7 challenges faced by a startup company in India

Business View
8 Min Read

Startup and Entrepreneurship is the new wave in India. As the Startup India Scheme was introduced by the Indian Government this phenomena got a positive boost. With the success story of startups like Swiggy and Paytm inspiring a million minds, numerous new entrepreneurs are emerging in our nation. But before every success story comes a struggle story. As many of these entrepreneurs enter the market without any awareness about the possible risks they might face, their initial confidence is tainted with doubts.

To ensure your confidence in your idea stays intact, we have compiled a list of possible hurdles faced by every startup in India. Here is a list of 7 challenges faced by a startup company in India :


1. Lack of Skilled individuals 


One of the biggest hurdles for an Indian Startup Company is the lack of skilled individuals. Indian youth are talented but not skilled. Unfortunately our restrictive education system frequently fails the Indian Youth. Indians are considered as one of the sharpest minds in the world but the Indian unemployment rate paints a paradox before us. The Indian education system still follows the outdated British education system that fails to serve the youth of this country. Much of the curriculum has no practical benefits for us. The standard style of theoretical education stands outdated as data has become available on fingertips, the education system needs to evolve and become more skill focused than theory focused. Algebra and geometry does not serve the collective student bracket of tenth standard but educating them about taxes will help them no matter what stream they choose for their higher education.


2. The Tricky Indian Market    


The Indian Marketspace is a tough one to crack. The average Indian is a smart consumer but a very loyal one. Once a company does crack the market, the Indian consumers are also quite rewarding. It is hard to both get an Indian consumer’s loyalty and shake it off.  Many of the biggest companies of the world have expressed their struggle in the Indian market. For it is a complex market to understand for any startup company. The dynamism of the Indian Market is not one with theoretical solutions. It is barely something the management studies can teach. Studying definitely helps a firm afloat but to really sail through, it is required to understand this landscape from the long running businessmen in this space. Most entrepreneurs get inspired from some US or Chinese startup and want to replicate the formula in the Indian landscape, but this kind of replication can’t happen without making some adjustments.


3. Economic and Political Instability


The Startup India Scheme helped many entrepreneurs initiate their startup journey. This flagship initiative by the Indian Government created an atmosphere of entrepreneurship in India and skyrocketed the startup culture in our country. Needless to say it was a great help to our domestic entrepreneurs but it comes with a crucial question. With the political party running the government changing every five years, what is the guarantee the next government will be as much of an Startup India enthusiast as this one? One top of that the taxes and market fluctuations post covid has become a big hassle for many small startups. Recession, Inflation and Government policies add on to this dilemma. 


4. Fierce Competition


Regardless of its complexities, it is a sought-after market for the enormous business potential and 1.3 billion population. This results in fierce competition among startup companies for the consumers in the market. Every division of the consumer market has subconsciously submitted themself to a particular brand. In this ocean of already established brands, it is extremely difficult to enter the playing field. Amidst all of this, the startup scene in India has been booming for the last few years. With government policies encouraging entrepreneurs to come forward with their startups, there are thousands of entrepreneurs fighting for the limited funds in the market. Even an initiative like Startup India could only provide limited support to our vast entrepreneur community due to the sheer quantity of emerging and existing startups.   


5. Cyber Security


One of the biggest mistakes Indian Entrepreneurs make is by underestimating the need for Cyber security. Today, no business can stay away from digitizing one or all departments. Even the humblest of vegetable vendors use online payment to assist them. In this era of digitalization, overlooking the importance of cyber security is unacceptable. Startups often fail to understand the importance of getting cyber security and the ones that don’t fail, often struggle with funding an above average security support. Many times, a startup company ends up losing their hard earned data by a cyber attack they were not prepared for.   


6. Marketing with limited budget


The biggest repercussion of lack of funding arises while planning the marketing strategy. When the budget is tight, the marketing is often extensive, excruciating, and not satisfactory. Even with great services to offer, when a startup fails to market themselves effectively, it becomes extremely hard for them to grow in the challenging terrain of the Indian Market.



It is crucial for a startup to adhere to the compliances. It helps build the company’s reputation among investors and competitors. And yet it is an extremely challenging task for a startup company to deal with. From registering the entity with the Registrar of Companies(RoC), to getting a Memorandum of Association and Articles of Association (AoA), to LLP Agreements, details of registered office, identity and address proof of directors or partners, the list requires quite a few steps. Apart from these basic requirements, a company might need specific licenses and permits based on their nature of business to operate legally. Besides these, a startup is also required to adhere to the Labor and Employment Laws of our Nation.

Also Check:- Make In India Initiative: Boosting Fastest Growing Startups in 2024

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These challenges are the reality of the Indian market but they are not impossible feats to achieve. Many startups have fought through these hurdles and come out on the other side creating history. If you are an entrepreneur with an idea, work out these challenges while holding on to your startup dream. Remember, the Indian Market is tough, but rewarding. That was our list of 7 challenges faced by the startup company in India. 

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