Editorial 2 : Startups Need an Enabling Climate
Context: India needs an ecosystem that better enables deep-tech innovation.
Introduction: Union Commerce Minister has noted that Indian startups are overly focused on consumer-driven ventures (food delivery, quick commerce, boutique brands). This contrasts with China’s emphasis on high-tech sectors (EVs, semiconductors, AI, robotics) and highlights India’s struggle to foster deep-tech innovation despite talent abundance.
Global Innovation Landscape
- Global Innovation Index 2024
- China: Ranked 11th with advanced R&D, strategic investments.
- India: Ranked 39th with consumer-driven growth, lagging in foundational tech.
- Investment Gap (2014–2024)
- India: $160 billion in tech.
- China: $845 billion in tech, driven by initiatives like Made in China 2025.
Challenges in India’s Innovation Ecosystem
- Insufficient Government Investment
- India’s IndiaAI Mission (Rs.10,000 crore) and Fund of Funds are dwarfed by China’s state-backed programs.
- Limited focus on high-risk, long-term R&D projects.
- Risk-Averse Venture Capitalism Culture: Indian VCs prioritize quick returns (e.g. consumer apps) over patient capital for deep tech.
- Skill Gap
- In India, millions of engineers graduate annually, but many lack employable skills.
- Low global university rankings for research output (e.g. no Indian university in top 100).
- Brain Drain: Top talent migrates to global hubs (e.g. Sundar Pichai at Google, engineers at Tesla/NVIDIA).
- Bureaucratic Hurdles: Legacy issues like angel tax (now scrapped) discouraged early-stage investments.
- Risk Aversion: There is a cultural preference for stable returns over moonshot innovation.
Success Areas
- Space Tech: Startups like Skyroot Aerospace, Agnikul Cosmos, and Digantara reflect space situational awareness.
- Digital Payments: Paytm and PhonePe revolutionized India’s financial ecosystem.
- Cybersecurity: Startups like CloudSEK and TAC Security, though often acquired early.
- Deep-Tech Growth: As per Nasscom, India’s 4,000 deep-tech startups attracted $1.6 billion in 2024, a 78 per cent increase year-on-year.
Way Forward: Opportunities for Strategic Growth
- Policy Interventions
- Increase R&D Spending: Expand funding for AI, quantum computing, and renewables (e.g. IndiaAI Mission).
- Incentivize Private Sector R&D: Tax breaks for corporate R&D aligned with global benchmarks.
- Education Reforms
- Industry-Academia Collaboration: Build research labs and skill development centres in universities.
- Focus on Original Research: Revamp curricula to emphasize critical thinking and innovation.
- Cultural Shift
- Promote Risk-Taking: Encourage Venture Capital funding for long-term deep-tech projects (e.g. SpaceX-like ventures).
- Leverage Diaspora: Create pathways for Indian talent abroad to contribute to domestic innovation.
- Sectoral Focus
- Priority Areas: AI/ML, semiconductors, defence tech, climate tech, and smart manufacturing.
- Patent Ecosystem: Streamline processes to boost patent filings and protect IP.
Conclusion: India must transition from ‘dukandari’ (shopkeeping) to foundational innovation. There is a need to scale funding, foster R&D partnerships and long-term investments. Stakeholders’ efforts must align with Viksit Bharat goals to position India as a global tech leader.