The number of new startups in the ecosystem has been decreasing since 2016, according to the BusinessLine report. The number of new startups founded in 2019 was 5,462, 35 percent down from 2018, the report said citing data from Tracxn - a firm that tracks investments and financials of private companies and startup. The number has been deteriorating since 2016.

The plunge in the number of startups is visible across sectors, ranging from fintech to retail to enterprise applications. In 2016, the government launched the Startup India scheme, an initiative to catalyze and foster innovation and entrepreneurship in India.

"This could be because of the increased competition in the space that has raised the entry barriers for new ventures, which need to sustain and survive alongside more established players with deep pockets," Ankur Pahwa, Partner, Ernst and Young was quoted as saying in BusinessLine report.

According to the report, the drop in number has however not impacted the funding. Start-ups across sectors received overall funding of $20.44 billion in 2019, the highest in the last five years.