Lately, Indian startups have been receiving a lot of flak. This started with union minister Piyush Goyal calling out the “fancy ice-cream” problem of Indian startups, implying that there is not enough deep tech research happening in India. This was also a jab at Indian investors, like the ones in Shark Tank, who do not invest in deep tech startups.
Anupam Mittal, founder of Shaadi.com and also one of the Sharks from Shark Tank India, possibly responding to Goyal’s recent remark, said, “There is no tech in India,” in a recent discussion with Nikhil Aggarwal, founder and group CEO of Grip.
Giving examples of tech giants like NVIDIA, Google, Meta, and Apple, Mittal said that these Western companies operate on larger margins to become billion-dollar enterprises within a few years. On the other hand, he notes that tech companies take a lot of time in India. “India has a lot of tech-enabled companies, not pure-play tech ones,” he said.
Mittal, giving Zomato as an example, said that such companies cannot function without technology but are merely tech-enabled companies.
But is this true?
The reality seems different from what Mittal says. As reported by AIM earlier, VCs are actively taking an interest in some of the deep tech startups in AI, robotics, and hardware. That said, the investments are limited for companies to scale.
Narendra Bhandari, partner at early-stage venture capital firm Seafund, speaking with AIM earlier, said, “There’s never enough tech investments. There’s never enough focus on deep tech.”
He believes India has a long way to go. “We need more of it, a lot more of it,” he said. “We need to continuously invest at a private level and at a government level.”
Similarly, Vaas Bhaskar, partner at Elevation Capital, believes AI is becoming a foundational element, not just an added feature. “Just the way they are architecting themselves from day zero, how the engineering, service and product teams are running, it’s quite different,” he told AIM.
Read: Indian VCs Want to Invest in Deep-Tech Startups Despite Govt Skepticism
A recent Tracxn report, shared exclusively with AIM, reveals that total funding for AI startups plunged by 53% year-on-year. It decreased from $305.9 million in FY 2023-24 to $143.6 million in FY 2024-25, alongside a 44% drop in funding rounds.
Meanwhile, data from analytics firm Dealroom shows that global AI startups secured $110 billion in 2024, a 62% increase from the previous year. US-based startups accounted for around 42% ($46.2 billion) of the total funding.
Companies like Zoho, Meesho, Zomato, Swiggy, InMobi, and Ola may be scaling in that direction. Still, a tangible tech product like Microsoft’s Windows or NVIDIA’s GPUs has not been born out of India.
There are an increasing number of startups like the government-backed Sarvam AI or others like Soket AI, Gnani.ai, CoRover, or several space tech companies, but according to Mittal’s assessment, they are not building software or tech for the world to use.
In a previous interaction with AIM, Debarghya (Deedy) Das of Menlo Ventures said India faces a considerable challenge in competing with Western labs. Although not entirely impossible, he admits, as an investor, he is unlikely to make such a bet.
“If you look at AI in India today, the market size doesn’t quite justify the level of R&D investment needed to make it a success,” he said.
Besides, as Mohandas Pai, founder of Aarin Capital, has told us, Indian IT hasn’t made any breakthrough in the last decade. IT giants like TCS, Infosys, Wipro, or HCLTech have focused on providing services rather than building core tech.
Shouldn’t be the Use Case Capital of the World
This conversation brings us back to Nandan Nilekani, the co-founder of Infosys, who believes India is the use case capital of the world. Even OpenAI CEO Sam Altman recently acknowledged that India has one of its biggest user markets, even though Indian products are not able to scale globally.
Perplexity AI, built by the Indian entrepreneur Aravind Srinivas, was started in the West. Better growth ecosystem and interest from Silicon Valley investors drove him out of India.
On the optimistic side, there are people like CP Gurnani, former CEO of Tech Mahindra, who is currently building AIonOS, an agentic AI startup. Speaking at MachineCon 2024, Gurnani said that India should move beyond being the use case capital of the world. He believes that a company like NVIDIA will take shape in the country and be self-sufficient in the chip market.
Similarly, Ajai Chowdhry, co-founder of HCL and chairman of National Quantum Mission, said that the next Apple and NVIDIA must come from India, and he is after that dream of building India as a product nation.
It might become possible given the current push from the government, at least in terms of AI. IndiaAI Mission, apart from selecting Sarvam for building the first foundational model of India, has also selected 17 companies to provide infrastructure to enable AI research in India, including Yotta, Tata, and E2E.
This makes it clear that India aims to soar high and is headed in that direction, but innovation seems lacking.
