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The recent remarks by Union Commerce Minister Piyush Goyal questioning the focus of Indian startups, particularly their emphasis on food delivery and hyper-delivery apps, have ignited a vigorous debate within the Indian startup ecosystem and beyond. Goyal's comments, delivered at an investment event in Delhi, centered on the perceived imbalance between India's aspirations for technological advancement and the prevalence of startups focused on consumer internet applications. He contrasted this with China's focus on artificial intelligence (AI), electric vehicles (EVs), and semiconductors, implying that India was lagging in these critical areas due to its over-reliance on simpler, service-oriented business models. Goyal's rhetorical question, "Dukaandari hi karna hai (Do we just want to sell things?)", struck a nerve, prompting responses from prominent figures in the startup world who defended their contributions to the Indian economy while acknowledging the need for greater focus on deep technology. The debate has brought to the forefront critical questions about the direction of India's technological development, the role of government policy in fostering innovation, and the balance between short-term economic gains and long-term strategic objectives. The core of Goyal's argument is that India, with its large pool of STEM graduates, should be aspiring to create high-value, technologically advanced products and services rather than focusing on creating "delivery boys and girls" for consumer-facing apps. He expressed concern that the focus on food delivery and other similar services was creating a cheap labor force to cater to the wealthy, while neglecting the development of industries critical to national competitiveness and security. He also raised concerns about the proliferation of online betting apps, which have come under scrutiny for alleged money laundering, suggesting that startups should instead focus on activities that contribute to "real economic productivity." This perspective reflects a broader concern within the government about the need to promote innovation in areas such as manufacturing, renewable energy, and digital infrastructure, which are seen as crucial for achieving sustainable economic growth and reducing dependence on imports. The minister’s viewpoint aligns with the ‘Make in India’ initiative that aims to boost domestic manufacturing and reduce reliance on foreign countries for essential goods. However, Goyal's comments have been met with strong reactions from within the startup community, with many arguing that consumer internet startups have made significant contributions to the Indian economy. Zepto co-founder Aadit Palicha, for example, highlighted the fact that Zepto alone employs 1.5 lakh people and contributes over Rs 1,000 crore in taxes per year. He also pointed out that Zepto has attracted over a billion dollars in foreign direct investment (FDI) and has invested heavily in organizing backend supply chains, particularly for fresh fruits and vegetables. Palicha argued that it is unfair to criticize consumer internet startups without acknowledging their positive impact on job creation, tax revenue, and investment. He also emphasized that many successful technology companies, including China's Alibaba, started as consumer internet companies before evolving into more sophisticated technology platforms. This argument underscores the importance of allowing startups to experiment and iterate, even if their initial focus is on relatively simple business models. By creating a supportive ecosystem that encourages entrepreneurship and innovation, India can foster the growth of companies that eventually develop deep technology capabilities. Ashneer Grover, the former Managing Director of BharatPe, echoed Palicha's sentiments, reminding the minister that China also started with food delivery initiatives before becoming a global leader in technology. He also criticized politicians for not pushing the overall Indian economy to grow faster, suggesting that their focus should be on creating an environment conducive to economic growth and job creation rather than criticizing existing businesses. Grover's remarks highlight the importance of government policies that support entrepreneurship, innovation, and investment. By reducing bureaucratic hurdles, streamlining regulations, and providing access to funding, the government can create a more favorable environment for startups to thrive and contribute to economic growth. Mohandas Pai, former CEO of Infosys, offered a more critical perspective, urging Goyal to not belittle Indian startups and instead focus on ensuring that the government supports the creation of those focusing on high technology. He also criticized Finance Minister Nirmala Sitharaman for being "hostile" towards startups, citing the angel tax issue, and the Reserve Bank of India for "regularly harassing overseas investors." Pai highlighted the significant disparity in investment between China and India, noting that China invested $845 billion in startups from 2014 to 2024, whereas India invested only $160 billion. This disparity underscores the need for India to attract more investment in startups, particularly those focused on deep technology. Pai's remarks highlight the importance of creating a supportive regulatory and financial environment for startups. By reducing bureaucratic hurdles, streamlining regulations, and providing access to funding, the government can create a more favorable environment for startups to thrive and contribute to economic growth. The angel tax issue, in particular, has been a major concern for startups in India. The tax, which was introduced in 2012, taxes investments made by angel investors in startups at a higher rate than other forms of investment. This has made it more difficult for startups to raise capital, particularly in their early stages. The government has taken steps to address the angel tax issue, but more needs to be done to create a more favorable environment for angel investment. The debate sparked by Goyal's comments has also raised questions about the role of government policy in promoting innovation. Some argue that the government should actively support the development of deep technology by providing funding, tax incentives, and other forms of assistance. Others argue that the government should focus on creating a level playing field and allowing the market to determine which technologies and business models succeed. There is no easy answer to this question. However, it is clear that the government has a role to play in fostering innovation. By investing in research and development, supporting education and training, and creating a favorable regulatory environment, the government can help to create a more vibrant and innovative economy. The debate surrounding Goyal's comments has also highlighted the need for India to develop a more comprehensive innovation strategy. This strategy should focus on identifying key areas of technological strength and opportunity, setting ambitious goals for innovation, and creating a supportive ecosystem that encourages entrepreneurship and investment. By developing a clear vision for the future of innovation in India, the government can help to guide the country towards a more prosperous and technologically advanced future. In conclusion, Union Commerce Minister Piyush Goyal's recent remarks about Indian startups have sparked a vital debate about the direction of India's technological development. While his concerns about the over-reliance on consumer internet applications are valid, it is important to recognize the contributions that these startups have made to the Indian economy. The government should focus on creating a supportive ecosystem that encourages entrepreneurship, innovation, and investment in both consumer internet and deep technology. By developing a comprehensive innovation strategy and fostering a favorable regulatory and financial environment, India can unlock its full potential and become a global leader in technology.
Source: Indian Startup Bosses On Piyush Goyal's "Dukandaari Hi Karna Hain?" Question