AI chips not ice creams - minister's dig at Indian start-ups sparks debate

Recently, India's Commerce Minister Piyush Goyal made some remarks that have stirred up a significant conversation about the state of start-ups in India. During the Startup Mahakumbh, a government-led event focused on start-ups, Goyal expressed his concerns that many Indian start-ups are primarily concentrating on consumer products, such as ice creams, rather than pushing the boundaries of technology and innovation. His comments were aimed at encouraging entrepreneurs to think beyond lifestyle products and to explore more advanced technological innovations that could contribute to the country's growth. Goyal's remarks drew a comparison between Indian start-ups and those in other countries, particularly China, which he suggested are making substantial advancements in fields like machine learning and robotics. He pointed out that while other nations are developing next-generation factories capable of competing on a global scale, Indian start-ups seem to be stuck in a cycle of creating lifestyle products, such as gluten-free ice creams. This sparked a wave of reactions from various entrepreneurs and innovators in India. Some agreed with Goyal's perspective, viewing it as a call for greater ambition, while others felt it was an unfair critique of the start-up ecosystem, which plays a crucial role in the Indian economy. Goyal did acknowledge the rapid growth of new businesses in India, highlighting that the country is now the third-largest start-up ecosystem in the world. He urged Indian investors to provide more support to local creators, but he also expressed a desire to see more rapid progress and bolder initiatives within the industry. At one point during his speech, he posed a thought-provoking question to the audience, which was filled with entrepreneurs and investors: 'Do we want to make ice creams or semiconductor chips? ' This question resonated with many and prompted further discussions about the direction of India's start-up landscape. Aadit Palicha, the co-founder of the quick-commerce app Zepto, quickly responded to Goyal's comments. He argued that consumer internet companies, like his own, have been at the forefront of technological innovation in India and globally. Palicha pointed out that Amazon, which began as a consumer internet company, eventually expanded into cloud computing, and that major players in artificial intelligence today, such as Facebook and Google, also started as consumer internet companies. He urged Indian investors to continue supporting consumer internet companies, as their growth could lead to even more ambitious innovations in the future. Mohandas Pai, a prominent angel investor, also weighed in on the discussion. He highlighted the lack of capital investment in deep-tech start-ups from both government and private sectors. Pai explained that many investors are drawn to lifestyle-focused start-ups because they offer quicker returns on investment. In contrast, deep-tech innovations require significant time and financial resources to develop. He emphasized that investors need to be willing to take long-term risks, as deep-tech start-ups require 'patient' money to thrive. Pai also pointed out that regulatory restrictions on foreign investments in Indian start-ups are hindering innovation. He cited an example of an Indian company that developed a quick-charging battery for buses but struggled to find a market for its product. Many social media users shared their own experiences of trying to launch tech businesses, discussing the challenges they faced, such as difficulties in securing loans, high import taxes on foreign materials, and the bureaucratic hurdles that made obtaining necessary approvals a daunting task. However, some entrepreneurs defended Goyal's comments, suggesting that they were well-intentioned and served as a necessary reality check for the start-up ecosystem. Vironika S, the founder of the edtech app Proxy Gyan, agreed that India's future leadership in the global economy relies on breakthroughs in AI and semiconductors. She acknowledged the realistic barriers to achieving this and suggested that the government could play a role in easing these challenges. Indian investor Kushal Bhagia also supported Goyal's assertion about the need for greater ambition and the lack of deep-tech start-ups in India. He noted that many talented tech professionals are leaving the country to work for firms in the United States, and that there is a shortage of deep-tech founders for aspiring entrepreneurs to learn from and be inspired by. While there are some deep-tech start-ups emerging in sectors like agriculture, experts believe that India still has a long way to go in this area. The minister's comments also prompted media analysis of the different paths taken by Indian and Chinese start-ups. Journalist Abhijeet Kumar pointed out that in 2023, only 5% of funding for Indian start-ups was directed towards deep-tech sectors, compared to 35% in China. He highlighted how the Chinese government actively promotes high-tech innovation, having significantly reduced taxes and fees for high-tech firms. An article published recently noted that Indian start-ups tend to be more consumption-driven, focusing on using technology to address local problems rather than aiming for global solutions. It was reported that India currently has around 4,000 deep-tech start-ups, with expectations that this number will rise to 10,000 by 2030. A report from Nasscom indicated that India's deep-tech start-ups attracted $1. 6 billion in funding in 2024, marking a 78% increase from the previous year. However, there is still much work to be done. The editorial concluded that as the global competition in deep-tech intensifies, India must take significant steps to catch up with other countries. Goyal's comments should serve as a wake-up call for start-ups, investors, and the government alike. This could involve establishing deep-tech innovation funds, fostering strong connections between academia and start-ups, and providing incentives for faster advancements in hardware, AI, biotech, and clean energy.