Why in News?

Commerce Minister Piyush Goyal’s remarks comparing the focus of Indian and Chinese start-ups have sparked a vital conversation.

While Indian start-ups largely concentrate on areas like online delivery and betting apps, Chinese counterparts are advancing in strategic sectors such as electric mobility and AI.

His comments underscore a deeper issue: despite being the world’s third-largest start-up ecosystem, India’s innovation priorities differ significantly from global leaders.

What’s in Today’s Article?

• Food Delivery vs. Deep Tech: India-China Start-Up Divide
• China's Breakthrough in Artificial Intelligence
• India’s Growth in Domestic E-Commerce
• China’s Dominance in Global Consumer Tech
• Manufacturing: China Leads, India Catches Up
• China’s Lead in Deep Tech Start-Ups
• India’s Strength in the SaaS Sector
• Start-Up Leaders React to the Criticism

Food Delivery vs. Deep Tech: India-China Start-Up Divide

• Commerce Minister Piyush Goyal contrasts Indian and Chinese start-up ecosystems.
• Indian start-ups are largely focused on food delivery, instant groceries, influencer culture, and fantasy sports.
• Goyal questioned whether these ventures truly represent India's future potential.
• The Chinese Model: Deep Tech and Global Innovation
  • Chinese start-ups are focusing on advanced sectors such as electric vehicles (EVs), battery tech, semiconductors, AI, robotics, and logistics.
  • The minister highlighted this contrast to underscore India's missed opportunities in critical technologies.
• Call for IP-Led Growth in India
  • There is a need for India to develop its own intellectual property (IP).
  • India lacks significant IP in frontier sectors, especially when compared to China.
  • Government initiatives like the Design Linked Incentive (DLI) scheme for semiconductors aim to address this gap.
• India’s Technological Lag in Electric Mobility
  • China leads in EV and battery technology, outpacing even Western companies.
  • India remains heavily dependent on Chinese innovations in this domain.

China's Breakthrough in Artificial Intelligence

• While American firms like OpenAI and Anthropic lead globally, China has made headlines with Deepseek.
• Deepseek demonstrated that powerful AI models can be developed at much lower costs.
• India has yet to produce a globally competitive AI model, though proposals are under government evaluation.

India’s Growth in Domestic E-Commerce

• India has built major consumer-facing platforms like Flipkart, Zomato, Swiggy, Blinkit, Zepto, and Myntra.
• These firms leveraged increased internet access and urban discretionary spending.
• Many of them are publicly listed and dominate the Indian market.
• Limited Global Reach of Indian Start-Ups
  • Indian start-ups primarily serve the domestic market, which limits scalability.
  • Around 90% of India’s population lacks spending power, posing growth challenges.
  • Global expansion is difficult due to strong existing competitors in international markets.

China’s Dominance in Global Consumer Tech

• Chinese companies like TikTok (Bytedance), Shein, and Alibaba have succeeded globally.
• They cater to international audiences and have built strong global brands.

Manufacturing: China Leads, India Catches Up

• China remains the global hub for tech manufacturing.
• India has made progress in smartphone assembly but still relies heavily on Chinese components.
• Efforts are ongoing to expand domestic manufacturing capabilities.

China’s Lead in Deep Tech Start-Ups

• China has over 6,000 deep tech companies.
  • Deep tech involves the application of advanced scientific or engineering breakthroughs.
  • Focus areas include AI, biotechnology, quantum computing, robotics, aerospace, clean energy, and advanced materials.
  • These start-ups aim to solve complex, high-impact global problems.
• Over 100 Chinese deep tech companies have successfully gone public.
• India's Struggles in the Deep Tech Space
  • Indian deep tech start-ups face a severe funding crunch.
  • Investors often see them as high-risk ventures and hesitate to support them.
  • This limits their growth and ability to compete globally.

India’s Strength in the SaaS Sector

• India has made a mark globally in the Software-as-a-Service (SaaS) space.
• Key players include Zoho, Freshworks, TCS, and Infosys.
• However, growth has been largely driven by cost advantages rather than groundbreaking innovation.
• Global Capability Centres (GCCs) are emerging, but innovation is often limited to specific client needs.
• UPI: A Recognised Innovation in Digital Payments
  • India’s Unified Payments Interface (UPI) has set a global standard in digital transactions.
  • Initially driven by the government, it was later opened to private firms like PhonePe and Paytm.
  • Despite its success, UPI remains free to use, making monetisation a challenge for service providers.

Start-Up Leaders React to the Criticism

• Experts highlight that Zepto has created 1.5 lakh jobs, paid ₹1,000+ crore in taxes annually, and brought in $1 billion+ in FDI — calling it an "Indian innovation miracle."
• They argued that India must aim for consistent high growth before criticising its entrepreneurs. China, too, started with consumer services before transitioning to deep tech.
• They also highlighted the presence of promising Indian deep-tech start-ups but stressed the lack of capital and an enabling ecosystem as major hurdles to their growth.