Why the Indian startup ecosystem should embrace Piyush Goyal’s reality check

App forwards rarely spark serious conversations across India’s startup ecosystem, but one particular forward recently created a stir and offended a significant section of the community. During his keynote at Startup Mahakumbh in New Delhi, Commerce Minister Piyush Goyal pulled out a viral creative that compared the current status of Indian startups with those in China. 

Goyal, who is usually praised by Indian startup founders and investors, faced sharp criticism from stakeholders for drawing a comparison between the two countries. From Zepto co-founder Aadit Palicha to veteran investor Mohandas Pai and many others — both publicly and privately — a wave of backlash targeted Goyal.

But why was the ecosystem so quick to take offense? Isn’t it true that while India’s food delivery and quick commerce companies have demonstrated tremendous innovation, efficiency, job creation, and attracted billions in foreign direct investment (FDI), the country still lags behind China and the U.S. in deep tech, electric vehicles (EVs), semiconductors, and other critical sectors? A gap that seems to be expanding every month?

Why then did the Minister’s call for innovation and raising the bar not sit well with many stakeholders? Was it due to complacency? Certainly not. India has hundreds of founders actively building deep tech, hardware, robotics, and other cutting-edge companies, several of which are poised to stand shoulder to shoulder with their global peers from the U.S., China, and Israel. Goyal himself referred to hundreds at work, but called the number too small. Perhaps only too aware of the survival rate in the sector.

Stakeholders who felt offended by Goyal’s remarks may have been too hasty. Goyal did not attack food delivery or quick commerce companies. In fact, he acknowledged hyper-fast logistics as a form of innovation. His intention was to urge the ecosystem to aim higher. Moreover, the comparison content wasn’t created by Goyal himself; as he clarified, it was a forward shared by a friend that disturbed him, which he spontaneously referenced during his speech to inspire budding and established entrepreneurs. However, many media houses mistakenly portrayed the creative as his own. Below is a snapshot of that creative.

Goyal’s comments need to be seen in the context of a string of recent news from China, indicating the massive progress firms there have made across high technology sectors such as semiconductor, chips and AI foundational model, successfully playing catch up or even overtaking the west as in the case of EVs and batteries. Indian startups by contrast seem to seek validation only from a coterie of VC’s and few influential voices in the ecosystem here. Or a public listing where they have had the benefit of immense hype and valuations, with little to show subsequently frankly. 

As an ecosystem, we must remain open to criticism and feedback without reacting impulsively to reality checks. The hard truth is that India still lacks a sufficient number of truly innovative startups in deep tech, hardware, and artificial intelligence. We should be grateful that the government, which usually champions startups, chose this time to hold up a mirror instead.

Constructive criticism like this should not be seen as an affront but rather as an opportunity for reflection and improvement. Full marks to Piyush Goyal for daring to draw a comparison with China — something the government often hesitates to do.