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Indian American entrepreneur criticizes India's startup ecosystem
Sabeer Bhatia contrasts India and the United States, citing regulation, entrepreneurship and delayed project delivery concerns.
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Pranavi Sharma - Wed, 29, Jul 2026
- 02:13 EDT
- 23
Sabeer Bhatia / X
Sabeer Bhatia, the Indian American co-founder of Hotmail, criticized India's business environment in a series of posts on X on July 29, comparing the country's regulatory framework with that of the United States and arguing that excessive compliance requirements discourage entrepreneurship, innovation and foreign investment.
Bhatia said his own experience attempting to build a business in India shaped his views. He wrote that in 2014 he tried to establish a company similar to Stripe in India, but the venture had failed by 2017 because of what he described as "regulatory cholesterol."
"Every company worth hundreds of billions of dollars began as an idea—an idea that didn't fit neatly into existing regulations," Bhatia wrote. Referring to Stripe, he added, "Today it's valued at around $160B."
"In 2014, I tried building a similar business in India. By 2017, it had died under the weight of regulatory cholesterol."
Every company worth hundreds of billions of dollars began as an idea—an idea that didn’t fit neatly into existing regulations.
— Sabeer Bhatia (@sabeer) July 29, 2026
Take Stripe. Today it’s valued at around $160B.
In 2014, I tried building a similar business in India. By 2017, it had died under the weight of…
He concluded, "People ask why I'm not building businesses in India. That's your answer."
In another post, Bhatia contrasted the ease of starting and closing a business in the United States with India's legal framework.
"In the US, I can start a business in 24 hours and shut it down in 48 hours—no questions asked," he wrote.
He added, "In India, there are 26,134 imprisonment clauses embedded in the business laws. This is known as 'regulatory cholesterol.'"
Bhatia also questioned whether such regulations were discouraging foreign direct investment, writing, "And one wonders why India is not attracting FDI."
Citing an Observer Research Foundation report titled 'Jailed for Doing Business: The 26,134 Imprisonment Clauses in India's Business Laws', Bhatia said India had 1,536 economic laws and that "half carry prison terms."
"India dreams of becoming the entrepreneurial capital of the world, yet entrepreneurs operate under the constant threat of criminal prosecution for routine compliance lapses," he wrote.
"When innovation can be met with imprisonment instead of encouragement, fewer people take risks."
Bhatia argued that penalties should focus on fraud rather than procedural violations.
"You don't build a startup nation by making entrepreneurs fear the law. You build it by trusting them, punishing fraud—not paperwork."
He also questioned whether criminal penalties for routine compliance could undermine India's entrepreneurial ambitions.
"Silicon Valley was built around entrepreneurs. It has created over $50 trillion in wealth and hundreds of thousands of jobs," he wrote.
"If routine business compliance can land entrepreneurs in jail, is India shooting itself in the foot?"
Bhatia added that "You can't become the entrepreneurial capital of the world by criminalizing entrepreneurship."
In separate posts, Bhatia broadened his criticism beyond business regulation. He wrote that "India is falling behind the rest of the world because its leaders don't know how to make good decisions."
He also argued that the phrase "At least..." reflects a culture of lowered expectations, writing that India's biggest challenge "isn't a lack of talent—it's a culture of accepting 'good enough' when we should be demanding excellence."
The posts follow Bhatia's earlier comments about delays in receiving possession of an apartment he booked in India in 2012, which he has cited as another example of challenges he associates with doing business in the country.
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