India’s startup ecosystem in the face of the Chinese challenge

What can the Indian startup ecosystem expect in the near future as tensions recede at the China-India border?

India and China are in similar situations, driving strong competition within their domestic and joint startup ecosystems. The Asian giants are continuing their vertiginous economic race with accelerated growth.

According to World Bank data, China and India are the fastest growing economies in the world, each experiencing a yearly increase of GDP above 6%.

With strong public spending and an increasing amount of outside investment flowing in as the drivers for growth, India has been pushing its economy forward to the point where it is blossoming in a way not unlike the Chinese post-reform economic boom.

The main hurdle India has to overcome toward leveling the field with China is developing enough infrastructure to support a diversified ecosystem of value-added startups. Otherwise, the momentum will be lost to other emerging economies in Southeast Asia, capable of chiming in with low-cost, fast growth opportunities for international investors.

Although the Indian startup economy attracts far less investment than China, the incredible growth experienced by startups that tackle ripe-for-disruption traditional markets in India continues to make the country increasingly attractive for investors. Armed with a strong entrepreneurial spirit and good tech penetration, India desperately needs improved infrastructure and especially more capital investment.

Recently, funding has dried up for less competitive startups, restricting future funding to more promising startups. This is bad news for dreamers but great news for the ecosystem, as it helps position India as profitable place to invest.

The challenge here is to innovate and to shed the copycat reputation of Indian startups that drives high rates of failure and hinders global competition. India has a lot to offer as the home to the third largest number of startups, surpassed only by the US and UK.

India has traditionally depended on China for many low-cost items such as electronic items and parts; as it develops its tech industry, the tendency toward self-reliance will continue to increase and support a larger, more resilient ecosystem of entrepreneurial innovation within the country. In turn, this will increase competition with China.

Finally, one of the great advantages of India is its use of English as the lingua franca. This has made for a more open startup environment, allowing it to better draw influence, help and resources from developed countries for faster global scaling up, especially in the services sector.

The de facto English-speaking partnership between India, the West—and even the more westernized Asian economies like Singapore—give it a significant edge over China, whose startups tend to remain heavily domestic and rather hostile to non-Chinese players.

The 20-year race with China at the lead is not close to an end, but after decades of sprinting with growing pains China is bound to take a break—sooner than later.