Union Commerce Minister Piyush Goyal’s critique of the Indian startup ecosystem has drawn flak from entrepreneurs on social media.

At the recently-held Startup Maha Kumbh, the Minister asked Indian startups to shift their focus from food delivery apps to high-tech sectors like semiconductors and AI. “Healthy ice cream, zero, gluten-free, vegan; using these terms and good packaging, they call themselves a startup. This is not a startup, it’s an entrepreneurship. This is business,” he said.

In response, Zepto CEO Aadit Palicha and former Infosys CFO Mohandas Pai defended Indian startups. Reacting to Goyal comparing home-grown companies to those in China, Pai remarked: “Minister Piyush Goyal should not belittle our startups but ask himself what he has done as our Minister to help deep tech startups grow in India.”

While a few businesspersons agree with Goyal, many are of the opinion that Indian startups are held back by tedious red tape and rigid taxation. In this context, we asked a few entrepreneurs from Telangana what Indian startups need to grow as world leaders.

“I don’t agree to Goyal’s comments on food startups because a startup is a startup. This is nothing but splitting hairs. The government’s job is to enable an ecosystem and give incentives based on priorities. While the environment has improved a lot in the last decade, it’s still difficult to get finance, skilled resource and forums to discuss specific industries,” says Rishi Yadati, founder and CEO of Think Prile, a digital marketing consultancy.

Pointing out how startups languish due to lack of funding, Dineshbabu Muthuraman, founder and CEO of BlueMarble Smartware Pvt. Ltd., says: “Entrepreneurs have to work with banks to get loans sanctioned. Government-sanctioned loans are provided only by nationalized banks. Since the funds are unsecured, most nationalized banks do not provide the loan, and even if they do, it takes 8-12 months to get it processed. The funds are not enough, the entrepreneur is exhausted and there is no motivation to continue.”

Regulatory environment needs a makeover

Many food startups in India today are focused on bringing fresh, culturally-rooted and biologically-relevant food to people’s doorsteps.

What we are witnessing now is a quiet revolution – one that demands unlearning decades of processed food logic and re-learning the science and wisdom behind real ingredients. It calls for a deep, biochemical understanding of food, indigenous knowledge systems, and an uncompromising commitment to quality.

The level of thought, innovation, and complexity involved is immense. To call this anything less than ‘deep tech’ would be a disservice. This is especially significant in a country like India, where we’ve historically looked at growth and well-being in more holistic terms — beyond GDPs or material wealth. And yet, the system isn’t built to support this. The bureaucratic and regulatory environment are hardly conducive to innovation. Take beverages, for instance, where products are burdened with up to 40% GST. When nearly half the price goes into taxes, there’s little room left for real innovation or the use of high-quality, nutrient-dense ingredients. If we want to build a healthier, more culturally-grounded food future, we need systems that recognize and support the depth of this work.

— Ravi Teja, founder, Goli Soda

Investors don’t support deep tech startups

I agree with Mr Goyal that we must recognize that not every business that is new is necessarily a startup in the true sense. A startup is not just a new business — it’s about building disruptive, scalable technologies that solve real-world problems and transform the way we live. It’s about innovation, not replication.

However, bureaucracy remains a major bottleneck. But we must also understand that the onus of change lies not just with the government, but equally with entrepreneurs, investors, and institutions. India is rapidly becoming a service-delivery economy. Deep tech startups, which need longer gestation periods, greater capital, and deeper technical understanding, are often turned away by investors, including those whose core thesis claims to support deep tech, simply because they ‘don’t understand the technology.’

— Siddhartha Durairajan, CEO and co-founder of Hylenr Technologies

How to create a better startup ecosystem

Siddhartha Durairajan shares a few tips:

  • Government and investor communities need to work in tandem to build an ecosystem that genuinely supports product-based and deep tech innovation.
  • If LPs (Limited Partners), especially government-backed ones, fund VCs, they must demand a better understanding and support for deep tech from those VCs.
  • The government should directly and indirectly support deep tech entrepreneurs, especially in the early stages where R&D and prototyping are resource-intensive.
  • We need more accessible maker spaces, testing labs, and shared infrastructure for hardware and scientific startups to thrive.
  • Incentives and policies that are currently focused on large-scale manufacturing should also be extended to deep tech startups.

Service-oriented startups driving innovation

The Minister’s perspective suggests that food, textiles and service industries like yoga centers are not startups. I believe this view doesn’t fully account for the dynamic growth within these sectors. In today’s economy, food businesses, quick commerce, and service-oriented startups are driving innovation, creating jobs, and contributing significantly to revenue generation. These industries are very much part of the modern startup ecosystem, transforming traditional markets and addressing evolving consumer needs. With ongoing reforms and better infrastructure, Indian entrepreneurs can overcome these challenges and continue contributing to a thriving startup ecosystem.

— Gaurang Shah, founder of label GAURANG and GAURANG’s KITCHEN