Several Indian entrepreneurs on Friday (April 4, 2025) rallied in unison after Commerce Minister Piyush Goyal questioned the Indian startup ecosystem’s value and innovation proposition, as prominent names like Zepto CEO Aadit Palicha and Zoho founder Sridhar Vembu voiced their opinion on the issue that has stirred a debate in the startup circles.
Palicha – one of the most recognised faces in the startup circles and the cofounder of Zepto – cited the quick commence company’s contribution to jobs and FDI, and termed it a “miracle in Indian innovation”.
He underscored the role played by consumer internet companies in pushing technology-led innovation.
The young founder argued that the startup ecosystem, government, and owners of large pools of Indian capital need to actively support the creation of “local champions” and “not pull down the teams that are trying hard to get there”.
Zoho’s Vembu saw the minister’s call as a challenge to engineers and technologists and not as pointing fingers.
“What we need are smart engineers who roll up our sleeves 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,” Vembu said in a social media post.
Meanwhile, Goyal talking to reporters on Friday accused Congress of misleading Indian startups by misinterpreting his message at the Startup Mahakumbh, which was taken positively by the budding entrepreneurs.
He also alleged that the Congress ecosystem did not understand his message for startups, which is a reflection of their negative approach.
“My message for startups has been received (positively) except by some Congress party (social media) handles who are hell-bent on manufacturing a controversy when it is none. By and large, the feedback that I have received is that the young Indians are ready to capture the world,” he told reporters here.
In a post on X, the Congress said, “Piyush Goyal admits India’s startup struggles”.
In another post, it alleged that Goyal exposed the lies of Prime Minister Narendra Modi on startups.
Infosys’ former CFO Mohandas Pai reacted to Goyal’s critique, urging ministers to keep faith, help deep-tech startups, and remove difficulties, and assured that the industry will deliver on the promise.
He said any comparison with China is not right as India also has such startups, albeit “small”.
Shark Tank India judge and founder of Shaadi.com Anupam Mittal, in a post on X, said that he was left mighty impressed by a few deep-tech companies that he has met.
“In the last few months, I have met a few deep-tech companies that have absolutely blown me away. From AI and space tech to material science, Indian entrepreneurs are ready to take on the world. But capital and the ecosystem for growth and commercialisation are severely lacking,” he said.
Founders can do most things but not everything, Mittal wrote.
Zepto’s Palicha – in an elaborate post on LinkedIn – said: “It is easy to criticise 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”.
His statement came after Mr. Goyal on Thursday asked the Indian startup community to shift their focus from grocery delivery and ice cream making to high-tech sectors like semiconductors, machine learning, robotics, and artificial intelligence.
The Minister had questioned Indian food delivery startups for turning unemployed youth into cheap labour.
“Are we going to be happy being delivery boys and girls… Is that the destiny of India…this is not a startup, this is entrepreneurship… What the other side is doing — robotics, machine learning, 3D manufacturing and next generation factories,” Mr. Goyal said on Thursday, showing a slide titled “India vs China. The Startup Reality Check”.
He said that some people might criticise him for comparing Indian startups with Chinese, but “I have no objections (because). We have to be willing to learn, evolve…aspire for bigger and better, we have to be bolder and we should not shy of competition”.
“What are Indian startups doing today? We have focused on food delivery apps turning unemployed youth into cheap labour so that the rich can get their meals without moving out of their houses,” the minister added.
On the other hand, Chinese startups are working on developing electric mobility and battery technologies, and with that today, they are dominating the electric mobility ecosystem.
“We are very proud of what India has done, but are we the best in the world? Not Yet. Should we aspire to be or are we going to be happy being delivery boys and girls,” Mr. Goyal stated, adding that some are making fancy ice cream and cookies, “but is that the destiny of India…this is not startup, it is entrepreneurship or business”.
China, on the other hand, is focusing on semiconductors’ growth, artificial intelligence, and building chips, which will prepare themselves for their future, he has said.
Palicha came out in the defence of Indian startups and went on to list the contributions of Zepto and the economic value created by his venture.
“₹1,000 plus crore of tax contribution to the government per year, over a billion dollars of FDI brought into the country, and hundreds of crores invested in organising India’s back-end supply chains (especially for fresh fruits and vegetables). If that isn’t a miracle in Indian innovation, I honestly don’t know what is,” Palicha wrote.
Why doesn’t India have its own large-scale foundational AI model, he quipped, and added that “it is because we still haven’t built great internet companies”.
“Most technology-led innovation over the past two 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),” Palicha said.
Consumer internet companies drive innovation because they have the best data, talent, and capital to put behind it.
“We need to build great local champions in the internet that are generating hundreds of millions of dollars in free cash flow (FCF) 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,” Palicha argued.
Zepto, he said, is still far away from being a great Internet company that can hold a candle to the global best, but is “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 further said.
Paytm founder Vijay Shekhar Sharma said the Indian startup system is still evolving in its maturity cycle, while the same in China and the US are more developed.
“Whether China or America, developed ecosystems are geared up to play longer haul. When you are mature, you have resources, then, you can play a longer arc game,” Sharma said.
He further argued that India and many other countries where the ecosystem is still evolving in its maturity sequencing make with what they have.
“When you are new, like India and many other country’s ecosystems, you play on what is in front of you,” he said, adding that “money which comes from there will help us expand…We will achieve a milestone gradually”.
Published – April 05, 2025 07:20 am IST
