws.
Oyo has had to scale back its ambitions.
Photographer: Toru Hanai/Bloomberg
Indians have rightly been proud of the dynamism of our startups. Various government programs — Digital India, Startup India — are supposed to have energized the sector. Senior officials have insisted that “visionary and astute leadership” have “turned India into the [world’s] third-largest startup ecosystem.” Prime Minister Narendra Modi has himself said that “startups are going to be the backbone of New India” and even formally designated a “national startup day.” (January 16, for all those who celebrate.)
In the cold, hard light of 2023, however, much of that enthusiasm seems misplaced, or at least overstated. By some estimates, 92 companies in the sector have laid off over 25,000 employees since the beginning of the year. Many that had planned to go public have postponed their offers and lowered their expectations of how much they hope to raise. Hospitality service Oyo Hotels, for example, reportedly reduced the size of its initial public offering to less than half of its original estimate of $1.2 billion.