Piyush Goyal, India’s Commerce Minister, recently made comments at the second edition of Startup Mahakumbh that have sparked a heated debate about the country’s startup ecosystem. Goyal critiqued India’s consumer startups, urging entrepreneurs to focus more on technological innovations to help the nation progress. He drew comparisons with other countries, seemingly referring to China, highlighting their advancements in machine learning, robotics, and next-generation factories.
In contrast, he pointed out that many Indian startups are still focused on lifestyle products like gluten-free ice creams and food delivery apps. Goyal’s remarks evoked strong reactions from entrepreneurs and investors. Some argued that he was encouraging creators to be more ambitious, while others criticized his comments as an unfair assessment of the startup ecosystem, which significantly contributes to India’s economy.
During his speech, Goyal questioned the audience, “Do we want to make ice creams or [semiconductor] chips?” He expressed a desire for more rapid and broader innovation, stating, “We have to be willing to evolve and learn. If we want to be bigger and better, then we have to be bolder and we should not fight shy of the competition.”
Aadit Palicha, co-founder of the quick-commerce app Zepto, responded to the minister on X (formerly Twitter). He argued that consumer internet companies like his have led technological innovation both in India and globally, citing examples such as Amazon, Facebook, and Google, which started as consumer internet companies before venturing into AI and cloud computing.
Angel investor Mohandas Pai shared his perspective, explaining that lifestyle-focused startups often attract more investment because they promise quick returns.
Prioritizing technological innovation for progress
In contrast, deep-tech innovations require significant time and expensive infrastructure to develop.
“People are not willing to take long-term risks. We need long-term ‘patient’ money [for deep tech startups to thrive],” he said. Social media users also discussed the challenges they face when starting tech businesses in India, such as difficulty securing loans, high import taxes on foreign raw materials and equipment, and bureaucratic red tape.
Some entrepreneurs defended Goyal’s comments, suggesting they were well-intentioned and provided a necessary reality check for the startup ecosystem. Vironika S, founder of the edtech app Proxy Gyan, agreed that India’s future leadership in the global economy depends on breakthroughs in AI and semiconductors but noted that there are realistic barriers that the government could help alleviate. The media has been analyzing the divergent paths of Indian and Chinese startups.
A Business Standard editorial noted that just 5% of Indian startup funding in 2023 went into deep-tech sectors, compared to 35% in China. The editorial recommended setting up deep-tech innovation funds, strengthening academic and startup collaborations, and offering incentives for advancements in hardware, AI, biotech, and clean energy. As the debate continues, it remains to be seen how the Indian startup ecosystem will evolve and address the challenges and opportunities highlighted by Goyal’s comments.
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