Union Commerce Minister Piyush Goyal recently expressed concerns about the direction of India’s startup ecosystem. Speaking at a business forum, he pointed out that Indian startups have become overly focused on food delivery, betting, and fantasy sports applications. In contrast, he highlighted how Chinese startups have prioritized advanced technological sectors such as electric vehicles (EVs), battery technology, semiconductors, and artificial intelligence (AI). Goyal urged Indian entrepreneurs to shift their focus towards more innovative and tech-driven industries, which would have a long-term impact on the country’s economic and technological growth.
Current Focus of Indian Startups
Over the last decade, India has seen a boom in its startup ecosystem. Several unicorns have emerged, particularly in the fields of fintech, e-commerce, and consumer services. However, a significant portion of venture capital funding has been directed towards businesses that focus on food delivery, ride-hailing, gaming, and online betting. While these sectors have seen rapid growth, they primarily cater to consumer convenience rather than fostering deep technological advancements.
Apps like Zomato and Swiggy have revolutionized food delivery in India, and fantasy sports platforms such as Dream11 have gained immense popularity. However, Goyal believes that these businesses do not contribute to India’s long-term economic sustainability in the way that deep tech sectors would.
Comparison with Chinese Startups
Goyal contrasted India’s startup focus with that of China, where companies are investing heavily in AI, EVs, battery manufacturing, and semiconductor production. Chinese companies like BYD and CATL have become global leaders in electric mobility and battery technology, while tech giants like Alibaba and Tencent are making strides in AI-driven solutions.
China’s emphasis on developing cutting-edge technology has helped it achieve global dominance in multiple sectors. The Chinese government and private investors have strategically invested in these areas, ensuring that their startups drive industrial and technological advancements rather than just consumer-based solutions.
Need for a Shift Towards Deep-Tech Innovation
To compete globally, India needs to foster an ecosystem that supports deep-tech startups. Sectors like artificial intelligence, biotechnology, space technology, renewable energy, and advanced manufacturing have the potential to make India a global technology hub.
The government has already launched initiatives such as the Production Linked Incentive (PLI) scheme to boost manufacturing in high-tech industries. However, more efforts are needed from both policymakers and private investors to encourage innovation in these areas.
Startups in AI and machine learning can help India develop homegrown solutions in areas like healthcare, automation, and cybersecurity. Similarly, investments in semiconductor manufacturing can reduce India’s dependence on imports and establish a robust domestic supply chain.
Challenges and Roadblocks
Despite India’s potential, several challenges hinder the growth of deep-tech startups:
Limited Funding for Deep-Tech: Investors often prefer startups with quick returns, leading to an overemphasis on consumer-driven apps.
Lack of Infrastructure: Advanced technology sectors require significant infrastructure and R&D investments, which India still lacks.
Brain Drain: Many talented engineers and entrepreneurs leave India for better opportunities abroad.
Regulatory Hurdles: The absence of clear policies in areas like AI, data protection, and semiconductor manufacturing creates uncertainty for entrepreneurs.
The Way Forward
To address these issues, India must take the following steps:
Increase R&D Investments: The government and private sector should allocate more funds toward research in deep-tech fields.
Develop Specialized Infrastructure: Establishing semiconductor fabrication units, battery manufacturing plants, and AI research centers can provide a strong foundation for innovation.
Offer Incentives for Deep-Tech Startups: Tax breaks, grants, and easier regulatory approvals can encourage startups to explore advanced technology sectors.
Industry-Academia Collaboration: Strengthening ties between universities and industries can help bridge the gap between research and commercialization.
Attract Global Investors: Encouraging foreign direct investment (FDI) in deep-tech sectors can provide much-needed capital and expertise.