Groceries, Games, And Gig Work: Is This The Best India Can Build?

India’s startup ecosystem has witnessed astronomical growth in the last decade, earning accolades across the world. However, beneath this celebratory narrative lies a troubling pattern: a growing dependence on service-oriented, convenience-driven models with minimal focus on original technological innovation. Union Commerce Minister Piyush Goyal’s comment regarding the lack of innovation in India’s start-up ecosystem has sparked a national debate by questioning the trajectory of Indian startups.

He criticized their obsession with food delivery, fantasy sports, and quick commerce, lamenting India's shortage of deep-tech ventures and innovative capacity. His comments, though controversial, are rooted in truth. India’s startup scene is increasingly orienting itself towards short-term convenience, low-value gig economies, and copycat models, while countries like China have embraced deep-tech, AI, semiconductors, and industrial innovation.

Startups Prioritizing Low-Value Gig Economy Over High-Value Innovation

One of the starkest illustrations of India's innovation shortfall is the overwhelming focus on gig economy ventures. According to the NITI Aayog report, in 2020 - 21, there were 77 lakh gig workers in India. This number is projected to rise to 2.35 crore by 2029 - 30. Yet, over 77.6% of these workers earn less than Rs 2.5 lakh annually, revealing the exploitative economic model that lies underneath the many layers of glamorous startup ventures. 

Platforms like Swiggy, Zomato, and Zepto claim to offer convenience but extract high costs from both consumers and workers. A typical household in urban India now pays an extra Rs 12,000 annually in hidden charges for food deliveries.

Meanwhile, gig workers endure meagre pay and unsafe conditions to meet impossible delivery targets, a grim reality for a sector that claims to be “innovative.”

Instead of fostering long-term employment, such models trap India's youth in low-wage, high-pressure roles. The conversion of unemployed youth into delivery drivers or personal shoppers may offer temporary relief from joblessness but is no substitute for building an innovation-driven economy.

The gig economy, while scalable, fails to generate intellectual property, patents, or technological breakthroughs that position a nation for global leadership in tech and entrepreneurship.

A Culture of Convenience Over Progress

India's overreliance on services is deeply rooted in structural and cultural choices. The services sector contributes 53% of India’s Gross Value Added (GVA), while industries account for just 28%.

This economic skew encourages startups to pursue models that cater to comfort and convenience - delivery apps, aggregators, and marketplaces, instead of venturing into complex fields like robotics, aerospace, or biotech.

The education-employment mismatch further exacerbates the problem. A staggering 80% of India’s engineering graduates end up in non-technical roles, with only a fraction entering R&D or innovation.

Despite government efforts to promote deep tech, such as the Rs 10 billion fund for space startups approved in 2024, the cultural inertia and risk-averse mindset in the startup ecosystem hinder progress. Founders prefer replicable, cash-burning business models over long-term R&D efforts. This not only limits India’s technological potential but also reinforces a cycle of stagnation and service dependency.

Also Read: No, Piyush Goyal Didn't Run Down Indian Startups: 5 Things He Said That Should Go Viral

Short-Term Thinking Over Long-Term Vision

India’s startup ecosystem, while celebrated for its unicorns and valuations, often falls short when it comes to long-term vision. Despite having over 3,000 deep-tech startups, only a few hundred are genuinely pushing scientific boundaries. Most others optimize existing services rather than invent new technologies.

Contrast this with China’s trajectory. Once India’s peer in the startup race, China has now raced ahead with global giants like ByteDance, Alibaba, and Huawei. Chinese startups secured $45.4 billion in VC funding in 2023 alone, while Indian startups struggled with just $9.6 billion. China's strategic investments in AI, semiconductors, and manufacturing ecosystems have transformed its economic landscape, while India continues to chase valuation without value creation.

In India, even high-potential sectors like semiconductors and biotech remain underdeveloped. In 2024, only 5% of Indian startup funding went to deep-tech, compared to 35% in China. China had over 2.2 million R&D professionals in 2022; India had less than half that number.

Unless this gap is addressed, India risks becoming a consumer nation in a world driven by creators.

The Innovation Deficit

The replication culture in Indian startups is another indicator of the systemic innovation crisis. From Flipkart mimicking Amazon, to Ola following Uber’s blueprint, to Zepto replicating rapid grocery delivery models from Western markets, India’s most prominent startups have prioritized imitation over invention. Even new entrants like Aquapeya have resorted to blatant brand mimicry, leading to legal actions and reputational damage.

This cut-copy-paste strategy, while useful for rapid scalability, restricts India's global competitiveness. Many such startups end up being acquired by foreign entities, effectively transferring potential wealth, data, and IP abroad. Flipkart’s acquisition by Walmart and the undervalued sale of bright ideas to US companies, as lamented by Union Minister Piyush Goyal, exemplify this worrying trend.

A Misguided Focus on Burning Cash

India’s startup ecosystem is also plagued by an unhealthy obsession with cash burn and inflated valuations. Startups, especially in the consumer internet space, raise large rounds of funding only to spend recklessly on user acquisition, marketing, and discounts. This unsustainable approach creates flashy unicorns but few profitable companies.

The obsession with growth at all costs comes at the expense of building sustainable, innovation-led enterprises. In comparison, many Chinese startups have focused on manufacturing excellence, technological breakthroughs, and ecosystem building, creating not just companies but industries.

Redefining Priorities

India’s future lies not in how fast it can deliver groceries, but in how well it can deliver breakthroughs. If startups want to prepare the nation for the future, as Mr Piyush Goyal emphasized, they must look beyond short-term profitability and begin solving foundational challenges, in energy, healthcare, agriculture, space, and digital infrastructure.

Government policy must continue to incentivize deep-tech ventures, R&D, and IP creation. But the onus is equally on entrepreneurs, investors, and academia to build a culture where creating something new is more valuable than copying something that already works.

Conclusion

India stands at a critical juncture. The startup ecosystem has the numbers, the talent, and the capital. What it lacks is direction. Without a deliberate shift toward innovation, India’s startup boom may become a bubble that is loud and inflated, but fragile at its core. The time has come to choose: Do we want to make ice cream or microchips?