Indian deeptech ecosystem and its deep inadequacies

Speaking at the inaugural ceremony of the second startup Mahakumbh, Union Minister Piyush Goyal released the cat among the pigeons by stating, “We need to go global and think big. When we look at deep tech, there are only about 1000 startups in the ecosystem, and it’s disturbing.” This point shows that Indian startups are focusing on food delivery, betting, and fantasy sports. In contrast, Chinese counterparts are working on EVs, battery technology, semiconductors, and artificial intelligence, he criticized the current direction of Indian startups. He noticed, “Wherever I go, all over the country, I know at least three or four billionaires whose children make at least one brand of fancy cookies and ice creams. I have no complaints against that, but is that the destiny of India? Are we going to be happy being delivery boys and girls?” He lashed out at the ecosystem. “Do we have to make ice cream or chips? Dukaandari hi karna hai (Do we just want to do shopkeeping?)” While the concerns raised by the minister were accurate, the startup world was quick to counter and show the mirror to the government.

Tech investor and former CFO of Infosys, Mohandas Pai, reacted on X by posting statistics saying there are very many small deep tech start-ups in Chip design, IOT, Robotics, EV charging, and BMS in India, growing rapidly but without adequate capital. Indian startups got $ 160 billion from 2014/24 while China had $845 billion compared to the US at $2.3 trillion. Long-term investors like endowments and insurance don’t invest because RBI harasses overseas investors on remittances. Ashneer Grover of BharatPe said that the government should focus on delivering double-digit GDP growth for the next two decades. Zepto cofounder Aadit Palicha said that it’s easy to criticize even though the reality is that almost 1.5 lakh people are earning their livelihood through these food delivery apps. He argued that the reason why India still doesn’t have a large-scale foundational AI model is that we haven’t yet built great internet companies; and most tech-led companies originate from consumer internet companies.
With the startup ecosystem and government sparring on the deep tech issue, the question isn’t who is the culprit. The question is: Where are the deep pockets that will invest in high-end uncertain technology with a long gestation period? Why are they not investing in India while investing in China and the US?

For the past few decades, when Indian IT giants rose into the international market, there have been concerns that domestic tech giants are catering only to the low end of the tech spectrum. Tech companies like TCS, Infosys, Wipro, and HCL were accused of being the call center of the world rather than producing cutting-edge innovation. While Indian tech companies gained market share and created employment for millions of youth, it hardly made a dent in creating novel tech solutions. The IT sector, despite its formidable financial

muscle, was a follower of tech trends rather than a pioneer. The Chinese companies, meanwhile, persistently innovated and dominated the smartphone markets with high-quality products at competitive prices. The biggest competitors to Apple iPhones and Samsung handsets are the Chinese makers who beat them in price. While India was the biggest market for Google, Facebook, and Amazon, China opted to recreate its local version by investing in Baidu and Alibaba. The social media tech giants peaked last decade, and the AI era has arrived. The Indian tech problem is still constant, with India being users but not creators of LLMs. China challenged the Open AI dominance with Deepseek, while India is still pondering for answers even as its population merrily creates Ghibli images, sharing their facial data and photographs voluntarily.

In contrast to established giants with deep pockets, the Indian immigrants to the US have produced some groundbreaking competition despite their humble backgrounds. Companies like Perplexity have emerged as competitors to Open AI, Deepseek, and Alphabet. The likes of Meta, Alphabet, Facebook, Amazon, and Nvidia still dominate the roost in the latest technology like AI, ML, AR/V, R, and Foundational LLMs. Indian tech companies are mostly knock-off services copied from the West like food delivery apps, marketplaces, and ride sharing. India cannot yet brag even a single groundbreaking innovation that originated in India and dominated the international markets. The funding problem is a big issue, while the technological problem will not get solved if the Indian government freely allows endowments and insurance companies to invest without constraints. The bottleneck is the Indian reluctance to invest in research, ponder unique methods, and wait for the long term. The Western dominance is on account of a superior research ecosystem, ease of availability of funding, and immigrants. As per an NFAP analysis, Immigrants have founded or co-founded nearly two-thirds of the top AI companies in the US. Essentially, the Indian tech space is starved because Indian Americans are among those who are innovating in foreign lands but aren’t doing so in India. An Indian American like Aravind Srinivas is creating ripples in the AI world with his startup Perplexity. The Union minister Piyush Goyal has a point when ruing that Indians here aren’t challenging the status quo in the tech sector and are focusing on adopting tried and tested app development mode. The heroes of the start-up world have to reinvest their money in grants, the idea of catching them young, where researchers are identified by the govt early and family funds need to use their money to commercialise deep tech ideas. By avoiding sweet words and pointing out the inconvenient reality, the Union Minister has initiated introspection and steered the startup world toward a dynamic future.

Shweta Shalini is a political commentator.