Nearly Half of Recognised Startups Now in Tier-2, Tier-3 Cities: PM Modi

Prime Minister Narendra Modi said on 19 September 2026 that nearly half of India's recognised startups are now based in Tier-2 and Tier-3 cities. He spoke at the 20th Rozgar Mela, where he distributed more than 51,000 appointment letters to newly recruited government employees by video conference. The event was held at 45 locations across the country. Modi described India as the world's third-largest startup ecosystem.

Startups have long been seen as a metro story. Modi's remark at the Rozgar Mela points the other way: young people from villages, towns and smaller cities are building companies and creating jobs for others. The share has been reported by different bodies at around 45 to 50 per cent, so 'nearly half' is a broad figure.

The claim fits earlier official data. In January 2025, DPIIT Secretary Amardeep Singh Bhatia said startups were present in 779 districts, with Tier-2 and Tier-3 cities taking centre stage.

State programmes add to central support. Jaipur's iStart initiative under the Rajasthan government offers seed funding, mentorship and tax incentives, according to industry reports. Kerala, Odisha, Madhya Pradesh, Uttar Pradesh, Tamil Nadu and Assam also run startup missions or policy cells.

Founders cite lower rents, lower salaries and local talent as advantages. Better highways, UPI payments and wider internet access let small-city firms sell nationally from the start. Industry commentary suggests this allows smaller teams and longer cash runways than metro counterparts.

Challenges remain. Venture capital and angel networks are still concentrated in Bengaluru, Mumbai and Delhi-NCR, so small-city founders have fewer chances to meet investors and mentors. Many depend on grants, local angel groups and bootstrapping. Schemes such as the Seed Fund Scheme and state missions aim to close this gap.

Short-term: The immediate effect is the appointment of more than 51,000 new government employees across ministries and departments. The Prime Minister also used the event to draw attention to existing support for young people and founders. These include the first-job incentive of up to ₹15,000, the PM SETU modernisation of ITIs, and free trade agreements with around 40 countries, which he said open new markets for Indian entrepreneurs.

Long-term: The message signals that startup support, jobs schemes and skill programmes are being designed to reach beyond the metros. The Pradhan Mantri Viksit Bharat Rozgar Yojana aims to bring around 2 crore young people into their first jobs. The next thing to watch is whether funding spreads as widely as founders have, since investor networks remain concentrated in a few large cities.

Who is affected: Young people in villages, towns and smaller cities are the main group affected, both as job seekers and as founders. Small-city startups, including those in Rajasthan, Tamil Nadu and other states with startup missions, stand to gain from state programmes and central schemes.

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