Mohandas Pai flags lack of domestic capital for Indian startups, calls for policy overhaul

Mohandas Pai flags lack of domestic capital for Indian startups, calls for policy overhaul

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Mohandas Pai of Aarin Capital urges policy reforms and more R&D funding to boost Indian startups, citing restrictive regulations and inadequate domestic investment.

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By PTI June 8, 2025, 5: 18: 21 PM IST (Published)

Mohandas Pai flags lack of domestic capital for Indian startups, calls for policy overhaul

Indian startups are being held back by a lack of adequate domestic investment due to restrictive regulations of the government, according to industry veteran and Aarin Capital Chairman Mohandas Pai, who called for policy reforms and R&D investments to strengthen the ecosystem.



Despite India being the world’s third-largest startup hub, Pai cautioned that the country risks falling behind in global innovation unless these challenges are addressed.


”We have 1,65,000 registered startups, 22,000 are funded. They created USD 600 billion in value. We got 121 unicorns, maybe 250-300 soonicorns.


”The biggest issue for startups is the lack of adequate capital. For example, China invested USD 835 billion in startups and ventures between 2014 and 2024, US invested USD 2.32 trillion. We just put in USD 160 billion, out of which possibly 80% came from overseas. So local capital is not coming in,” Pai said in an interview to PTI.



Pai pointed out that, unlike the US, where insurance companies and university endowments are major sources of startup funding, Indian endowments are prohibited from investing in startups by government policy, and insurance companies remain largely absent due to incomplete regulatory reforms.



He advocated for regulatory changes to allow insurance companies participate in fund-of-funds and called for greater flexibility in their investment st

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