Report warns restrictive digital regulations could slash Indian startups and venture capital
A study by Oxford Economics for Digital Prosperity Asia (DPA) warns that restrictive digital regulations in India could lead to the creation of 2,130 fewer startups annually, a loss of approximately ₹91,500 crore in venture investments each year, and a reduction of about 2,45,000 startup jobs.
Digital Prosperity Asia is a coalition representing small and medium-sized enterprises and startups across the Asia-Pacific, working to strengthen dialogue between the digital ecosystem and policymakers. Oxford Economics is a global advisory firm providing independent economic forecasting and modelling.
The report, titled 'Digital Regulations and the Startup Ecosystem in India', suggests that a shift from India's current enabling environment towards a more restrictive digital regulatory regime could slow startup formation by 20% and venture capital flow by 25% between 2025 and 2035.
Conversely, a more enabling regulatory approach could boost startup formation by 7%, increase venture capital investment by 9%, and support an additional 80,000 startup jobs by 2035.
Bali Kaur Sodhi, Lead Economist at Oxford Economics, said: 'In an emerging market like India, maintaining proportionate, principles-based regulatory frameworks can support startup scaling, attract investment, accelerate technology diffusion, and strengthen the country’s innovation ecosystem.'
The report draws on a survey of 550 ecosystem participants, including 350 startups, 100 venture capital firms, and 100 incubators, as well as expert interviews and quantitative economic modelling. It also notes that cross-cutting regulations could create overlapping obligations across AI, data governance, and cybersecurity, increasing compliance complexity and regulatory fragmentation.
