Why Startups Fail In India | What Are Reasons For The Failure Of The Many Startups ?

Indians are continually developing a large number of novel ideas for new startup businesses. Everyone has the idea that they should launch their own startup, and everyone has the goal of making billions of dollars with their startup. However, the truth is that it isn’t as simple as it appears. 

  • Despite the fact that India has one of the largest ecosystem for Startups, between 85 to 90 percent of Indian firms are unsuccessful during the first three to five years after they are founded. 
  • It’s rare to find someone who is doing something because they are truly passionate about it; instead, most people get their start by copying others or being inspired by others. You’ll need both passion and perseverance to run a start-up successfully. This could also be one of the potential reasons. 

Want to know why Startups fail? 

        These startup failures have many causes, and there are steps entrepreneurs may take to counteract them.

Tax Related Reasons For Failure

  • When it comes to tax advantages for small businesses, a patent is another way to go. It is also said that, there are a few significant problems with this. 
  • Tax benefits are withheld from royalty income that is earned before the registration of the patent in India, which can take several years. Mathematical procedures, business operations, software programs in and of themselves, and algorithmic formulations do not fall under the purview of patentable subject matter, and hence cannot be patented. 
  • Hence, Indian entrepreneurs can’t patent software like applications. A related issue, not to be confused with 80-IAC tax exemption is that of angel taxes, which must also be taken into account.Startups must request CBDT to waive the tax. 
  • Startup India is essentially a pipe dream for the vast majority of Indian start-ups and intellectual property owners. In light of these factors, it is understandable why many young entrepreneurs prefer the option of moving outside India or forming a legal entity outside the country.

What should be done?

  • Be conscious of the choices you make after experiencing a setback. Under pressure, maintaining a positive frame of mind is critical. Take the appropriate steps with the proper mindset. Refuse to take advantage of bad opportunities. 
  • Don’t settle for anything less than your finest efforts. Don’t be afraid to take risks and learn from your mistakes as you work your way up the career ladder.
  • Some of life’s most valuable lessons are discovered only via the experience of suffering or tragedy. Make use of the information in this article to help you plan and prioritize your time ahead of time.
  • Preparation is a key: 
            When it comes to planning and executing, startup founders have no problem at all. Select the most qualified   entrepreneurs and employees to help you. Make the most of your efforts and keep going till you reach your goals!
  • It’s a good idea to think and make list all of your skills, along with the possible money you could earn from those skills, if the firm fails.
  • Making use of this basic exercise, you will gain insight into how to sustain the company for the foreseeable future.
  • Failure need not spell the end of your journey:
  • Avoid blaming yourself or anybody else for your failure, but be proud of the lessons learned from it. When things don’t go as planned, it might be helpful to keep in touch with loved ones, including friends, family, and other relatives. 
  • Locate a guide or a community of others who have had similar experiences. Gain knowledge from their experiences. Consult with experienced entrepreneurs and mentors who have navigated both the path of success and the path of failure to gain direction and mental support.

Failed Start-Ups in India


  • The most interesting policy effort that the Modi government has undertaken, in the eyes of young Indian business people, is called Startup India. For new businesses, it promised tax incentives that were in line with worldwide standards, funding and advising resources, and a reduction of red tape, among other things. 
  • As is often the case, despite Prime Minister Narendra Modi’s greatest efforts, the Startup India initiative has failed owing to implementation flaws – in a study of some 30k+ companies, more than 85% claim that had gained no benefit from the initiative, and more than 50% indicate that the single biggest impediment to business is corruption from authorities.
  • As was mentioned before, the majority of people do not actually have a passion for what they do; instead, they either do it solely for the purpose of making money, or they get started doing it simply by observing others and allowing themselves to be influenced by them.

Read Also