After Union Minister Piyush Goyal’s strong remarks on the Indian startup ecosystem, industry leaders and entrepreneurs have come forward to defend its direction and priorities. India, home to the world’s third-largest startup ecosystem after the US and China, is now facing intense scrutiny after Goyal’s comments at the Startup Maha Kumbh on Thursday.
The Union Commerce Minister criticized Indian startups for being overly focused on sectors like food delivery, betting, and fantasy sports, while Chinese startups are making significant growth in areas such as electric vehicles, battery technology, semiconductors, and artificial intelligence.
“Are we here to make ice cream or chips? Dukaandari hi karna hai (Do we just want to run shops) ?” Goyal asked, questioning whether Indian startups should limit themselves to gig-based businesses instead of pursuing groundbreaking innovation and long-term technological advancements. He said the a need for Indian entrepreneurs to shift their focus toward core technological advancements that can drive the country’s global competitiveness and economic growth.
His comments have ignited a debate within the startup community, with many founders arguing that India’s startup ecosystem has already made major contributions across multiple industries, from fintech and edtech to deep tech and healthcare. Some industry leaders have pointed out that consumer-driven businesses, such as food delivery, play a vital role in economic growth and job creation. However, others acknowledge the importance of pushing for more innovation in critical technology sectors to keep pace with global advancements.
What founders and leaders said
Mohandas Pai, former Infosys CFO and leading investor, called the comparison with China unfair and counterproductive. He argued that while India does have startups in deep-tech sectors, they remain small due to policy challenges. Instead of criticizing, he urged the government to focus on supporting their growth.
“These are flawed comparisons. India has startups in those sectors too, but they’re still developing. Rather than undermining them, Minister @PiyushGoyal should reflect on what he has done to foster deep-tech startups in India,” Pai wrote on X.
He also pointed to regulatory roadblocks, stating that India’s financial policies have hindered startup investments.
“For years, @FinMinIndia @nsitharaman burdened startups with Angel Tax. Endowments and insurance firms still can’t invest in startups, unlike in global markets. @RBI creates difficulties for overseas investors with strict remittance rules. China poured $845 billion into its startups between 2014-2024, while India only managed $160 billion. Why aren’t @PiyushGoyal and @AshwiniVaishnaw addressing these fundamental issues?” Pai questioned.
Zepto founder Aadit Palicha also defended India’s consumer internet startups, pointing out Zepto’s impact since its launch just 3.5 years ago.
Zepto, which became a unicorn in 2023, pioneered 10-minute delivery in India. Palicha stressed that the company supports 1.5 lakh people with jobs, pays over ₹1,000 crore in taxes annually, and has attracted over a billion dollars in foreign investment. It has also invested heavily in India’s supply chains, especially in fresh produce. “If this isn’t a miracle in Indian innovation, I don’t know what is,” he said.
Palicha argued that strong internet companies are essential for future tech development. He pointed out that global leaders in AI, like Google and Alibaba, started as internet companies. He emphasized that such firms have access to the best data, talent, and funding, which fuels innovation.
He urged the government and investors to support Indian internet companies and admitted Zepto is still growing, but committed to long-term innovation. According to Startup India, India has around 20,000 startups, including 4,750 tech-driven ones, and 110 unicorns. However, the rate of new unicorns has slowed, with only five emerging in 2024, the latest being MoneyView in September.
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