Biggest issue for Indian startups is the lack of adequate capital: Mohandas Pai

Mohandas Pai, a prominent industry veteran and Chairman of Aarin Capital, has highlighted that restrictive government policies are hampering the growth of Indian startups by limiting the inflow of domestic capital. He pointed out that despite being the third-largest startup ecosystem, India lags significantly behind the US and China in terms of venture capital investment. Pai identified a key issue: Indian regulations prohibit university endowments and restrict insurance companies and pension funds from investing in the high-risk, high-reward startup sector. He called for urgent policy reforms, including expanding the government's fund-of-funds program and allowing domestic financial institutions greater flexibility to invest in venture capital. According to Pai, unlocking this domestic capital is crucial for fostering innovation, increasing R&D spending, and ensuring the long-term sustainability and global competitiveness of India's vibrant startup ecosystem.