Are startups really failing India? Let’s look at the big picture

He praised the performance of Chinese startups, which are innovating at the cutting edge of technology. The backlash has come from successful startup leaders and venture investors.

Also Read: India must wake up on basic R&D for technology before it gets too late

Much of their response is valid, clothed though it is in disappointment that the minister overlooked the vital roles they’ve played in job creation, organizing rural supply chains, using tech for efficiency and so on.

These protests, however, obscure a kernel of truth in Goyal’s concern. We do need startups to help solve some of the problems we face in our quest for strategic autonomy. To that end, we require innovation in defence modernization and indigenization, space capabilities and advanced materials, computing and communication technologies, plus more.

What the minister could have avoided was an implication that the contrast with China is simply a matter of startup choice, independent of the ecosystem in which our businesses operate.

Also Read: Nilesh Jasani: Snap out of the DeepSeek delusion and invest big in basic research

Overall, India spends just 0.65% of GDP on research and development (R&D), according to World Bank data, narrowly ahead of Gambia and South Africa, but trailing Tunisia, Morocco and the UAE, not to speak of the US (3.46%), China (2.43%), South Korea (4.93%) and Israel (5.56%).

Blame India Inc and the government first for this abysmal state of affairs, in which the research outlay of a single mega-corp like Amazon outstrips the combined R&D spend of India, public and private sectors combined. The Australian Strategic Policy Institute’s critical-technology tracker finds that China is the global leader today in 57 of 64 critical technologies, having displaced the US.

This is thanks to Beijing’s policy focus and investment in quality education at all levels, apart from its push for research capacity and publication of substantive findings. In fact, this is what explains its AI success.

Indian researchers do publish, but are rarely cited since their research aims tend to tick the right boxes for career gains rather than advancing the frontiers of knowledge. Startups will routinely be able to tackle hard tech if and only if they can draw on a talent pool that’s large and diverse enough. Indian political leaders, on their part, would help if they harp less on ancient glory as part of their politics and promote scientific attitudes driven by evidence.

Also Read: The great AI reboot: Educators, techies and leaders all need to adapt fast

Then there is the question of our business culture and funding. Risk-taking, by and large, remains the preserve of a section of society that has traditionally been in business. Others often find it hard to raise capital again if their startups end up failing. Meanwhile, scholastic pursuits have not broadened to involve all social segments and knowledge creation rarely ever commands the premium it should. Small ventures that take off often struggle for funds to scale up. Venture funding in India comes mostly from abroad.

Should a thin slice of the enormous pool of retirement savings in the Employees’ Provident Fund and National Pension System not be channelled to startups? Why should the government drag its feet on the R&D corpus announced in the Union budget years ago? The answer is with the government, not startups.