'India's Startup Ecosystem Needs More Than Just Funding' says MeitY Startup Hub CEO Panneerselvam Madanagopal at Razorpay FTX 2025

India’s startup landscape is flourishing, driven by various government initiatives that promote innovation, deep tech, and entrepreneurship. However, building a truly sustainable and scalable ecosystem requires more than just funding. This was one of the key discussions at Razorpay FTX 2025, the sixth edition of the company’s flagship fintech event, where industry leaders explored ways to strengthen India’s startup ecosystem through strategic government support, deep tech investments, and inclusive innovation.

The event brought together more than 70 thought-provoking speakers from organizations like NPCI, MeitY, Meta, WhatsApp, AWS, Airbnb, Google, Salesforce, Cred, Zomato, Swiggy, Yes Bank, Adani Group, Mastercard, Visa India, and GIC, among others. 

Beyond insightful discussions, Razorpay also unveiled a suite of India-first innovations aimed at transforming business payments and financial operations. These included RazorpayX Corporate Cards (with Yes Bank), Razorpay Buyer Protection, Razorpay RAY Agentic-AI, and Razorpay Engage Gift Cards—solutions designed to enhance efficiency, security, and adaptability for merchants navigating the evolving digital economy.

Amidst this backdrop of innovation, Shri Panneerselvam Madanagopal, CEO, MeitY Startup Hub (MSH), engaged in a compelling discussion with Rahul Kothari, COO, Razorpay, about the government’s role in supporting startups, the need for deep tech investments, and the importance of strategic patience in building globally competitive enterprises. The conversation touched upon three key pillars of India's startup growth strategy: deep tech innovation, fostering sector-specific startups in tier II & III cities (such as agritech, healthcare, assistive technology, and localized AI applications), and driving inclusivity in technology.

The Indian government has taken a multi-pronged approach to nurturing the startup ecosystem, with over 17 ministries running dedicated startup programs. In addition to Startup India, MeitY Startup Hub, and domain-specific initiatives, organizations such as iDEX (for defense innovation), BIRAC (for biotechnology research), and the India AI Mission (for AI & deep tech development) play a crucial role.

Madanagopal noted that India has nearly 1,250 incubators and accelerators, with over 60% concentrated in Tamil Nadu, Telangana, and Karnataka. He emphasized that rather than working directly with startups, the government focuses on empowering enablers—incubators and accelerators that provide mentorship, infrastructure, and funding.

Beyond infrastructure and funding, he stressed the importance of market access. "Customer is your best investor. If you focus on your customer, investors will run after you," he said, reinforcing the idea that sustainable business models must prioritize solving real-world problems over chasing investment.

 

Deep tech is a key priority for the government, with support extending beyond funding to include technology access and policy frameworks. The India AI Mission is actively investing in high-performance computing and AI model development, while the government is providing over 1,000 GPUs to the eco system to accelerate deep tech innovation. Unlike venture capital firms that seek quick exits, the government takes a long-term strategic approach, staying invested in startups for up to 10 years to support research-heavy ventures.

"We don’t invest like VCs looking for quick exits. We are here for the long haul—some R&D projects need a decade to mature, and we are ready to support them," said Madanagopal. The focus is on enabling startups to develop foundational AI models, build computational capabilities, and ensure India remains a leader in emerging technologies.

While metro cities have traditionally dominated the startup ecosystem, India’s next growth wave will come from smaller cities. The government has launched Genesis, a program dedicated to fostering innovation outside major urban hubs, working with 65 incubators across 18 states to support startups in emerging regions.

"The real opportunity for India lies in tier II and III cities. The problems there need urgent solutions, and startups must lead the way," he said.

Startups in these regions are encouraged to develop solutions for critical sectors such as agritech, healthcare, assistive technology, and localized AI applications, addressing challenges unique to their communities.

Another critical pillar of India’s startup growth is inclusivity, with a strong focus on women in tech and assistive technology. The government is actively encouraging women entrepreneurs to enter deep tech sectors, moving beyond traditional IT roles to core technology innovation.

Special initiatives are being rolled out to increase women's participation in deep-tech and high-growth domains such as AI, cybersecurity, and semiconductor design.

Additionally, Madanagopal highlighted the importance of assistive technology for India’s aging population. With a growing elderly demographic, fintech and healthcare startups must develop solutions tailored to this segment. "As fintech entrepreneurs, you must think about building products for the elderly. They are going to be a significant user base in the coming years," he advised.

How Startups Can Leverage Government Support

Additionally, she could leverage Production-Linked Incentives (PLI) for manufacturing and Design-Linked Incentives (DLI) for product innovation as she scales.

"All she needs to do is reach out via our social media channels or website. We will connect her to the right incubator, provide mentorship, and help her scale," said Madanagopal.

Despite ₹21,000 crore invested in startup funding, many entrepreneurs remain unaware of these resources. Rahul Kothari emphasized, "Many entrepreneurs are unaware of the extensive support the government provides—it’s time they take full advantage of it." He pointed out that while multiple programs exist, there is a lack of awareness and accessibility, making it difficult for founders to navigate them.

He further stressed the importance of collaboration, stating, "It takes a village to build a startup. The right mix of corporate partnerships, venture capital, and government aid can make all the difference." Kothari highlighted that startups should proactively engage with available resources and leverage a combination of public and private sector support to achieve sustainable growth. Building a thriving startup ecosystem requires contributions from multiple stakeholders. The government provides infrastructure, funding, and policy support, while venture capitalists offer strategic capital and mentorship. Corporates, in turn, play a crucial role in market access and enterprise partnerships.

Madanagopal acknowledged this challenge and stressed the need for stronger networking and knowledge-sharing within startup communities. He emphasized the role of peer-to-peer learning as a crucial medium for disseminating information, encouraging founders to actively share insights and experiences to help others navigate the ecosystem more effectively. However, he warned against over-reliance on external support, urging startups to maintain focus on execution. He stressed that while the ecosystem exists to support them, entrepreneurs must remain focused on building scalable businesses rather than chasing every available opportunity.

Building India’s Next Generation of Startups

"The government can provide infrastructure, funding, and policy support—but success ultimately depends on founders solving real problems, staying focused, and scaling responsibly," said Madanagopal. With the right mindset, India’s startups can create impactful, scalable solutions that define the future of global innovation.