Startup Ecosystem In India Needs Process-Driven Approach: IIM-I Study

Indore (Madhya Pradesh): India has rapidly expanded its startup incubation infrastructure, but the ecosystem lacks process-level understanding, effective evaluation and consistent data, according to a study by the Indian Institute of Management, Indore.

The study is for prompting policymakers and industry leaders to rethink how business incubators are evaluated and supported in the country’s rapidly evolving startup landscape.

Authored by Sonali Gupta, a DPM 2016 alumna and Professor D L Sunder, the study—published in the Journal of Public Affairs—provides a critical review of the business incubation policy and ecosystem in India, calling for a more evidence-based and process-driven approach to entrepreneurial support.

With over 1,000 incubators established across the country under flagship initiatives like Startup India and the Atal Innovation Mission, India’s startup infrastructure has grown impressively in recent years. However, the study points to a pressing gap: a lack of process-level understanding and insufficient long-term research on how incubators actually function and influence entrepreneurial outcomes.

“India has made great strides in supporting startups, but without systematic evaluation, we risk mistaking quantity for quality,” said Gupta. “There is an urgent need for consistent metrics and data-driven insights to truly understand what works.”

The research highlights that while incubators are widely promoted as catalysts for innovation and job creation, the actual impact of these institutions remains poorly documented. Inconsistent reporting, the absence of a central monitoring framework and reliance on vague success metrics, such as number of startups supported or office space occupied, have obscured real outcomes like sustainable venture creation and long-term business growth.

One key concern raised in the paper is the blurring of definitions. The term “incubator” is often loosely applied to co-working spaces and commercial setups with minimal mentorship or innovation support, leading to mismatched expectations and diluted impact. Furthermore, ‘serial incubation’, where startups move between incubators primarily for funding and benefits, distorts performance metrics, making it difficult to assess true entrepreneurial progress.

The study also criticises the dominant top-down evaluation models that overlook the voices of the entrepreneurs themselves, those best equipped to assess the value of incubation support. A more bottom-up, entrepreneur-informed assessment strategy, the authors argue, could yield far more meaningful insights.

Adding to these challenges is the lack of localized incubation strategies that reflect India’s vast regional and sectoral diversity. A one-size-fits-all approach, the study warns, may stifle innovation in underserved areas or industries.

As India aspires to become a global startup hub, the authors offer a constructive path forward: build robust evaluation frameworks, invest in longitudinal research and foster a culture of evidence-based policymaking. By doing so, the country can move beyond headline numbers and cultivate a startup ecosystem that’s not just large but truly impactful.

“This study is a wake-up call,” added Prof. Sunder. “We need smarter incubation, not just more of it.”