Centralized policy initiatives aimed at regional economic upliftment frequently encounter friction at the 'last mile' of implementation due to deficits in local institutional capacity. This paper examines the operational challenges faced by the Startup India Initiative (SII) in the underdeveloped Kalyana Karnataka region. Through an analysis of founder experiences, this study identifies and quantifies the primary implementation barriers using Weighted Average Scores (WAS) from a survey of 300 registered startups. Key findings indicate that the most significant deterrents to scheme utilization are Bureaucratic Complexity in Documentation (WAS 4.45) and Lack of Awareness among Local Bank Officials (WAS 4.12). These internal, institutional failures, rather than external market factors, prevent the conversion of high policy awareness (e.g., for non-financial benefits) into capital utilization (e.g., for Seed Fund Schemes). The paper argues that successful regional development policies must shift focus from broad scheme creation to mandatory localization protocols and capacity-building measures at the street-level bureaucratic interface.