Why Tier 2, 3 cities are emerging as the fastest growing startup hub in India

Gone are the days when startups and entrepreneurship were confined to metro cities. Today, approximately 50% of recognized start-ups in India are based in Tier 2 and Tier 3 cities. The ongoing technological revolution witnessed in Tier 2 and Tier 3 cities is fueling the country’s economic growth and driving socioeconomic transformation globally.

Delphin Varghese, co-founder and chief business officer, Adcounti Media, said that improved infrastructural support, faster internet, favorable working conditions, better transport communication and availability of a huge pool of talent have contributed significantly to the start-up of small businesses. cities.

Furthermore, changing consumer behavior, attributed to increased internet penetration, has opened up opportunities in the local market, he added. A BCG report reveals that 50% of online shoppers are located in small towns. This number is expected to reach 60% by 2030.

Pushkar Limaye, co-founder and CTO of Mahindra& Mahindra-backed Carnot Technology said, “There is a lot of potential in start-ups in Tier II and Tier III cities that needs to be tapped. India is growing and a true indicator of whether entrepreneurs dare to dream big in smaller cities. Every time we visit smaller towns, rural areas or agricultural shows, we are surprised by how much talent and innovation there is. It’s always been there, and now it’s flying with technology and the penetration of the Internet combined with renewed confidence.”

According to Dinesh Pratap Singh, co-founder of WoodenStreet, India’s growth has spread beyond the metros and reached Tier 2 and 3 cities in the country.

“Solving local problems and providing solutions at scale in various sectors like health, education, domestic, agriculture, etc is a vital reason for the growing number of startups from these parts of the country,” said Dinesh Pratap Singh.

In addition, tier-2 cities such as Jaipur, Ahmedabad, Indore and Surat have seen an economic growth rate of over 40% on the grounds that larger spaces are available at low and affordable prices, enabling startups to operate on a larger scale, he added. .

“Tier 2 and 3 enable good infrastructure at a lower cost.” The cost of living and survival in these cities is also lower. People’s opinion is generally changing, as far as startups are concerned in these cities. Availability of both skilled and unskilled people at a lower cost as compared to Tier 1 cities,” said Dr Visesh Kasliwal, Founder, Mediseva.

Skyrocketing costs in metro cities and exorbitant rents deter businesses from investing in such places.

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