India’s minister for commerce and industry, Piyush Goyal, set off a firestorm when he noted how dissatisfied he was with the nation’s startups, an unusual target for the ire of a government official. His trenchant criticism was both accurate and unfair.
Startups are more accustomed to being feted as an example of what has gone right in the economy. Officials often complain that legacy companies, especially in manufacturing, aren’t investing enough, but are happy to present these new players as a success story.
The Prime Minister Narendra Modi likes to talk about how the growth of the sector shows that India is “dynamic, confident and future-ready.” His ministers praise their contribution to employment generation and highlight how much foreign investment they attract. This is seen as demonstrating the effectiveness of Modi’s business-friendly reforms.
But on this occasion, Goyal’s diagnosis was, frankly, accurate. And that’s why it struck a nerve.
The minister threw up a slide comparing India’s startups with China’s. The local apps were “turning unemployed youth into cheap labor so the rich can get their meals without moving,” he kvetched, while Chinese entrepreneurs were “investing heavily in self-reliance, building chips and AI models for the future.” Each of his five points contrasted Indian companies focusing on serving niche demand with counterparts in China that he claimed were building out deep tech and new industrial sectors.
Goyal isn’t wrong about the consumer-facing nature of local startups. But although he might have diagnosed the disease properly, he was wrong about what might have caused it. The anger in his speech is misdirected. If India’s startups aren’t in the same sectors as China’s, the fault lies with the economy and its stewards — with, in fact, the government.
New firms are created to serve the economy of which they are part. In India, there are some fields of innovation — space or semiconducto ..
