Commerce & Industry Minister Piyush Goyal’s recent
remarks at the Startup Mahakumbh offer a timely and necessary critique of
India’s startup ecosystem. While acknowledging and applauding the remarkable
growth and innovation within the sector, Goyal urged startups to shift their
focus from low-value ventures like food delivery and hyper-fast logistics to
high-impact sectors such as semiconductors, robotics, and deep-tech.
This call for introspection is not only valid but essential
for ensuring the long-term sustainability and global competitiveness of India’s
entrepreneurial landscape.
Success Story - India’s startup ecosystem has
undeniably achieved significant milestones. In 2025, startups raised $2.5
billion in Q1 alone, marking an 8.7% increase from the previous year. The
country ranks third globally in terms of startup funding, trailing only behind
the United States and United Kingdom. Additionally, IPO activity has surged,
with 23 startups preparing for public listings this year, demonstrating
investor confidence in Indian innovation.
Moreover, Tier 2 and Tier 3 cities are emerging as hubs of
entrepreneurial activity, addressing local challenges in agriculture,
healthcare, and education. This decentralization is a promising trend that
underscores the inclusivity and potential of the ecosystem.
Challenges Highlighted
by Goyal - Despite
these achievements, Goyal’s critique points to critical gaps that need
addressing. Many startups focus on replicating existing business models rather
than innovating in transformative sectors like deep-tech. For instance, while
Chinese startups lead globally in semiconductors and EV technologies, Indian
startups often prioritize instant grocery delivery or niche consumer products.
This approach risks creating businesses with limited long-term economic value.
Goyal also raised concerns about brain drain, where
innovative ideas are sold to foreign companies at undervalued prices. Without
robust support for homegrown innovation, India risks losing its intellectual
capital to global competitors.
Introspection and
Accountability - The
minister’s statement is a welcome departure from usual platitudes showered upon
the startup ecosystem. He chose to call a spade a spade. This candid critique
should not be seen as a rebuke but rather as a constructive challenge to
India’s brightest young minds—a nudge in the right direction.
Such statements from senior ministers are vital for fostering
a culture of introspection and accountability within the startup ecosystem.
While it is easy to bask in the glory of unicorn valuations and funding
milestones, true progress lies in addressing systemic gaps and building
businesses that create long-term economic value. Goyal’s remarks serve as a
wake-up call for founders and investors to rethink their priorities and align
their efforts with national goals.
India’s startup community must welcome this kind of leadership—one that is unafraid to challenge the status quo and push for meaningful innovation. By embracing this vision, Indian entrepreneurs can rise to the occasion, leveraging their talent
Why Deep-Tech Matters -
Deep-tech industries
such as artificial intelligence (AI), robotics, and semiconductors are pivotal
for driving economic growth and technological leadership. Globally, these
sectors are shaping the future of industries ranging from healthcare to
manufacturing. Yet, India has only about 1,000 startups in deep-tech—a number
Goyal described as “disturbing”.
Investing in deep-tech offers multiple benefits:
• Economic Value: High-tech industries
generate higher revenue per employee compared to low-skill sectors.
• Global Competitiveness: Innovation in AI
and robotics positions India as a leader in cutting-edge technologies.
• Sustainability: Unlike short-term
ventures, deep-tech solutions address systemic challenges and create lasting
impact.
Roubust Ecosystem the
Way Forward: To
realize Goyal’s vision for a more impactful startup ecosystem, several steps
need to be taken:
1. Encourage Deep-Tech
Funding: While late-stage funding dominates ($1.8 billion in Q1 FY25),
early-stage investments in deep-tech must be prioritized. Industry bodies like CII and FICCI can play a crucial role
by facilitating the creation of dedicated funds for innovation-driven startups.
2. Policy Support: Recent
reforms like abolishing the angel tax have boosted investor confidence. Further
incentives for R&D in high-tech sectors can accelerate growth.
3. Promote Intellectual
Property (IP): Startups should focus on building IP-driven solutions rather
than adapting global models. This shift will ensure that Indian innovations
remain competitive globally.
4. Leverage Tier 2 &
Tier 3 Cities: The rise of ‘Bharat’ presents an opportunity to address
localized challenges through deep-tech solutions tailored to rural needs.
5. Collaborate with
Academia: Universities can serve as incubators for deep-tech innovation by
fostering research partnerships with startups.
Balancing Growth with
Purpose
India’s startup ecosystem is at a crossroads. While it
continues to attract record-breaking investments and global attention, its
long-term success depends on aligning entrepreneurial efforts with national
priorities. Goyal’s remarks serve as a wake-up call for founders and investors
alike to rethink their strategies.
The path forward lies not in abandoning consumer-focused
ventures but in diversifying into sectors that drive meaningful change—whether
through AI-powered healthcare diagnostics or sustainable EV technologies. By
doing so, Indian startups can not only capture global markets but also
contribute significantly to domestic economic growth.
In conclusion, Piyush Goyal’s critique is not an indictment but an invitation—an invitation to evolve beyond short-term gains toward creating an ecosystem that truly adds value to the nation’s economy and society. As India moves forward into 2025 with optimism and resilience, this introspection could be the catalyst for its next wave of innovation-driven growth.
(The author is Member,
National Consumer Disputes Redressal Commission & former secretary to govt
of India. A PIB feature)
