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

The British East India Company arrived in India because a group of investors in London were willing to take outrageous risks on an unknown future. Four centuries later, venture capitalist Vinod Shankar says India's own wealthy elite have become so obsessed with safety, real estate, and gold that they are starving the country's innovation economy of the very risk capital that once helped outsiders build empires from Indian wealth.

Shankar, in a LinkedIn post, argued that India's richest households and largest corporations are now "the single largest self-inflicted obstacle" to the future they publicly claim to believe in.

India's wealth problem is not lack of money

Shankar's argument is not that India lacks capital. It is that India refuses to deploy capital boldly.

"India's wealthiest 1% hold nearly 60% of their total assets in real estate and gold," he wrote, pointing to trillions locked away in apartments, physical assets, and ornaments instead of flowing into startups, research, or deep technology.

He described this money as "sediment" and "money that has decided to stop moving," arguing that India's wealthy have embraced a deeply defensive relationship with capital.

At the same time, India's startup ecosystem continues producing ambitious founders building companies in defence technology, aerospace, climate tech, autonomous systems, and artificial intelligence. But according to Shankar, much of the money backing those companies still comes from foreign investors.

"India is building the rockets," he wrote. "Someone else is owning the equity."

A crisis in making

India spends just 0.65% of GDP on R&D, compared with 2.65% in China, 3.45% in the United States, and more than 6% in Israel, he noted.

The numbers become even more stark inside corporate India.

"India's top ten non-financial firms collectively invest a mere 2% of their profits in R&D," Shankar said, comparing that with companies in the US, China, Japan, and Germany that invest between 29% and 55% of profits into innovation.

He argued that many of India's biggest companies have grown comfortable serving the domestic market without ever competing at the technological frontier.

"The banking and financial services companies that dominate the Nifty 50 allocate precisely zero rupees to R&D," he wrote. "Not a token amount. Zero."

For Shankar, this is more than a business problem. It is a national vulnerability.

While companies like NVIDIA, Alphabet, Microsoft, Samsung, and Volkswagen pour billions into AI, semiconductors, autonomous systems, and advanced manufacturing, India's corporate sector still largely treats R&D as an expense to minimize instead of a strategic necessity.

"India's largest corporations are generating the cash flows to fund the next industrial revolution," he wrote. "They are choosing not to."

He warned that AI and deep-tech disruption will not wait for Indian companies to catch up. "AI, autonomous systems, and advanced manufacturing do not care about the size of your domestic market."

'Mutual Fund Sahi Hai. Startup Bhi Karna Hai'

Shankar also tears into India's booming mutual fund culture.

India's SIP and mutual fund participation has exploded over the last decade, creating millions of first-time investors. But Shankar argued that most of that money ultimately flows into established companies dominating existing industries rather than technologies shaping the future.

"What the SIP boom has created is a nation of people who have learned to make money from money," he wrote, "through the existing structures of the past, not the disruptive technologies of the future."

The East India Company comparison

Shankar drew a direct line between venture capital and the East India Company.

Shankar noted that in 1600, English merchants pooled money into a high-risk venture aimed at an unknown market thousands of miles away. There were no guarantees, no proven business model, and no certainty the ships would even return.

"The English didn't build an empire by buying gold and putting it under the bed," he wrote. "They built it by funding expeditions into the unknown."

The irony, according to Shankar, is devastating.

"The descendants of the colonised," he wrote, "have now adopted the most risk-averse, feudal, extractive relationship with capital imaginable."

Instead of funding Indian founders, he argued, wealthy households continue pouring money into "the second flat and the third flat," while overseas investors capture the upside of India's startup revolution.

The 'Viksit Bharat' contradiction

For Shankar, this contradiction sits at the center of India's "Viksit Bharat 2047" ambition.

India wants technological sovereignty, globally dominant startups, and world-class innovation. But the domestic risk capital required to build that future remains painfully limited.

"You can't become a developed nation by not taking risk," Shankar wrote. "History has no examples of it."