The Covid-19 pandemic is a big setback to one of the most ambitious goals humanity has ever set for itself: the Sustainable Development Goals (SDGs). According to a recent study by UNDP, even in a non-Covid scenario, the global community would be struggling to achieve the SDGs by their 2030 deadline. The long-term impact of the pandemic has moved us further away from achieving these goals. There is a need to push and accelerate our efforts to an unmatched level to achieve the SDGs by 2030. This will not be possible without bringing in disruptive and innovative technologies, adopting more inclusive business models, and nurturing entrepreneurship to achieve these inter-connected and cross-cutting goals.
Achieving SDGs has the potential to create a new market opportunity of USD 12 trillion while making the world more sustainable, equitable, and prosperous. Local entrepreneurs and small enterprises will be critical in this journey, as they can harness technologies and innovations to develop solutions that address the challenges faced by communities at the ground level since they are also most in touch with the needs of these communities.
India, with pioneering progress in building the ecosystem for innovations and entrepreneurship, is poised to become one of the leaders in achieving the SDGs. According to the Economic Survey 2021, India had 41,061 startups in 2020. Currently, India has over 75 start-ups classified as unicorns, each with an estimated valuation of more than USD one billion or more. This has also led to increased investments coming into India to fuel these startups and their innovative solutions. While a majority of the unicorns are in the e-commerce and fintech space (such as Slice, Upstox, Grofers, Bharatpe etc.), we now have the experience and ecosystem required to create impact unicorns that could provide universal quality healthcare, address challenges in the provision of education, address climate-related issues and transform our agriculture sector, both in terms of economic contribution as well as making it more resilient to climate impacts.
The “impact unicorns” are going to happen sooner than later. India has almost achieved universal access to power (99.99% of households having access to electricity), addressed major challenges in financial inclusion (through government programs such as Jan Dhan-Aadhaar-Mobile, in order to ensure access to finance for last-mile customers), and probably also hosts the world’s most advanced digital inclusion framework (by building IndiaStack, a unified digital platform to conduct financial transactions and provide government services at scale). Access to power, access to finance, and data and digital technologies are the ingredients that will help us scale and develop the solutions that are needed for many of the SDGs.
While these foundational blocks are being put in place, the enormity of the challenges and the complexity of the development goals also require us to put consistent emphasis on addressing some of the gaps in our current innovation and entrepreneurship ecosystem.
Ecosystem for Empowering and Enabling Women
The first and foremost priority should be to focus on empowering and enabling Indian women to leverage innovation and entrepreneurship. A recent RBI survey found that only 5.9% of Indian startups have all-women founders. Gender segregated data further shows the harsh divide, especially in rural India. Only 25% of the women in rural areas use the Internet compared to 48% of rural men. Around 64% of the population in India still relies on solid fuels for its cooking needs, and women are disproportionately exposed to dangerous air-pollution. Our entrepreneur and investor ecosystems continue to be male-dominated and biased towards men. Within the agriculture sector, women are still struggling to get their land rights, and while they account for nearly one-third of the agricultural labour force in the country, they hold only 12.8% of operational land holdings. They are also among the most impacted by the adverse effects of unsustainable agriculture practices.
We need to make the innovation and entrepreneur ecosystem more gender-just as we can never achieve the SDG goals if women continue to remain at the fringes of the entrepreneurship and innovation ecosystem.
Investing in Research and Development
There must be concerted efforts to increase investment in R&D and labs that will help create proofs of concept and streamline funding to undertake pilots to scale and commercialise operations for startups. We are significantly behind in terms of per capita spending on R&D compared to other regional leaders. Korea leads in terms of R&D spending, at USD 1995 per capita, followed by Israel (USD 1991). Other countries’ spendings include China (USD 1127), Brazil (USD 719), and South Africa (USD 520). India’s per capita R&D spending stands at USD 464.
Dedicated Focus on Scaling up Sustainable Agriculture and Forestry
Entrepreneurship, technologies, and innovative business and financing models can provide us a great opportunity to transform the lives of small-farmers and forest-dwelling communities.
India has to alter its path in order to achieve SDG 2 (Zero Hunger) while ensuring SDG 12 (Responsible consumption and production). To reach a sustainable stage of food security, India needs to emphasise and promote sustainable farming practices and support innovative solution providers in agriculture and livestock that help reduce hunger and risks of nutrient deficiencies. The development of innovative solutions across the agriculture value chain can address multiple SDG goals.
In addition to large agricultural land coverage, India also has vast forest lands which impacts SDG 15 (life on land) and several others, as forests can act as carbon sinks and create great value for the environment. As per a 2019 assessment, India had a total forest cover of 7,12, 249 sq. km., accounting for 21.67% of its total geographic area. Our goals to increase the forest cover and improve the quality of our forests can be expedited with the use of technologies and new business models (such as global carbon markets and payment for ecosystem services).
Incubators and Accelerators for Climate Tech
India is gradually emerging as the hub in the global south for incubation and acceleration but we need more deep-science climate tech incubators and accelerators. These are essential for developing a pipeline of climate tech startups focusing on achieving SDGs.There is a massive upsurge in climate tech investment globally but only a fraction of that is coming to the global south. In the first half of 2021, about 250 deals were made in climate tech ventures worth about USD 16 billion. In terms of regions, North America has the most climate tech venture funds coming in, followed by China and Europe.
Globally, India ranks ninth with the country’s climate tech start-ups receiving USD 1 billion in venture capital funding between 2016 and 2021. Over this time, 120 Indian climate tech startups raised more than 200 funding rounds from 272 unique investors. Indian climate tech investment activity has been growing in terms of the amount invested as well as the number of deals – it has grown from 18 deals in 2016 (USD 102 million) to 58 deals in 2019 (58 deals; USD 506 million). This number decreased slightly in 2020 owing to the pandemic, with 48 deals (USD 236 million). The majority of the climate tech investment in India flows to the sectors of energy and sustainable mobility. The sectors gradually gaining traction in the market are climate-smart agriculture, circular economy and waste management, and natural resources and the environment.
Though there has been significant growth in recent years, the climate tech entrepreneurial ecosystem in India is still at a nascent stage. Investments in climate tech account for less than 10% of the funds that are flowing into impact sectors in the country. Some of the challenges impeding the growth of climate tech start-ups include limited early-stage and long-term financing, lack of business support services covering mentorship, strategic advisory and talent management, and low customer willingness to pay a premium for green products and services.
There is a need to enhance the ecosystem for climate investment by setting up climate-focused incubators/accelerators, designing innovative financing options (such as blended finance) to encourage private sector investment, and developing policies to promote green products and services.