Piyush Goyal calls out ‘cheap labour’ culture while startups lay off hundreds of youth
At the Startup Mahakumbh event at Bharat Mandapam, Union Minister of Commerce and Industry Piyush Goyal raised concerns about India's startup ecosystem, questioning why deep-tech innovation remains limited while investments continue to pour into hyperfast logistics and food delivery businesses. His remarks came at a time when job security is an increasing concern. For instance, most recently Zomato laid off around 500 employees—sparking debates on the role of artificial intelligence (AI) in employment.
Speaking at the event, Goyal expressed frustration over India’s sluggish progress in deep-tech startups, emphasising the need for innovation beyond food delivery and quick commerce. “We need to go global and think big. There are only about 1,000 deep-tech startups in India, which is a disturbing sign,” he remarked, urging entrepreneurs to focus on long-term value creation rather than short-term gains.
He criticised the industry’s overreliance on hyperfast logistics, arguing that businesses built around grocery and food delivery are not enough to elevate India onto the global stage. Comparing India’s startup investments with China’s, Goyal pointed out that while India channels significant resources into delivery platforms, China is making strides in AI, robotics, and next-generation manufacturing.
"In India, we're focused on food delivery apps, turning unemployed youth to cheap labour so the rich can get their meals without getting out of their house," he said at the inaugural session of Startup Mahakumbh in New Delhi.
"On the other hand, what is China doing? They're working on battery and electric mobility.... So should we aspire to be the best or just be delivery boys and girls?" Goyal asked.
‘What has Goyal done to help?’
Goyal’s remarks did not sit well with industry veterans, including former Infosys CFO Mohandas Pai, who strongly criticised the minister’s comparison between India and China.
“These are bad comparisons. India has startups in those areas too, but they are small. Minister @PiyushGoyal should not belittle our startups but ask himself what has he done as our Minister to help deep-tech startups grow in India? It is easy to point fingers at them,” Pai tweeted.
Pai further alleged that India’s policy environment has been hostile to startups, citing issues such as Angel Tax regulations, investment restrictions, and bureaucratic hurdles imposed by agencies like the Reserve Bank of India (RBI).
“We have a hostile @FinMinIndia @nsitharaman who harassed startups on Angel Tax for many years, do not allow endowments to invest, insurance companies still do not invest whereas they do globally, @RBI regularly harasses overseas investors on remittances and AIFs, treat them badly, and impose complex foreign exchange rules,” Pai stated.
Highlighting India’s lagging investment in startups compared to China, Pai pointed out that between 2014 and 2024, China invested $845 billion into its startup ecosystem, while India’s total investment stood at just $160 billion. “Why is Minister @PiyushGoyal @AshwiniVaishnaw not helping solve these issues?” he questioned.
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Startups leaving hundreds jobless
While Goyal emphasised global competitiveness, the reality on the ground tells a different story. Under its Associate Accelerator Programme (ZAAP), Zomato reportedly forced around 500 employees from its Gurugram and Hyderabad offices to resign without a formal layoff announcement.
Affected employees were logged out of internal systems and notified via a senior manager’s message that they had been “identified as faulty based on data.” Many employees were offered only two months' salary as compensation without a notice period.
A former employee described the experience as distressing, stating, “When I was fired, I was asked to leave with a smile so that other employees wouldn’t be disturbed.” Others claimed that the reasons for termination were vague and unfair, including minor infractions such as arriving a few minutes late or customer interaction concerns.
The layoffs coincided with the launch of Zomato’s new AI-powered customer support platform, “Nugget,” designed to automate customer interactions. Nugget handles over 15 million monthly queries across Zomato’s brands, including Blinkit and Hyperpure, reducing the need for human intervention.
However, the role of AI in employee dismissals has raised concerns, particularly regarding fairness and accuracy. Reports suggest that Zomato’s AI system assigns “karma scores” like Gold or Iron to employees, influencing their dismissal decisions. Critics argue that AI-driven performance assessments lack human judgment and context, potentially leading to unjust terminations.
Union Minister’s call for cheaper labour comes at a time when mass layoffs are becoming increasingly common in India’s startup sector. As AI takes over roles once held by humans, the very notion of affordability in hiring is being reshaped—raising questions about what “cheaper labour” even means in an era of automation.
As India navigates this critical phase in its startup journey, the challenge will be to create an ecosystem where cutting-edge technology coexists with a workforce that is not left behind. The government’s response to these concerns will shape the future of Indian entrepreneurship and its standing on the global stage.