Commerce and industry minister Piyush Goyal recently stirred the start-up ecosystem with a sharp critique, urging Indian founders to rethink their purpose and value proposition if they aspire to build globally renowned companies. At a time when deep-tech innovation is transforming industries worldwide, Goyal lamented that India has only about 1,000 start-ups in the sector—an alarmingly low number for the world’s most populous nation. He called on entrepreneurs to look beyond short-term wealth creation and instead aim for global scale and significance. Yet his comments sparked a fierce debate, with many questioning the fairness of his assessment.
Goyal’s concerns are rooted in a visible disparity: while Chinese start-ups are pushing the envelope in artificial intelligence (AI), robotics, machine learning (ML), and next-generation manufacturing, Indian start-ups are largely preoccupied with consumer conveniences—food delivery, quick commerce, and hyper-local logistics. Giants like BYD, Huawei, and DJI showcase China’s ability to innovate at scale, supported by robust supply chains and strategic global integration. In contrast, Indian start-ups tend to focus on refining daily life rather than investing in transformative technologies.
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That said, it’s not entirely accurate to suggest that Indian start-ups are confined to grocery deliveries and cab bookings. The ecosystem is undeniably diverse, though it remains skewed toward consumer-centric sectors. Fintech players like Paytm and PhonePe have capitalised on India’s digital payments revolution. Edtech firms such as Byju’s and Unacademy have catered to the country’s educational aspirations. Meanwhile, food tech and mobility firms like Zomato and Ola serve a growing urban middle class that prioritises convenience.
The minister’s remarks come at a critical juncture in global trade, with the world grappling with the fallout from US President Donald Trump’s new wave of tariffs. As major trading blocs recalibrate their strategies, India finds itself at a crossroads. To stay competitive, the country must not only future-proof its economy but also carve out a niche in the evolving global order. Indian start-ups could help lead that charge—if they can overcome the structural barriers that currently hold them back.
Indian start-ups stay local
In sheer numbers, India’s start-up story is impressive. As of April 2024, the country boasted over 128,000 DPIIT-recognised start-ups, up from 117,254 at the end of 2023. With over 110 unicorns valued collectively at more than $340 billion, the country ranks as the third-largest start-up ecosystem globally—behind only the United States and China. Indian unicorns such as Flipkart, Byju’s, and PhonePe have raised massive sums from global investors and expanded into Southeast Asia, the US, and Europe.
However, volume hasn’t translated into global leadership. Analysts point to a critical weakness: a lack of original, disruptive ideas. Many of India’s most successful ventures are modelled on Western counterparts—Flipkart on Amazon, Ola on Uber, Oyo on Airbnb, and Zomato’s food delivery playbook on DoorDash. These start-ups succeeded largely due to first-mover advantage in a vast, underserved market, rather than technological innovation.
A staggering 90% of Indian start-ups fail within five years. Their downfall often stems from limited originality, an over-reliance on replicating proven models, and a short-term mindset. Unlike Silicon Valley’s culture of bold, risk-taking innovation or China’s state-backed tech push, India’s start-up ecosystem has leaned towards fast-moving consumer services instead of long-term bets with high technological complexity.
The deep-tech deficit
One of the most persistent gaps in the Indian start-up landscape is the lack of investment in research and development. Deep-tech sectors—like semiconductors, advanced robotics, and clean energy solutions—require long gestation periods and sustained financial support. Yet, Indian entrepreneurs and investors alike shy away from these high-capital, high-risk ventures.
The blame here is shared. Industry has been reluctant to fund R&D-heavy start-ups, and government support has been inconsistent. This underinvestment in innovation has prevented Indian firms from evolving into true global tech leaders. Chinese start-ups may have also started by mimicking American models, but they quickly adapted, innovated, and began filing their own patents. India’s ecosystem needs to follow suit.
Funding challenges, regulatory roadblocks
Funding remains another major bottleneck. Deep-tech ventures demand patient capital, but global economic uncertainties have made investors cautious. In 2024, Indian start-ups raised just $30.4 billion in funding—dwarfed by the $845 billion raised by Chinese firms during a similar period. The situation is exacerbated by regulatory hurdles and India’s fragmented domestic market, both of which increase the cost and complexity of scaling up.
For Indian start-ups to make a global mark, the ecosystem needs a structural overhaul. Start-ups must recalibrate their focus toward high-impact technologies, but they cannot do this alone. A concerted push is needed—from government policy and regulatory reform to increased corporate and venture capital investment.
India’s start-up ecosystem is a paradox—bursting with energy and ambition, yet hamstrung by a lack of direction and deep-tech investment. While consumer-centric ventures have served the economy well, the next phase of growth must be defined by innovation, R&D, and scalable global solutions.
The country’s entrepreneurs have shown that they can build at scale. The challenge now is to build for the future.