Mohandas Pai blasts China startup comparison: 'How much has the govt of India invested?'

Startups are innovating, but raising capital and scaling in India remains an uphill battle, according to Mohandas Pai, chairman at Aarin Capital. "I don't agree with the commerce minister,” Pai said in an interview with ET Now, in response to Goyal's remarks criticising Indian startups for focusing on food delivery and fantasy sports apps instead of core technologies like EVs and semiconductors. "Because if you look at what China did, many of these delivery companies, e-commerce companies came long before they started investing in EV and semiconductor chips and other areas."

Pai highlighted China's long-term government backing in areas like AI, where it pledged $150 billion nearly seven years ago. "How much money has the government of India put into AI?" he asked. "They got a Rs 10,000 crore fund they announced one and a half, two years back...I don’t know how much money has been put to work."

Drawing comparisons with global economies, Pai said, "China is a $19 trillion economy, we are a $4 trillion economy, the US is a $32 trillion economy, and to compare all the three and say we got to overtake China without putting money to work, without having the funding, without having institutional finance, I think is a sad joke.”

Pai pointed to the vast number of Indian deep-tech startups already in play. "We have more than 4,500 deep tech funds. I've been investing in this area for the last 13 years. In our portfolio across many funds of 500 startups, we got more than 50 deep tech funds. And all of them are struggling to raise capital to grow and to do business in this country."

He offered a concrete example from his portfolio: "We got a company which has created a one megawatt fast charging mechanism for a bus which can charge a bus in 15 minutes. It's called Exponent in Bangalore. They've done it, they put a lot of money to work. They're deep innovators — but then when they want to sell to the bus industry, 90% to 95% of buses are run by the state road transport organisations. You know how it is to deal with them. It's very difficult to do business in this country."

Comparing India's slow EV bus adoption with China, he noted: "China started the EV bus program 10 years ago. Yes, 80–90% of buses are EV buses in China today. Look at the state in India."

According to Pai, raising capital for deep-tech is a structural challenge. "Money will go where there are great returns and quick returns. There are no quick returns in deep tech. It takes multiple years to have the technology right...we need long-term patient money.”

He pointed to the investment data: “From 2014 to 2024, India invested $160 billion into venture and startups, China $860 billion, US $2.32 trillion — what are the comparison?”

“What commerce minister Goyal should have done is to say this is the state of affairs, we're going to help you, we're going to remove barriers...He didn’t make this remark. They're just pointing finger, which is very, very unnecessary, bringing down this industry.”

Speaking from experience, Pai said, “I meet many of them in our portfolio of 500 startups across many funds, we got 50 deep tech companies. We've been holding them for 9, 10 years. I know the struggles they have for getting money. I know the growth is impaired. I know how difficult it is to do business.”

Urging the government to shift priorities, he added, “India has to grow...The government of India and state governments spend Rs 9 lakh crore in subsidies for the poor. Good luck to them because we need to help them. How much money is put into innovation in India across the government of India and state governments? Just give me a number — Rs 1,000 crores, Rs 2,000 crores, Rs 3,000 crores? Why can't both - central and state governments - spend 20,000 crores a year in innovation in helping deep tech create high-quality jobs?"