India’s Startup Ecosystem: Convenience vs. Deep-Tech Innovation

Introduction

India’s startup ecosystem is often hailed as one of the fastest-growing in the world. And rightfully so. In just under a decade, India has transformed from a country of “jugaad” innovations to a powerhouse of scalable, tech-driven startups. We’ve seen the emergence of unicorns solving real-life problems—from payment bottlenecks to hyperlocal delivery—creating millions of jobs and reshaping consumer behaviour. The numbers speak for themselves: in 2016, India had fewer than 10 unicorns. By 2023, that number had surged past 110, making it the third-largest startup ecosystem globally, after the US and China. This growth hasn’t been random—it’s been catalyzed by a convergence of factors. Over 800 million internet users, widespread smartphone adoption, and the success of the India Stack (notably UPI, which clocked over 12 billion transactions in December 2023 alone) have created fertile ground for digital-first businesses. Add to that over USD 130 billion in venture capital funding funnelled into Indian startups between 2014 and 2023, and you get an ecosystem that’s moving from imitation to innovation. India’s fintech market is expected to reach USD 1.3 trillion by 2025.

Companies like Razorpay, PhonePe, and Cred have built sleek solutions on top of complex payment rails, making finance accessible even in tier-3 towns. With lower customer acquisition costs and deep engineering talent, Indian SaaS startups like Freshworks, Zoho, and Postman are now competing globally—Freshworks even listed on the Nasdaq in 2021. Though edtech faced a correction post-pandemic, it still raised over USD 2.5 billion in 2022, and health tech players like PharmEasy and Practo are addressing access gaps in rural healthcare. But now, at the peak of this progress, a narrative is gaining steam, pushed by none other than Commerce and Industry Minister Piyush Goyal: that Indian startups are too focused on convenience and not enough on core innovation. We are stuck building food delivery apps while China races ahead in semiconductors and AI. These remarks by Commerce and Industry Minister Piyush Goyal have reignited a debate that has been brewing under the surface: Is India focusing too heavily on convenience-based startups at the cost of deep-tech innovation? Is the nation settling for comfort rather than pioneering core technologies that can drive strategic long-term growth?

Piyush Goyal’s Swipe at Indian Startups

At the Startup Mahakumbh 2025 in New Delhi, Commerce and Industry Minister Piyush Goyal delivered a candid critique of India’s startup ecosystem. He expressed concern that Indian startups are predominantly focusing on consumer convenience sectors like food delivery and quick commerce, rather than investing in deep-tech areas such as electric vehicles, semiconductors, artificial intelligence, and robotics. Goyal highlighted this disparity by presenting a slide titled India vs. China: The Startup Reality Check, contrasting India’s consumer-focused startups with China’s advancements in high-end technologies. He sparked a storm with a provocative question: “Should we aspire to be delivery boys and girls?” The statement, aimed at pushing India’s startup ecosystem beyond food delivery and lifestyle apps, has triggered a fierce debate between ambition and reality. He questioned whether India’s destiny is to be content with creating delivery services and luxury consumables, urging startups to aspire for more substantial technological contributions. He accused the ecosystem of prioritizing consumer convenience over critical technology, comparing India’s food and beauty startups with China’s breakthroughs in EVs, AI, and semiconductors. It implied that building a platform to ensure your biryani arrives hot is somehow less noble than designing a chipset. It was a rebuke masquerading as advice, and the startup community took notice.

Startup leaders were quick to respond. Zepto co-founder Aadit Palicha and Aarin Capital chairman Mohandas Pai criticized Goyal’s comments, suggesting that the government should focus on creating an environment conducive to deep-tech innovation rather than critiquing existing startup models. Aadit Palicha, among others, defended the economic and societal impact of these so-called convenience startups. He also highlighted the employment and tax contributions of quick commerce, calling it a miracle of Indian innovation. Mohandas Pai called out the government’s hypocrisy: How can you criticize the lack of deep tech while failing to provide the support structure such ventures need? He pointed to a massive investment gap: China invested USD 845 billion in startups from 2014–2024; India, only USD 160 billion. Ashneer Grover bluntly argued that policymakers, not founders, need a reality check.

China Comparisons: Apples and Missiles

Comparing India to China is a lazy, outdated tactic. China’s innovation is state-directed, subsidy-fueled, and often shielded from global competition. India is a democracy with a market-led startup model. And let’s not forget: many Chinese innovations are blatant copies, enabled by walled-off markets. We need to stop playing catch-up with China and instead build our own trajectory. India has its own innovation DNA—frugal, inclusive, and improvisational. Let’s embrace that rather than mimic a system we neither want nor can replicate.

Instead of moralizing about startup priorities, the government should act. Here are a few places to start:

• Fund deep tech as a sovereign priority. Just as we created ISRO and BARC, create a national startup mission focused on next-generation technologies.
• Enable public-private R&D through tax incentives and research collaborations.
• Allow premier institutions like IITs and IISc to spin out commercial ventures, similar to Stanford University.
• Reduce compliance burdens once startups begin scaling instead of increasing regulatory scrutiny.
• Create differentiated policy incentives for consumer-tech and deep-tech startups, recognising that both play vital but distinct roles.

Indian Startup’s Bottleneck

Indian startups often face an uphill battle in conducting business smoothly due to a mix of structural inefficiencies, regulatory uncertainty, and a lack of enabling infrastructure. Despite the enthusiasm of a growing entrepreneurial culture and increasing digital adoption, the ease of doing business remains questionable. Regulatory processes are notoriously cumbersome—startups must navigate GST complexities, ambiguous TDS rules on foreign payments, and recurring changes in FDI norms, particularly in sensitive sectors like e-commerce and fintech. For instance, Paytm and PhonePe have both faced frequent compliance challenges due to shifting policies on digital payments and data storage requirements.

Moreover, capital access remains uneven. While metro-based startups continue attracting venture capital, startups in smaller cities often struggle due to investor risk aversion and limited access to incubators. Deep-tech or hardware startups attempting to build drone technologies, semiconductor products, or EV infrastructure frequently find it difficult to raise adequate funding because India’s venture capital ecosystem remains heavily skewed towards fast-growing B2C businesses. Startups also report delays in payments from both government departments and enterprise clients—an issue highlighted even by mature companies such as Delhivery and Zoho.

Adding to these challenges are bureaucratic hurdles such as acquiring land, complying with outdated labour regulations, and resolving tax disputes, all of which can consume valuable time and resources. Innovation also suffers due to weak enforcement of intellectual property rights, making it risky for startups operating in biotechnology, artificial intelligence, and semiconductor sectors to commercialize proprietary technologies. Although initiatives like Startup India and the Atal Innovation Mission have created momentum, implementation remains inconsistent across regions. The result is a paradox: India has one of the world’s largest startup ecosystems by volume but comparatively fewer globally dominant and enduring technology companies.

Startups Deserve More Respect

Let’s be clear: India’s convenience startups are not the problem. They are, in many ways, the solution to a range of long-ignored challenges. Think of Dunzo helping citizens navigate lockdown logistics. Think of PharmEasy providing doorstep access to medicines in Tier-2 cities. Think of Meesho enabling rural entrepreneurs to reach customers nationwide. These are not merely convenience services—they are technology-enabled transformations that improve accessibility, financial inclusion, and economic participation.

In response to the backlash, Piyush Goyal clarified that his intention was not to disparage Indian startups but to encourage them to pursue more ambitious, globally impactful innovations. He emphasized the need for the startup ecosystem to evolve beyond consumer-facing applications and contribute to India’s technological leadership.

Convenience startups aren’t just apps—they are infrastructural revolutions disguised as B2C platforms. Swiggy and Zomato operate one of the world’s largest logistics networks across thousands of Indian towns. Paytm, PhonePe, and BharatPe have accelerated India’s transition toward a digital economy by bringing millions into the formal financial system. These startups represent innovation designed specifically for India’s unique challenges, where unreliable infrastructure, traffic congestion, weather disruptions, and inconsistent connectivity make execution significantly more difficult than in many developed economies.

Building for Bharat

Deep-tech innovation is undoubtedly important, but it is equally important to recognize what innovation means within the Indian context. Creating a mobile payment platform that functions efficiently on feature phones is innovation. Building a supply chain capable of handling both digital transactions and cash-on-delivery across rural India is innovation. Companies such as Kuku FM have expanded vernacular content access, while DeHaat has empowered farmers by connecting them with agronomists, suppliers, and buyers. These businesses are transforming livelihoods and expanding opportunities across Bharat.

This is not an argument against deep-tech innovation. India certainly needs indigenous semiconductor manufacturing, AI platforms, electric vehicles, robotics, quantum computing, and advanced research capabilities. However, deep-tech requires patient capital, strong intellectual property protection, advanced laboratories, skilled research talent, and sustained government support. That ecosystem is still evolving. If policymakers expect more moonshot startups, they must first invest in creating the launchpad through sovereign technology funds, tax incentives for research and development, regulatory clarity, and stronger industry-academia collaboration.

Power of the Ecosystem

India’s startup ecosystem is not a monolithic entity—it is a dynamic network of founders, investors, employees, researchers, and institutions. Today’s founder building a successful grocery delivery platform could become tomorrow’s entrepreneur building AI hardware or semiconductor technologies. The success of companies like Flipkart has already demonstrated this phenomenon, with former employees going on to establish dozens of successful ventures across industries. Similarly, Byju’s growth attracted capital and talent into India’s broader edtech ecosystem.

Building a healthy foundation of profitable, revenue-generating startups creates experienced founders, develops skilled talent, attracts investors, generates tax revenue, and strengthens the entrepreneurial culture necessary for deeper technological breakthroughs. You cannot build rocket ships without first building roads.

Piyush Goyal is right in one respect—India must dream bigger. However, it would be a mistake to undervalue the entrepreneurs who are already solving complex problems at scale. Founders building real-time payments, hyperlocal logistics, healthcare access, and digital commerce have not merely made life more convenient—they have improved the efficiency of India’s economy. If India truly wants to become a global deep-tech powerhouse, policymakers must move beyond criticism and create the infrastructure, capital, and regulatory support that ambitious innovation demands.

Convenience startups are not the enemy of innovation—they are its first wave. Ignoring their contribution risks overlooking the very ecosystem that can eventually produce India’s next generation of deep-tech pioneers. The future will belong not to those who dismiss today’s successes, but to those who build upon them.