Piyush Goyal stirred a heated debate when he exhorted Indian startups to come up with ideas that can stand apart in the fast-changing world of business. The Union commerce and industry minister’s concern isn’t new, but the context has changed in recent weeks. India not only needs to future-proof its economy, but for now it needs weapons to fight a global trade war. China, Europe and many other top trading entities offer, at competitive prices, goods and services the world cannot do without. What is India’s world-beating offering?
So, the minister understandably wants Indian startups to pivot towards high-tech industries like semiconductors, machine learning, robotics and artificial intelligence. The problem is layered—it’s not just about regulatory and bureaucratic bottlenecks, as many startup bosses have pointed out since Goyal’s speech. One prime problem, for which industry is as much culpable as the government, is the lack of focus on research and development. Indian startups continue to avoid spending on deep tech, which has long gestation periods.
The most successful Indian startups have copied thriving business ideas from the West: Flipkart borrowed from the Amazon model, Ola from Uber, and Oyo is an AirBnB lookalike. Zomato, India’s first listed food-tech company, expanded to food delivery inspired by DoorDash and other food delivery apps overseas. Many of these startups had the first mover’s advantage, they attracted funding from investors, survived competition from later entrants and lived to see the light of the day. They must be complimented for their success and maturation as viable businesses. Slushed with easy liquidity in the post-Covid era due to benign central bank monetary policies, many startups with no actual worth or problem-solving abilities received funding at higher valuations. The bubble burst and many fell by the wayside.
It is time for the Indian startup apparatus to rewire for the next maturation phase. Chinese startups also began by copying the Americans, but quickly adapted, innovated and filed their own patents. For Indian startups to revise their strategy, mainly investing in R&D and the latest tech-enabled solutions, support must come from the government, big business and other investors. Investing heavily in foundational technologies that can become building blocks for later-stage innovations would be a start. For India to achieve this, the change in approach must happen at all levels—founders, investors and policymakers.