India’s startup funding gap: grants vs. government contracts
India’s government funds startups through grants but rarely awards them purchase orders. Despite prototypes developed with public money, state agencies continue sourcing from established suppliers, leaving startups without scalable revenue.
Sources: yourstory.com
“This underscores a structural misalignment: India’s startup policy emphasizes funding but stops short of creating demand, unlike defense or infrastructure sectors where government contracts drive growth.”
What it means
The pattern reflects broader procurement inertia, where risk aversion and legacy vendor relationships outweigh innovation incentives. Without policy changes—such as mandatory startup quotas or faster tender processes—grants alone may fail to translate into sustainable businesses. Similar gaps exist in other emerging markets, but India’s scale makes it a critical test case.
Read the original reporting
The outlets below did the original reporting.
- India Funds Its Startups. Why Won't It Buy From Them? — yourstory.com
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