Union Minister Piyush Goyal has left the Indian startup world rattled.

That too, on a stage supposed to celebrate innovation and entrepreneurship — the “Startup Mahakumbh.”

If what startup founders expected at the event was words of encouragement, they were in for a rude shock….

The irony shouldn’t go unnoticed.

Indian startups have spent years cheering on the Modi government.

They have amplified its campaigns. Aligned with its policies. And rarely spoken out.

Basically, they have toed the line whenever called on. 

So when Goyal gave that public scolding, many saw it as a betrayal.

But let’s consider this. 

Was there really any truth to what the minister said?

At a surface level, it sounds like he has a point.

But first impressions can be misleading. Real understanding only comes when you dig deeper — when you think about second-order effects, and the layers beneath.

So the fact is, he is just as wrong as he is right.

Let me explain.

First let’s look at why the start-up sector has been bending over backwards to be in the Modi government’s good books.

The sector is still young, and somewhat unstructured.

Many founders feel it’s safer to stay on the government’s good side — especially when the tax system is so complex and always changing.

The unspoken agreement has long been: we support you, you support us.

Those who watch my show every week know this is exactly where I will remind you about becoming a subscriber. Because, here at the news minute, we don’t need to cozy up to governments or big corporations…because we have you–our subscribers…

If you want our voice to stay independent–independent of influence and pressure, then you need to speak up for us

Support me and my team and become a subscriber of TNM.

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Now back to Piyush Goyal, he did not hold back at the Startup Mahakumbh. 

Let’s take a moment to look at the kinds of businesses Indian startups are actually building.

We’ve got food delivery. Instant grocery delivery. Ride-hailing apps. Betting and gaming platforms. Discount stock brokerages. Crypto and forex trading apps. Learning portals Etc etc

That’s the cluster of popular startups in everyday conversation — and likely what prompted Goyal’s comment.

Now, as writer Vivek Kaul points out in this article, many of these startups have something in common.

First, they’re built on top of systems that already exist. 

Food delivery apps depend on restaurants they didn’t build. 

Taxi apps don’t own the cabs. 

E-commerce platforms don’t manufacture what they sell. 

Fintech and gaming startups rely on banking and internet infrastructure that they didn’t create.

They’re essentially intermediaries — connecting demand with supply more efficiently.

And yes, that does bring value. It makes the economy smoother, and faster. 

But Goyal’s not wrong — these aren’t breakthroughs in technology or innovation. They’re not building entirely new stuff.

Building of physical infrastructure is rare too. 

Some quick commerce firms set up delivery hubs. 

Some e-commerce players lease warehouses. 

But even that can be outsourced.

Now, what about jobs?

Startup founders often say that they have created tons of jobs. And sure, there are delivery riders, warehouse staff, support teams, etc.

But here’s the catch — most of these startups are backed by venture capital. And VCs have one goal: scale fast, list the company, and cash out.

Then there’s the financial sector side of things. 

When we talk about job creation, we need to ask: Are these new jobs replacing old ones? And are the new ones better or worse?

Now, let’s talk about rentier startups — like edtech.

Byju’s is the most obvious name. 

Once again, as Vivek Kaul points out, Byju’s didn’t grow by solving deep problems. 

It grew by feeding on three things:

  1. a broken public education system.

  2. the anxiety of middle-class parents.

  3.  the desperation of less-educated families who wanted a better life for their kids.

The result? 

Families took out loans to buy overpriced courses and tablets. 

And many of these companies collapsed anyway — leaving behind financial messes for their customers.

It wasn’t about building sustainable businesses. It was about growing fast, getting an IPO, and cashing out.

And Goyal’s not wrong to call that out.

Now let’s look at Goyal’s point of comparison of Indian startups with the Chinese ones.

He pointed to what Chinese startups are building — EVs, battery tech, deep R&D. 

They’re creating entire ecosystems.

So why aren’t Indian startups doing the same?

For years, China and India were seen as the two rising stars of the global startup world 

— big markets, booming internet usage, and tons of venture capital flowing in.

With populations of over 1.4 billion each, both countries are massive playgrounds for startups 

— perfect for testing and scaling before going global. 

But by 2024, China had pulled ahead, and by quite a margin. 

While India has had its share of breakout companies, many startups here are still wrestling with scale and profitability. 

Meanwhile, Chinese giants like Alibaba, Tencent, and ByteDance have gone global and become household names.

Or look at social media: TikTok, built by China’s ByteDance, crossed one billion users before it even fully cracked Western markets. 

In comparison, India’s homegrown ShareChat is still inching towards the 400 million mark.

Both countries started off with similar potential.

But Chinese startups cracked the code early.

They figured out how to use their massive scale.

And they turned it into real global influence — much faster than expected.

So, what gave China the edge?

This is where Piyush Goyal has to look inwards. 

China’s startup surge was built on the back of deliberate choices — bold government policies, serious money, and a market environment designed for rapid scaling.

Where Indian startups often hit a wall of red tape, China went the other way. 

The government there actively rolled out the red carpet for innovation. 

By 2023, China was pulling in a massive 40% of all global venture capital funding.

That’s nearly half of the world’s VC money going to one country.

Pretty staggering when you think about it.

India, by comparison, was at just 5%.

Then there’s the money China itself put on the table. 

Between 2015 and 2025, Beijing pledged a jaw-dropping $1.4 trillion to grow its tech sector.

That’s almost ten times what India set aside — just $150 billion.

And in 2024 alone, China went all in.

It cut over $360 billion in taxes and fees to give high-tech firms a boost.

Out of that, $80 billion was pumped directly into research and development incentives.

That’s approximately 2.4% of its GDP, just towards R&D.

It’s no surprise that with this kind of backing, Chinese startups had both the runway and the fuel to take off — and fast.

India, meanwhile, doesn’t spend much on R&D — just 0.64% of its GDP.

Our private sector is also not helping much. 

Businesses here contribute just 36% of the country’s R&D spend. In China, that number is 77%. And in the US, 75%.

So if Indian startups aren’t inventing the next big thing — can we really blame just them?

In fact, this shows how the larger business culture works.

It’s all about trade and making safe bets.

People don’t like taking big risks.

They focus more on finding price gaps and making quick profits.

Even our IT sector, which has created massive wealth, didn’t build many global products. It built its business by offering cheap labour.

And a lot of it was just sending workers to do outsourced projects for Western companies.

And when Indian entrepreneurs did try to get into future tech — like electric scooters — many of them just imported cheap parts from China and slapped on a brand. 

So yes, Goyal is right in some ways. We do need more deep tech, more original innovation.

But here’s where he goes wrong. Is blaming startups alone for these problems fair? Especially when his own government is hugely responsible.

Our startups are a product of the ecosystem they operate in. One that doesn’t reward long-term thinking, doesn’t invest enough in science, and doesn’t encourage bold risk-taking.

Startups are mirrors — not outliers. They show us what our economy really values.

And right now, it’s still more about making a quick buck than building the future.

After Goyal’s tirade, some people, like Zepto co-founder Aadit Palicha, were quick to call out the minister.

Even today’s AI giants like Facebook and Google were once just consumer internet startups.

Palicha’s main point was this: support consumer internet companies. Help them grow. Let them make money. Then, let them reinvest that money into bigger, more ambitious tech bets.

Meanwhile, a Reddit user posted an open letter to the minister.

The person claims to be running a successful semiconductor startup in India.

He says his company designs chips for clients in the US and EU, including a prominent AI pioneer. 

But despite this, dealing with the Indian ecosystem — including many agencies — has been futile.

Government departments are either non-committal, dismissive, or outright hostile to pitches.

He points out the lack of concrete support. Like no guarantees of contracts, bureaucratic red tape around tax breaks, exploitative “facilitator” middlemen, and high import costs. And all these issues make it harder to compete globally. 

His message to Goyal? Don’t lecture startups about ambition. Especially when the real problem is poor governance and a system that punishes rather than empowers deep-tech innovation.

Now in an interview, Goyal said those who are criticising him are Congress proxies. He’s wrong on that too. 

Mohandas Pai, a well-known angel investor, was also critical of Goyal’s stand.

As many of you might know, Pai is one of the loudest supporters of this government. 

Deep-tech takes time. It needs serious infrastructure. It’s expensive. And it doesn’t give you quick wins.

Pai explained that this is why investors tend to flock to lifestyle startups. They promise faster returns.

But for deep-tech to really thrive, we need something else — what he calls patient money. The kind that’s okay waiting 7–10 years for a payoff.

Pai also flagged another big roadblock — regulation.

He said stricter rules on foreign investment have made it even tougher for deep-tech startups to grow. 

Even when someone builds a solid product, like this quick-charging battery for buses, they often can’t find buyers.

Outside of the headlines, social media was full of similar frustrations.

That said, it’s not like the deep-tech space in India isn’t growing. 

The country currently has around 4,000 deep-tech startups, and projections suggest this number could more than double by 2030. 

In 2024, these startups attracted $1.6 billion in funding — a sharp 78% jump from the year before. 

Where China has clearly taken the lead in hardware, India is carving out its space in software, enterprise tech, and SaaS — areas where it already has a strong global reputation. 

And with 65% of the population under 35, India’s youthful demographic could be a huge advantage, if the right skills are developed.

Startup journeys are rarely linear. Ecosystems evolve — and so do priorities. 

India has the talent, the market, and now, at least some policy momentum on its side. 

If capital starts flowing into the right sectors, and if the government follows through on its deep-tech push, there’s still a window to leap forward.

For suggestions and feedbacks write to pooja@thenewsminute.com

Produced by Megha Mukundan, edited by Nikhil Sekhar, script by Lakshmi Priya and Pooja Prasanna, GFX by Vignesh Manickam

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