Beyond Dukaandari: Why India's Startup Ecosystem Needs a Reality Check

In recent weeks, a heated debate has erupted within India's startup ecosystem following Commerce Minister Piyush Goyal's pointed question to startups: "Dukaandari hi karni hai?" (Do you only want to run small shops?). His comments, urging Indian startups to pivot from food delivery applications to more strategic sectors like semiconductors and artificial intelligence, have sparked both criticism and support. This debate intensified when brand strategist Suhel Seth claimed that "80% of startups in India is nothing but a racket" and questioned whether "startups are an employment exchange," particularly criticizing quick commerce player Zepto's response to the minister's remarks.

As someone deeply invested in India's technological and economic future, I believe Minister Goyal's challenge to the startup community merits serious consideration rather than defensive reactions. The response from certain quarters of the startup ecosystem, particularly from quick commerce players like Zepto, demonstrates precisely the problem the minister was highlighting – a focus on short-term business models rather than transformative innovation.

The Quick Commerce Conundrum

Quick commerce startups like Zepto and Blinkit have certainly created visibility and attracted significant funding. Their promise of delivering groceries and essentials in 10-20 minutes has captured consumer attention in urban India. However, we must ask ourselves: Is this truly the pinnacle of innovation that a nation of 1.4 billion people with exceptional technical talent should aspire to?

These business models essentially digitize the neighborhood kirana store experience – certainly valuable, but hardly revolutionary in the global technology landscape. They operate on thin margins, rely heavily on gig workers often working in challenging conditions, and duplicate infrastructure in already congested urban areas. The fundamental question is whether such models contribute meaningfully to India's long-term technological sovereignty and economic transformation.

When Zepto responded dismissively to the minister's comments, they missed an opportunity for introspection. Instead of acknowledging the legitimate concern about innovation direction, the response appeared defensive and failed to engage with the substance of the critique. This type of reaction reflects a troubling resistance to constructive criticism within parts of the ecosystem.

The Strategic Innovation Imperative

Minister Goyal's call for startups to venture into semiconductors, AI, and other strategic sectors isn't merely political rhetoric – it's aligned with global economic realities. Countries that control critical technologies shape the future global order. The recent global chip shortage demonstrated how semiconductor capability represents not just economic opportunity but national security. Similarly, leadership in artificial intelligence will determine which nations will lead in productivity and innovation over the coming decades.

India's talent pool in engineering and computer science is among the world's largest. Indian professionals lead some of the world's most innovative companies. Yet domestically, much of our venture capital and entrepreneurial energy has flowed toward consumer services like food delivery, rather than fundamental technology development.

This is not to diminish the value of all consumer-focused startups. Companies like Flipkart pioneered e-commerce in India, adapting global models to local contexts and solving uniquely Indian challenges. However, when an ecosystem becomes overwhelmingly tilted toward consumer services replicating existing models with marginal improvements, it signals a potential misallocation of entrepreneurial resources.

The Problem with Defensive Responses

When Suhel Seth made his controversial "80% of startups are a racket" comment, it undoubtedly painted with too broad a brush. Many founders work extraordinarily hard, take enormous risks, and genuinely seek to solve important problems. However, the defensive and dismissive responses from some startups, particularly Zepto's, inadvertently validated some of his critique.

Professional discourse requires engaging with the substance of criticism, not dismissing it outright. When government officials or industry veterans raise concerns about innovation direction, the appropriate response is to either demonstrate why current models are more valuable than perceived, or to acknowledge limitations and commit to higher ambitions.

Zepto's response appeared reactive and immature, focusing on defending its business model rather than engaging with the deeper question about India's technological trajectory. This type of response damages the credibility of the entire ecosystem and reinforces perceptions that some startups prioritize quick returns over meaningful innovation.

The Path Forward: Balancing Innovation Portfolios

The solution isn't abandoning consumer-focused startups entirely but developing a more balanced innovation portfolio as a nation. India needs:

1. Strategic sector focus: Directing more entrepreneurial talent and venture capital toward semiconductors, AI, quantum computing, advanced materials, biotechnology, and climate tech – areas that build fundamental capabilities.

2. Public-private partnerships: Government initiatives like the Semiconductor Mission need active startup participation, not just established players.

3. Long-term capital: Developing funding mechanisms that accommodate the longer timeframes required for deep tech development.

4. Ecosystem maturity: Fostering a culture where criticism and self-reflection drive improvement rather than defensive posturing.

Some Indian startups are already pioneering this approach. Companies working on indigenous chip designs, AI research platforms, and advanced manufacturing technologies may not generate the headlines of quick commerce players but are building foundations for enduring technological capabilities.

Conclusion: Embracing the Challenge

Minister Goyal's question – "Dukaandari hi karni hai?" – should be seen not as dismissal but as a challenge to aim higher. India's startup ecosystem has demonstrated remarkable growth and resilience, but its next phase must involve more fundamental innovation addressing both global markets and national priorities.

The defensive responses from companies like Zepto reveal an ecosystem still maturing in its ability to engage with legitimate criticism. Rather than viewing government officials or industry veterans as adversaries, startups should recognize that robust debate strengthens the ecosystem.

India stands at a critical juncture in its technological journey. The choices made by entrepreneurs, investors, and policymakers today will determine whether India becomes primarily a consumer of global technologies or emerges as a creator of transformative innovations. Minister Goyal's provocative question offers an opportunity to recalibrate our collective ambitions and ensure India's startup ecosystem fulfills its extraordinary potential.

The path from "dukaandari" to technological leadership will be challenging, requiring sustained investment, policy support, and cultural shifts within the ecosystem. But if India is to achieve its potential as a technological superpower, this is precisely the conversation we need to have – with openness to criticism, clarity about priorities, and commitment to long-term transformation.