India’s startups are generating more employment opportunities, yet additional investments are necessary to further enhance job creation.

India's startup ecosystem is on track for significant growth as the country aims to boost economic expansion and entrepreneurship, but more jobs are needed to address high unemployment levels. According to the CEO of a major recruitment firm, the overall unemployment rate continues to rise, with the Centre for Monitoring Indian Economy reporting an increase to 8.1% in April from 7.4% the previous month.

Data from Foundit shows that the number of startups in India surged by 37% in April compared to the previous year, leading to a 14% rise in startup-related jobs. The IT services sector offered the most job opportunities, with over 50% of new startup jobs aimed at recent university graduates. Foundit CEO Chandra Garisa told CNBC that India's startup boom has been fueled by a combination of talent quality, increased capital access, and a supportive ecosystem involving government bodies and investors. However, Garisa emphasized that more efforts are needed to address the high youth unemployment rate in India.

India, which has the largest youth population in the world, sees young people aged 15 to 29 making up 83% of the unemployed, according to the "India Employment Report 2024." Government data from March 2022 indicates there were 43.3 million university enrollments. Garisa explained that companies have not been investing in entry-level talent due to hiring and profitability pressures, preferring experienced workers instead. As a result, entry-level hiring has not reached the levels seen two to three years ago.

Despite the rise in startups and other companies, challenges such as funding, regulatory issues, and skill mismatches remain obstacles, according to Foundit. The internet sector saw a 3% decrease in jobs, fintech experienced a 10% decline, and education jobs fell by 8%.

Manufacturing jobs saw the highest increase across India, with a 31% surge driven by investment inflows in the automotive, chemical, pharmaceutical, and food processing industries. Garisa noted increased activity and production in manufacturing, with global companies adopting a China plus one strategy, often choosing India. Encouraged by the Biden administration, American companies are moving manufacturing operations to friendlier countries in Asia-Pacific, including India.

The information technology sector, encompassing both hardware and software, experienced a 9% job growth due to higher investments aimed at overcoming the IT talent shortage. Garisa highlighted that technology is a key driver of innovation in manufacturing across various sectors.