India Needs an Ecosystem That Better Enables Deep-tech Innovation

Syllabus :GS 3/Economy 

In News

• At Startup Mahakumbh, Commerce Minister Piyush Goyal criticized Indian startups for focusing on consumer-centric ventures like food delivery and boutique brands.
  • He contrasted this with China’s emphasis on high-tech areas such as EVs, AI, and semiconductors.

Comparison with china 

• Indian start-ups focus on food delivery apps, online services like betting, and influencer-driven content.
  • India lacks significant intellectual property (IP) in cutting-edge sectors, unlike China.
  • India lacks a globally competitive AI model and is still in the process of evaluating proposals.
• Chinese start-ups are focused on electric vehicles (EVs), battery technology, AI, robotics, and infrastructure.
  • China is a global leader in electric mobility and it leads in AI with Deepseek, showing that an effective AI model can be built at a fraction of the expected cost.
  • China has over 6,000 deep tech start-ups, which have raised nearly $100 billion in venture capital and private equity.

Challenges for Indian Start-ups

• Innovation Deficit: India is not fostering deep-tech innovation at the same pace as other nations.
  • Despite Indian talent succeeding globally (e.g. Google, Microsoft, Tesla), local innovation remains limited.
  • India ranks 39th in the Global Innovation Index 2024; China is at 11th — highlighting a major gap.
• Funding Gap: India invested $160B in tech from 2014–2024 vs. China’s $845B.
  • 90% of the Indian population lacks financial flexibility for discretionary spending, restricting these companies’ growth.
• Weak Education/Research: Many engineers are unemployable; universities lack global research recognition.
• Brain Drain: Top talent moves abroad due to better opportunities.
• Risk-Averse Venture capital (VC) Culture: Indian VCs prefer low-risk consumer apps over long-gestation deep-tech.
• Limited presence :  Many Indian start-ups like Flipkart, Zomato, and Swiggy are primarily focused on domestic markets, limiting their global potential.
  • India has made strides in smartphone assembly but remains dependent on Chinese parts for tech manufacturing.

Opportunities 

• India is the third-largest startup ecosystem in the world with 1.57 lakh+ startups recognized by DPIIT (as of Dec 31, 2024).
• The country hosts 100+ unicorns, driving innovation across multiple sectors.
  • Major cities like Bengaluru, Hyderabad, Mumbai, and Delhi-NCR lead the startup boom. 
• Tier II & III Cities contribute over 51% of startups, showing strong grassroots entrepreneurial growth.
• Government initiatives such as Startup India have played a crucial role in fostering this growth and empowering future entrepreneurs.
• India has made significant contributions in the Software-as-a-Service (SaaS) sector, with companies like Zoho, Freshworks, TCS, and Infosys.
• India has also set a global template with the Unified Payments Interface (UPI), though monetization remains a challenge.
  • Paytm and PhonePe revolutionized digital payments.
• Startups like Digantara, Skyroot, and Agnikul show promise in space tech.
• Cybersecurity startups are emerging, though often acquired too early.
• Deep-tech investment rose 78% in 2024, reaching $1.6B.

Conclusion

• India has progressed in sectors like SaaS and fintech but lags behind China in deep tech and global reach.
• Startups need stronger support in funding, infrastructure, and innovation. Long-term-focused political leadership is essential for sustained growth.
• To emerge as a global tech leader, India must transition from consumer-driven ventures  to foundational, deep-tech innovation through bold investment, policy support, and a culture shift.
• India must focus on sectors like AI, smart manufacturing, medtech, climate tech, defence, and computing.

Source :IE