Core Gaps in India’s Start-Up Priorities: Comparing Indian and Chinese Ecosystems

07-04-2025

04:30 AM

1 min read

What’s in Today’s Article?

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.

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.

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.

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.

China leads in EV and battery technology, outpacing even Western companies.
- India remains heavily dependent on Chinese innovations in this domain.

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 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.

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.

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

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 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 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.

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.

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.

Q1. What sectors are Indian start-ups focusing on?

Ans. Indian start-ups focus on food delivery, fantasy sports, influencer culture, and instant groceries.

Q2. What sectors are Chinese start-ups focusing on?

Ans. Chinese start-ups focus on deep tech sectors like AI, electric vehicles, and semiconductors.

Q3. Why is India lagging in electric mobility?

Ans. India depends on Chinese innovations in electric mobility, lacking significant domestic advancements in the sector.

Q4. How has India performed in the SaaS sector?

Ans. India has a strong presence in SaaS, with companies like Zoho, but growth is driven by cost advantages.

Q5. What is India's challenge in the deep tech space?

Ans. Indian deep tech start-ups struggle with limited funding and a lack of an enabling ecosystem for growth.

Source: IE | TI