Indian Startups vs Chinese Startups: Why is India still losing?

If you’ve been keeping an eye on India’s buzzing startup scene, you’ve likely heard Union Minister Piyush Goyal’s recent statement criticizing the country’s lack of deep-tech innovation. This sparked a fiery debate at Startup Mahakumbh 2025 on Indian Startups vs Chinese Startups. Hence, “India vs China” became the focal point of discussion.

You might be wondering — Is China really that far ahead of India when it comes to startups?

Let’s break it down for you based on four major categories, using real data and clear comparisons, so you can understand what’s working, what’s not, and why this debate actually matters.

Category 1: Support and Focus on Startup Ecosystem

India and China have taken two very different paths when it comes to nurturing startups. While India is booming with consumer-focused apps and platforms, China has gone all-in on deep-tech and hardware innovation.

Here’s a snapshot of the facts-

Category 2: Market, Scale, and Talent

When it comes to going global, China has a clear edge. Indian startups often start and stay local, while Chinese firms build products with worldwide reach — think TikTok, Shein, or Alibaba.

Category 3: Deep-tech, IP, and Infrastructure

This is where China is sprinting ahead. While India is still working on foundational deep-tech policies and infrastructure, China is producing its own AI models, advanced EVs, and quantum biotech.

Category 4: Exports & Survival Rate

Let’s talk outcomes. What good is a startup if it can’t survive or scale beyond borders? China not only creates more startups, but it also survives longer and sells far more tech globally.

FAQs on Indian Startups vs Chinese Startups

Before proceeding further, let’s go through a few frequently asked questions on Indian Startups vs Chinese Startups.

Q1. What is the rank of India and China in terms of “Best Countries for Startups”?

Ans. As per StartupBlink’s 2023 Global Startup Ecosystem Index-

• India ranks 20th
• China ranks 8th

So yes, China is currently better positioned globally.

Q2. Is China better than India for startups?

Ans. Based on R&D investment, talent pool, infrastructure, and tech output, the answer is a clear yes — for now. China provides a more robust ecosystem for deep-tech, and its global-first mindset allows for larger-scale impact.

Q3. Why do startups in India fail?

Ans. Common reasons include- 

• Focus on low-barrier consumer apps (crowded market) 
• Limited R&D and innovation 
• Difficult access to deep-tech infrastructure 
• Low survival rate due to funding winters and lack of global scaling strategies

Q4. Why is it difficult to launch a deep-tech startup in India?

Ans. Due to the following reasons- 

• High setup costs for hardware & AI infrastructure 
• Lack of fab labs and advanced testing facilities 
• Fewer deep-tech investors and VCs 
• Limited government spending compared to China

India’s ₹10,000 Cr AI Mission is a step forward, but still modest against China’s $500 Billion+ push in deep-tech.

Note: We have covered the following topics on India vs China-

• India vs China Economy: Which is better placed for growth? 
• India vs China in EV: Exploring the battle for EV Battery Dominance 
• India vs China for Tesla: Which one can be more beneficial?

How India Can Beat China in the Deep-Tech Race?

India may be behind in the current numbers, but the gap can be closed — with the right strategy. Let’s explore practical solutions and national-level changes that can help Indian startups rise as true global tech innovators.

1. Shift VC Mindset Towards Deep-Tech Investments

Currently, most Indian VCs prefer safer bets like consumer apps. To push innovation-  

• Encourage government-backed risk sharing for deep-tech startups. 
• Launch dedicated deep-tech funds with longer gestation expectations. 
• Offer tax breaks and incentives to investors funding AI, semiconductors, robotics, and biotech.

What can India do?

Replicate China’s deep-tech investment model where $12.3B in 2024 alone was funneled into AI and semiconductor startups.

2. Build National Deep-Tech Infrastructure

Deep-tech needs physical resources — labs, fabrication plants, testing centers. India currently lacks these at scale.

Strategic steps- 

• Speed up the construction of proposed semiconductor fabs under the India Semiconductor Mission. 
• Establish deep-tech parks with prototyping labs and AI supercomputing clusters.
• Build public-private partnerships to operate and fund these hubs efficiently.

3. Talent Retention and Upskilling

India produces top global tech talent — but much of it ends up powering Silicon Valley, not Indian startups.

Fix the brain drain- 

• Offer re-entry fellowships and startup grants for Indian researchers abroad to build companies at home. 
• Invest in PhD-level deep-tech education and specialized AI/semiconductor programs.
• Incentivize IITs, IIITs, and IISc to launch incubators focused on core tech, not just apps.

4. Reform Patent and IP Systems

India’s 61,000 patents in 2023 are a fraction of China’s 1.58 million. Protecting innovation is crucial.

India must- 

• Simplify and speed up the patent approval process. 
• Reduce IP filing costs for startups. 
• Introduce national patent literacy campaigns to encourage the protection of local innovations. 
• Offer legal aid for international IP battles for Indian deep-tech firms.

5. Create Global Startup Gateways

To scale globally, Indian startups need access to international markets, regulations, and networks.

Next steps:- 

• Set up India Innovation Centers abroad (e.g., in Silicon Valley, Berlin, Tel Aviv). 
• Forge bilateral innovation pacts to ease entry for Indian deep-tech startups. 
• Help startups with global certifications, testing, and compliance assistance.

6. Massive Push on Public R&D

India’s $23.45B R&D budget is just 0.7% of GDP — one of the lowest among major economies.

The government must:- 

• Push towards 2% of GDP in R&D within the next 5 years. 
• Allocate a minimum of 50% of public R&D to frontier techs: quantum, AI, biotech, and space. 
• Promote defense-tech spin-offs into the civilian startup ecosystem, like DARPA does in the US.

7. Champion Flagship Deep-Tech Missions

India needs symbolic “moonshot” projects that unify startups, scientists, and investors.

Examples:- 

• IndiaGPT: An open-source LLM built in India for Indian languages. 
• DesiChip: A home-grown semiconductor architecture. 
• BioBharat: A national initiative for quantum biology and drug discovery.

These could become the next UPI or Aadhaar for India’s innovation story.

The Bottom Line

Yes, China is ahead — but India is capable of catching up and even overtaking if we stop chasing the next delivery app and start backing vision, science, and hardware.

If you’re building something big, this is your moment — not just to join the startup wave, but to reshape where it’s heading.