As India strides boldly into the digital age, the narrative of an emerging technology superstate often overlooks critical underlying dynamics. As of February 2026, India’s technology sector is lauded for its rapid growth; however, beneath the surface lies a more nuanced reality that challenges conventional wisdom.
1. What is Actually Happening?
Amid the fervor of India’s burgeoning unicorn economy, which boasts over 100 tech startups valued at over $1 billion, recent data from the Reserve Bank of India (RBI) indicates a troubling decline in small to medium-sized enterprises (SMEs) within tech. From 2020 to 2025, the number of SMEs significantly diminished, with only 15% of small tech businesses making it past their first five years.
While big players like Infosys and Tata Consultancy Services dominate the market, smaller entities struggle for survival. The ongoing push for innovation is often accompanied by cuts to support and infrastructure for smaller tech companies, creating a paradox: greater investment in technology that primarily benefits large corporations while SMEs, which often fuel job creation and innovation, fade.
2. Who Benefits? Who Loses?
The primary beneficiaries of this technology boom are established giants and new-age unicorns, particularly in fintech and health tech. The RBI reports that these sectors received more than 60% of total investment in the Indian tech ecosystem in 2025. Venture capitalists and private equity firms have thrived, leveraging tax incentives and a favorable regulatory environment that often eludes smaller startups.
Conversely, the casualties in this race are manifold: local entrepreneurs, skilled laborers seeking stable employment, and the very spirit of innovation that the technology narrative promises. According to a Startup India report, tech job losses among SMEs reached a staggering 30% over the last two years. Furthermore, community-oriented innovations—improving local infrastructure or health solutions—are being sidelined in favor of high-profit ventures.
3. Where Does This Trend Lead in 5-10 Years?
Projecting forward, if the current trends continue, India might witness an even sharper divide between tech haves and have-nots. By 2030, we could observe a sector even more monopolized by a handful of technology giants, stifling competition. While the overall economy may grow, the crux of innovation could dwindle as niche ideas struggle to find funding and market viability.
Suburban and rural tech initiatives could face extinction as metropolitan-focused ventures absorb the majority of the funding, leading to a talent drain towards bigger cities and increasing regional disparities.
4. What Will Governments Get Wrong?
Governments often misinterpret the signs of success, mistaking growth in valuations for genuine health in the sector. In pursuit of attracting foreign investment, policymakers may overlook the critical need to nurture SMEs, not just unicorns. While initiatives like the PM Gati Shakti are laudable, the execution often falters due in part to overreliance on existing giants for innovation and growth.
Neglecting to incentivize supportive structures for smaller companies could foment discontent among skilled workers and stifle grassroots innovation, leading to future economic vulnerabilities.
5. What Will Corporations Miss?
Corporations might miss the pulse of true innovation lurking in the dorm rooms and garages across India. By focusing solely on scalable, short-term profits, these companies could overlook disruptive technologies and grassroots strategies that small startups often pioneer. Direct engagement with local ecosystems will be crucial but is frequently sidelined for traditional investment strategies focused on immediate returns.
6. Where is the Hidden Leverage?
The hidden leverage lies in understanding and supporting the ecosystem’s entire breadth. Fostering collaborations between startups and established enterprises can unlock potential markets and drive unconventional innovation. Companies that form symbiotic relationships with smaller firms will likely identify emerging technological trends years ahead of those who overlook this space.
Additionally, investing in joint mentorship programs and innovation incubators can lead to sustainable growth, crafting a tech landscape that serves not just the elites but the entire society.
Conclusion
India boasts incredible potential within its technology sector, but the current narrative vastly oversimplifies the landscape. As we navigate this digital revolution, the responsibility rests on leaders—both public and private—to recognize the broader implications of their strategies. The balance between supporting emerging businesses and leveraging existing resources will dictate India’s trajectory as a global tech player.
Contrary to popular belief, growth doesn’t simply stem from ambition and investment but requires a holistic approach that values every segment of the ecosystem. This was visible weeks ago due to foresight analysis.
