"Single Largest Self-Inflicted Obstacle": Investor Slams India's Rich, Cites East India Company

Venture capitalist Vinod Shankar has criticized India’s wealthy elite for prioritizing real estate and gold over risk capital, calling them the 'single largest self-inflicted obstacle' to innovation. Shankar noted that India’s richest 1% hold nearly 60% of their assets in physical forms, stifling startup funding and deep-tech investment. He described this capital as 'sediment,' arguing it is no longer flowing into disruptive sectors like AI, aerospace, or climate tech. India’s startup ecosystem is thriving, but much of its funding comes from foreign investors, Shankar observed. Domestic corporations, including those in the Nifty 50, allocate minimal resources to R&D—top firms invest only 2% of profits, compared to 29-55% in the US, China, Japan, and Germany. He highlighted that even financial services giants spend zero rupees on research, treating innovation as an avoidable expense rather than a strategic priority. Shankar also criticized India’s mutual fund boom, where new investors favor established industries over future-focused technologies. He warned that AI and deep-tech advancements will outpace Indian companies if domestic capital continues to avoid high-risk, high-reward sectors. 'AI, autonomous systems, and advanced manufacturing do not care about the size of your domestic market,' he wrote, emphasizing the urgency of reallocating capital toward innovation. The venture capitalist contrasted India’s cautious approach with historical examples, such as the East India Company, which thrived on bold risk-taking. He argued that India’s wealth problem is not a lack of capital but a failure to deploy it strategically. Without greater investment in R&D and startups, Shankar cautioned, India risks falling further behind global technological leaders. India’s R&D spending at 0.65% of GDP—well below China’s 2.65%, the US’s 3.45%, and Israel’s 6%—underscores the gap. Shankar urged corporations to treat innovation as a necessity rather than an afterthought, warning that delayed action could leave India dependent on foreign equity for its own technological breakthroughs.