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With the launching Prime Minister Narendra Modi’s ambitious Start-Up India mission there is a need to perform PESTLE analysis to find out the impact of startup plans in the current startup eco system.
PESTLE analysis is a business measurement tool to assess the overall macro environment of business. PESTEL is acronym for Political, Economic, Social, Technological, Legal and Environmental. It is a part of the external analysis while conducting market research, and it gives an overview of multiple macro-environmental factors before taking business decision.
Political Factors: Political factors are the medium by which Government intervenes the functioning of an enterprise. Government regulations are evaluated in terms of its capacity to influence the business environment and markets. The principle issues in this segment are political stability, tax guidelines, trade regulations, safety regulations, labor laws, and business laws.
Startups India Action Plan Impact: The action plans suggest law enforcement agencies to keep off the functioning of startups in the first three years of its operations. But after three years, companies need to follow the regulations.
Example- Tax exemptions, Self-certifications for 3 years
Economic Factors: These factors include economic growth, interest rates, exchange rates, and inflation rate. These factors extraordinarily affect how businesses operate and make decisions.
Startups India Action Plan Impact: There will be an improvement in the ease of doing business especially for startups which will boost entrepreneurship. There is a corpus fund for startups at lesser interest rate which will improve the ease of setting up news businesses.
Social Factors: These factors have a great impact on the buying patterns which is an important determinant for businesses. High trends in social factors affect the demand for a products and operational mode of enterprises.
Startups India Action Plan Impact: Startups action plan will change the buying pattern and behavior of consumers as this action plan is more focused on products and services which will be driven through new technologies and innovations.
Technological Factors: These factors include technological aspects like R&D activity, automation, technology incentives and the rate of technological change. These can determine barriers to entry, minimum efficient production level and influence the outsourcing decisions.
Startups India Action Plan Impact: Though there is not enough space for R&D activity in the startups action plan. This action plan would be a key contributor to technological aspects like the rate of technological changes i.e. technology beyond portal and mobile apps; etc.
Legal Factors: This factor includes consumer law, antitrust law, employment law, and health and safety law. These factors can affect how company operates, cost structure, and market demand for its products.
Startups India Action Plan Impact: Exemption of startups from labor inspections for the first 3 years from labor department etc. will definitely boost the business environment.
Environmental Factors: These include ecological and environmental aspects such as weather, climate change, environmental law etc. which may affect industries such as tourism, farming, and insurance.
Startups India Action Plan Impact: There is no special mention about in the announcements. However, the fund allotted through credit guarantee scheme will cover risk if any occurs.
Overall PESTLE analysis of the startups action plan can be illustrated through the below matrix:
Overall, the startup eco-system will be benefited from the new announcements in the next three years and let us hope for the best