Gujarat and Karnataka have been ranked as the best performers in developing startup ecosystem for budding entrepreneurs, according to the ranking of states and Union territories by the Department for Promotion of Industry and Internal Trade (DPIIT).
Among smaller states having population of less than one crore, Meghalaya has been adjudged as the best performer.
The rankings are based on the initiatives taken to develop the startup ecosystem for promoting budding entrepreneurs.
For the third time in a row, Gujarat was ranked as the best performer.
The exercise is aimed at supporting states and Union territories (UTs) in developing their startup ecosystem and learning from each other's best practices.
A total of 24 states and 7 UTs participated in the exercise, which ranked them under five categories -- best performers, top performers, leaders, aspiring leaders and emerging startup ecosystems.
Four states of West Bengal, Sikkim, Haryana and Jharkhand and UT Lakshadweep did not participate in the exercise.
The states and UTs were also ranked under these five categories based on the population of less than one crore.
Kerala, Maharashtra, Odisha, Telangana and Jammu and Kashmir were categorised as the top performers.
Punjab, Tamil Nadu, Uttarakhand, Uttar Pradesh, Andaman and Nicobar Islands, Arunachal Pradesh, and Goa are in the leaders category.
States and UTs in the aspiring leaders' category include Chhattisgarh, Delhi, Madhya Pradesh, Rajasthan, Chandigarh, Puducherry and Nagaland.
According to the ranking, the emerging startup ecosystems category includes Andhra Pradesh, Bihar, Mizoram and Ladakh.
They were evaluated across seven reform areas consisting of 26 action points, ranging from institutional support, fostering innovation, access to market, incubation and funding support.
DPIIT secretary Anurag Jain said that the exercise plays a crucial role in easing the business environment for startups in the country.
The states' startup ranking 2021 was released by Commerce and Industry Minister Piyush Goyal in New Delhi.
Goyal suggested all the stakeholders to aspire for becoming the number one start-up ecosystem in the world from the third position at present.
"Can we look at some district-level competition also," he asked.
He also asked the states to share best practices and handhold each other in further improving the ecosystem.
The government, he said, has acted as a catalyst for startups rather than a controller through initiatives like Fund of Funds, Seed Fund Scheme, income tax exemption for three years and resolving the issue of Angel Tax.
On ONDC (Open Network for Digital Commerce), the minister said that in the next five years the initiative would democratise the e-commerce sector.
"Rather than three companies becoming 100 billion or trillion-dollar companies, you will have a 1,000 companies each of a billion-dollar, that is what ONDC has the power to do," he said.
ONDC will not only help domestic retailers "survive the onslaught" of big e-commerce firms but grow their businesses, improve profitability and customer service and become job creators, Goyal added.
At the recently concluded ministerial meeting of the World Trade Organisation (WTO) in Geneva, Goyal said the members of the multi-lateral body managed to agree on prohibiting subsidies for fishermen engaged in illegal, unreported and unregulated fishing.
Start-ups can come up with solutions for Indian fishermen in areas like providing them safety or GPS systems so that they do not enter the waters of Pakistan and Sri Lanka, he said.
Further, the minister announced the mentorship, advisory, assistance, resilience, and growth (MAARG) portal.
It is a tool for start-ups that can be accessed from every corner of the country to request and connect with a mentor.
Member of National Startup Advisory Council Manoj Kohli, country head, Softbank India, said that the portal is ready and "we will be onboarding mentors in the next few weeks".
The mentorship programme would help in areas like profitability of a business model, dealing with corporate governance issues, scalability, funding gaps, branding and reputation building.
"We need to have a lot of Indian funding availability along with international funding," Kohli said.
Commenting on the rankings, Fintech company IOUX co-founder Vineet K Sachdev said that presently startups are subjected to a large number of regulatory compliances of various departments like Income Tax, GST, Labour, Environment, and Banks, he said.
"IOUX plans to offer blockchain-based solutions to this cumbersome process to ease the compliance burden of startups.
"Through the blockchain based process, all concerned departments like taxation, banks, and non-banking financial companies will be allowed to verify documents with proper e-KYC and digital signatures for recording regulatory compliances," Sachdev added.