The Indian startup ecosystem is witnessing a transformation with more and more companies now opting for tier-2 or tier-3 cities as their preferred location. Entrepreneurs are increasingly turning to the smaller cities for their operations which is leading to new opportunities being opened up in the local market.

Out of the 16, 500 startups registered as of March 2019, around half of them had their business centers in small cities. With the rapid technological advancements and the boom of e-commerce in the country, it has now become easier to set up centers even in small towns while tapping the unused local resources of the local market.

Startups in such cities are looking to solve local problems largely rather than focusing on the bigger problems.

Be it healthcare, ed-tech, agriculture or deep-tech, there are now startups invested in every sector that are trying to support the local economy. Cities like Hyderabad, Jaipur, Pune, and Ahmedabad are coming up as the go-to options for many business enthusiasts.

Moreover, the high costs and exorbitant rents in metropolitan cities act as one of the biggest deterrents for many businesses and people are reluctant to invest that kind of money. But when setting up a company in a small city, this operational cost can be drastically brought down and directed towards other resources.

Better infrastructure support, faster internet, favorable working conditions, better transport communication, and accessibility to a large pool of talent have progressively promoted the growth of entrepreneurship in tier-2 and tier-3 cities. At a time when small cities like Surat, Jaipur, Indore, and Patna have shown a growth of more than 40 percent, the new paradigm shift has given the boost to the entrepreneurial ecosystem in these cities.

The government is also now pushing hard to set up a positive working startup ecosystem in India while addressing the startup concerns by providing innovative and sustainable solutions. For example, the state government of Chhattisgarh, Kerala, and Bihar has launched programs in their respective states to boost the startup facility in these countries. Punjab, Madhya Pradesh, and Uttar Pradesh are some of the other states that are following the course and trying to augment the growth of startups.