In a strong critique of India’s startup ecosystem, Commerce Minister Piyush Goyal has called for startups to reassess their true value proposition and their impact on the Indian economy.
Speaking at the Startup Mahakumbh, Goyal pointed out the challenges facing the startup sector, noting that many Indian startups are overly concentrated on food delivery apps and hyperfast logistics. Rather than fostering innovation in deep-tech or industries with long-term potential, he argued, these startups are often creating opportunities that simply turn unemployed youth into cheap labour.
Goyal contrasted the situation in India with that of China, where startups are leading the way in cutting-edge industries such as semiconductors, robotics, electric vehicles (EVs), and battery technologies. In contrast, many Indian startups are focused on less impactful sectors like creating “fancy ice creams” or offering instant grocery delivery services, which Goyal suggested offer limited long-term value.
“Indian startups need a reality check in terms of what they are doing. We must focus on industries that truly contribute to our economy. Innovation and long-term sustainability should be the priority, not just competition for its own sake,” said Goyal.
Emphasis on Deeptech Innovation:
Goyal further highlighted the underdevelopment of the deeptech sector, which he believes holds immense potential to drive India’s future growth. He noted that there are currently only about 1,000 startups involved in deeptech, describing this number as a “disturbing situation.” The Minister stressed that a greater focus on deeptech innovation is crucial for staying globally competitive.
While acknowledging the success of India’s food delivery and e-commerce platforms, Goyal raised concerns about their long-term contributions to the economy. He questioned whether these companies were genuinely adding value or merely perpetuating low-wage, low-skill labor.
“We need to move beyond creating businesses that don’t offer real value. Hyper-fast logistics and instant food deliveries may seem glamorous, but they are not shaping the future of our nation,” he stated.
Calling on Entrepreneurs and Investors:
Goyal also called on entrepreneurs and investors to rethink their business models and adopt a more comprehensive approach to growth. He specifically referenced Shark Tank India, urging investors and mentors, such as boAt’s Aman Gupta, to reassess their perspectives and prioritize sustainable, value-driven businesses.
Addressing Brain Drain:
Goyal expressed his concern over India’s ongoing brain drain, lamenting that many innovative ideas are being sold to foreign companies for a fraction of their worth. “It’s heartbreaking to see a brilliant startup idea being sold for ₹50-60 lakh to foreign companies,” he said.
He concluded by urging India’s unicorns and established businesses to contribute to a fund dedicated to nurturing domestic innovation. Goyal called for collaboration among industry bodies like CII, FICCI, and Assocham to create pools of domestic capital that would help scale up homegrown startups, particularly those in deep-tech and innovation sectors.
Cultivating Curiosity and Critical Thinking:
In a final appeal, Goyal stressed the need to foster curiosity and critical thinking among children from an early age to prepare them for a future of technological innovation.
“We must inspire the next generation to think creatively and work towards groundbreaking solutions, which are the true drivers of economic growth,” he concluded.