Beyond Cookies and Ice Cream: Why India Must Rethink Its Start-up Ambitions

India’s start-up dream will remain stunted unless it learns to bet on the improbable.

In a thought-provoking address at a recent start-up event, Commerce Minister Piyush Goyal offered a candid diagnosis of the Indian start-up ecosystem. Comparing it with China’s, he questioned the overwhelming focus of Indian ventures on food delivery, gaming, celebrity-driven consumer apps, and other low-risk, low-tech business models. Goyal’s remarks resonated with many, not because they were entirely novel, but because they articulated an uncomfortable truth: India’s start-up ecosystem, while the third-largest in the world, is yet to mature into a serious force in deep technology or innovation-driven enterprise.

At the core of this concern lies the stark contrast with China. While Indian start-ups proliferate in service sectors, Chinese start-ups have made major strides in artificial intelligence, electric mobility, semiconductors, and smart manufacturing. They have done so by combining state support, private risk capital, and a strong culture of long-horizon innovation. China’s boldness in taking on ambitious, capital-intensive, and long-gestation projects has led to global players like DJI (drones), BYD (electric vehicles), and SenseTime (AI), some of which now rival American and European firms. Indian start-ups, by contrast, are rarely associated with such frontier domains.

Part of this imbalance stems from the risk appetite - or the lack thereof - among investors in India. Venture capital in India is often a misnomer; there is little ‘venture’ in venture capital when the preference is for safer, faster-return models. Sectors such as fintech, edtech, and e-commerce dominate funding flows, while genuine deep tech ventures in robotics, space, biotech, quantum computing or new materials remain starved of serious financial backing. A study by NASSCOM and Zinnov in 2022 found that fewer than 500 Indian start-ups (less than 2 percent of the total) qualify as true deep tech ventures. Of these, an even smaller number receive follow-on funding beyond seed stage.

The problem is compounded by the relatively shallow pool of capital made available by government schemes. While well-intentioned, the typical funding allocation of Rs. 25–50 lakh for start-ups is hardly sufficient for meaningful deep tech work. Developing a new semiconductor process, building a prototype of a biomedical device, or scaling an industrial AI solution often requires investments upwards of Rs. 5–10 crore just in early development. Moreover, the lack of continuity in public funding and bureaucratic delays further discourage high-risk, high-impact entrepreneurship. A serious start-up in quantum cryptography or advanced therapeutics cannot be built on frugality alone; it requires large, patient capital and institutional support over several years.

By contrast, countries that have taken deep tech seriously, such as the US, Israel, Germany, and now China, have put in place dedicated mechanisms to de-risk investment in frontier technologies. These include defence and space contracts, dual-use technology procurement programs, translational research parks, and matching funds that lower the risk for private investors. Crucially, they also have a venture capital culture that recognizes that failure is part of the game, and that the potential upside from a single breakthrough often justifies funding ten failed attempts.

India must learn from these models and create an ecosystem that encourages true innovation rather than low-risk replication. The Unified Payments Interface (UPI) and the emergence of global SaaS firms like Zoho and Freshworks are often cited as success stories, and rightly so. But they are not enough. To move beyond a service economy and become a global player in science and technology, India needs to build, not just scale. That means rethinking how we fund innovation at every stage, from seed to scale-up, and creating incentives for private investors to co-invest in moonshot projects.

This also calls for a cultural shift. Founders, investors, and policymakers must shed the obsession with early returns, vanity metrics, and unicorn valuations. What India needs are not just more unicorns, but more workhorses - start-ups that will solve hard problems in climate resilience, food security, space technology, medical diagnostics and materials science. Start-ups that will take a decade to mature but will redefine entire industries when they do.

Piyush Goyal’s comments, far from being a criticism, should be seen as a call to action. If Indian venture capitalists do not embrace risk, they forfeit the very principle of venture investing. If public funding continues to treat deep tech like a small business initiative, it risks underutilizing some of India’s finest scientific talent.

And if India continues to celebrate start-ups that merely resell foreign ideas with a local twist, it risks missing its opportunity to lead the world in original innovation.

The question, then, is not whether India can produce the next Google or Tesla. It is whether the system has the courage to support those who try. In the end, great ideas need more than applause - they need conviction, capital and the patience to let science take its course.

(The author is the former Director of Agharkar Research Institute, Pune, and a Visiting Professor at the Indian Institute of Technology Bombay. Views are personal)