Piyush Goyal’s ‘Reality Check’ Riles Startups: Leaders Demand, ‘Where is the Capital?’

Union Commerce Minister Piyush Goyal’s recent 'reality check', which was ostensibly aimed at motivating the youth of the country to dream bigger, has not been well-received by the industry.

Speaking at the Startup Maha Kumbh, Goyal criticized India's startup ecosystem, questioning whether the country was content with low-paying gig jobs instead of pursuing technological progress. "Do we need to make ice cream or chips? Bas dukandaari karni hai? (Do we want to just sell things?)" he asked.

Drawing a comparison between Indian and Chinese startups, Goyal emphasized that India should not shy away from competition. “While Chinese startups are working on battery technology, EVs, semiconductors, robotics, and automation, Indian startups are making fancy ice creams and cookies, which everyone knows can’t be healthy,” he remarked.

He also advised Indians to introspect, pointing out that resources in hyperfast logistics were being wasted by engaging in instant grocery delivery.

In response, former Infosys CFO Mohandas Pai criticized the comparison between Indian and Chinese startups. He argued that such comparisons are unfair and suggested that Goyal should reflect on his role in supporting deep-tech startups, given the financial and regulatory challenges they face.

Highlighting the lack of capital, Pai wrote on X, “Minister @PiyushGoyal, there are many small deep-tech startups in chip design, IoT, robotics, EV charging, and BMS in India, growing rapidly, but where is the capital? Indian startups received $160 billion from 2014–2024, while China received $845 billion, and the US received $2.3 trillion. Long-term investors, like endowments and insurance companies, still do not invest despite your efforts! Please address this situation. AIF investments are facing regulatory overreach, and the flow of capital has decreased. The RBI harasses overseas investors on remittances. We have the technology for fast-charging EV buses, but the majority of buses are run by PSUs. How do you sell to these dinosaurs?”

Pai advised Goyal not to belittle startups but to reflect on what he has done as a Minister to help deep-tech startups grow in India. “It’s easy to point fingers. We have a hostile @FinMinIndia @nsitharaman, who harassed startups with angel tax for many years, does not allow endowments to invest, and insurance companies still do not invest, though they do so globally. @RBI regularly harasses overseas investors on remittances and AIFs, treating them poorly due to forex rules. China invested $845 billion from 2014–2024, while India only received $160 billion! Why is Minister @PiyushGoyal @AshwiniVaishnaw not helping solve these issues?” he questioned.

Startup owners quickly voiced their opinions on the Minister’s remarks.

Zepto CEO Aadit Palicha highlighted the significant contributions his quick commerce app has made by creating 15,000 jobs and paid ₹1,000 crore in taxes. He emphasized the role of consumer internet companies in driving technological advancements, including foundational AI models.

Anupam Mittal, founder of Shaadi.com and a judge on the popular show ‘Shark Tank India’, addressed Goyal’s comments by pointing out the challenges entrepreneurs face, including limited capital and exposure. He posted on X, “In the last few months, I have met a few deep-tech companies that have absolutely blown me away. From AI and space-tech to material science, Indian entrepreneurs are ready to take on the world. But capital and the ecosystem for growth and commercialization are severely lacking. Founders can do most things, but not EVERYTHING.”

Thanking the Minister for starting the 'healthy' debate, BharatPe founder Ashneer Grover, who also judged the first season of ‘Shark Tank India’, emphasized that it is politicians who need a ‘reality check’. He remarked, "Everyone else is living in the absolute reality of India."

“China also had food delivery first and then evolved to deep tech. It’s great to aspire for what they’ve done — maybe it’s time for politicians to aspire for a 10%+ economic growth rate for 20 years straight before criticizing today’s job creators. Perhaps it’s time to change the ‘public discourse’ from history to science!” he added.

Vinod Java, Founding Partner of Java Capital, shared a slide presented by the Commerce Minister on the operations of Indian and Chinese startups. He pointed out that his pre-seed/seed venture fund, focused on deep tech, climate, and B2B, is doing exactly what Goyal is aspiring for. However, he highlighted that more capital is needed for such ventures. He also pointed out that Java Capital has invested in deep-tech and innovation-driven startups such as Oorja, Lightspeed Photonics, Agnikul, and Frigate.

India's entrepreneurs have collectively defended the current focus of many startups, emphasizing their significant economic contributions and the role of consumer internet companies in fostering technological progress. They advocate for a balanced approach that supports both consumer-centric services and deep-tech innovations.