The Indian startup ecosystem has quickly taken notice of the Commerce and Industry Minister’s exhortation to innovate like their Chinese counterparts.
Union Commerce Minister Piyush Goyal had today asked Indian startups to work on deep technical problems like Chinese startups. He’d been particularly severe on hyperlocal and delivery startups, asking if we wanted people to just become delivery boys and girls, or if we wanted to create value around the world. He’d also said that many billionaires — who have the appetite to take needle-moving risk — were instead working on incremental business models like food and beverages.
Goyal’s sharp remarks have drawn reactions from the Indian startup ecosystem, and have met with mixed reactions. Former Infosys CFO and VC Mohandas Pai seemed to suggested that Goyal’s criticism was unwarranted. “These are bad comparisons,” he posted on X, referring to Goyal’s comments on India not having sufficiently many startups in AI, robotics and other high-tech fields. “India has startups in all those areas too but they are small. Minister Piyush Goyal should not belittle our startups but ask himself what has he done as our Minister to help deep tech start ups grow in India? It is easy to point fingers at them. We have a hostile Finance Minister Nirmala Sitharaman who harassed start ups on Angel tax for many years, do not allow endowments to invest, insurance cos still do not invest whereas they do globally, RBI regularly harasses overseas investors on remittances and AIF’s, treat them badly, cos FE rules. China invested 845b$ from 2014/24 India only 160b$! Why are the Ministers not helping solve these issues?” he said.
Zepto founder Aadit Palicha too chimed in. Piyush Goyal had been particular severe on grocery delivery startups in his speech, and Palicha seemed to respond. “It is easy to criticize consumer internet startups in India, especially when you compare them to the deep technical excellence being built in US/China. Using our example, the reality is this: there are almost 1.5 Lakh real people who are earning livelihoods on Zepto today – a company that did not exist 3.5 years ago. ₹1,000+ Crores of tax contribution to the government per year, over a billion dollars of FDI brought into the country and hundreds of crores invested in organizing India’s backend supply chains (especially for fresh fruits and vegetables). If that isn’t a miracle in Indian innovation, I honestly don’t know what is,” he posted on X.
Palicha then addressed why India didn’t have deep tech companies. “Why doesn’t India have its own large-scale foundational AI model? It’s because we still haven’t built great internet companies. Most technology-led innovation over the past 2 decades has originated from consumer internet companies. Who scaled cloud computing? Amazon (originally a consumer internet company). Who are the big players in AI today? Facebook, Google, Alibaba, Tencent etc. (all started as consumer internet companies). Consumer internet companies drive this innovation because they have the best data, talent, and capital to put behind it. We need to build great local champions in internet that are generating hundreds of millions of dollars in Free Cash Flow first if we ever want to get a piece of great technology revolutions. The startup ecosystem, the government, and the owners of large pools of Indian capital need to actively support the creation of these local champions, not pull down the teams that are trying hard to get there,” he said.
“Zepto is still far away from being a great Internet company that can hold a candle to the global best. But we are executing day in and day out to get there. I can promise that any capital we generate from this business (and it honestly looks like we will) will be invested towards long-term innovation and value creation in India. That is essentially what I am dedicating the next few decades of my life to try to do: create dynamism in the Indian economy and our capital markets, in the same way the Americans have for decades. We have the talent and capital; we just need the execution,” he added.
But some startup founders agreed with Goyal’s speech. “The Commerce Minister is spot on,” wrote Slideshare founder Amit Ranjan. “Much of Indian startupland is chasing the lowest hanging fruits – transactional businesses moving offline to online and driven largely by labour arbitrage. There is a sense of denial in the ecosystem! When that India vs China comparison meme went around, you could see legions of VCs, founders try to soft paddle it, or explain it away. Transactional, inward looking models are useful & innovative in their own way (no doubt), but they don’t move the needle for the platform centric thinking the country. India needs to compete with the cutting edge. The world’s best innovators are operating at just a diff level… we have to set the bar much higher!” he posted on X.
Similar thoughts were echoed by Ola founder Bhavish Aggarwal, who himself runs an EV startup. “100 percent,” he posted referring to Goyal’s comments. “Time to build the future not the past,” he said. “Fully agree with Minister Piyush Goyal’s statement. Our startup community needs to introspect as to why we’re just building consumer tech companies. Entrepreneurs need to reflect and instead of building lifestyle apps, build innovation and future tech. Rockets, AI drugs, EUV machines, new mineral refining tech, new materials etc so much to build!!” he said.
UpGrad founder Ronnie Screwvala also supported Piyush Goyal’s statements. “Strong and right message and good chart and summary,” he wrote on X.
Zoho founder Sridhar Vembu said governments could only do so much to help startups. “The government cannot invent a better operating system or a smarter robot. The government should not even fund such things – it is not usually good at picking winners and losers. The government can at best conduct competitions where companies participate and then buy the best Indian products. In that sense, I see Minister Piyush-ji Goyal’s call as a challenge to our engineers and technologists and not as pointing fingers. What we need are smart engineers who roll up our sleaves and get it done. Keep in mind the vitamins and cancer cure argument – sequencing how we pay for our big tech ambition is very much part of the “engineering problem” that smart engineers must solve! We can do this,” he said on X.