Beyond valuations

India needs to invest more in R&D

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In a recent address, Union Minister of Commerce and Industry Piyush Goyal criticised the Indian startup ecosystem for being too focused on chasing valuations and using cheap labour instead of pursuing real innovation or solving fundamental technological challenges. Indian startups are largely seen to be consumption-driven and focused more on ecommerce, fintech, and edtech; that is, solving local problems at scale through technology-enabled services rather than working on long-gestation, foundational technologies. In other words, India's startup story, while inspiring, has largely been one of scale and not frontiers of science.

While the minister was right in pointing out that startups tended to shy away from innovation and replicate global business models rather than inventing new ones, founders may not be the only ones responsible for the current state of affairs.