Deep tech startups in sectors such as space, semiconductors, and biotech require a longer time to mature compared to conventional ventures. Recognizing this, India has made adjustments to its startup rules and is mobilizing public capital to support these startups in reaching commercial success.
The Indian government recently updated its startup framework, extending the period for which deep tech companies are considered startups to 20 years. Additionally, the revenue threshold for startup-specific benefits has been raised to ₹3 billion. These changes aim to align policy timelines with the lengthy development cycles of science- and engineering-led businesses.
This shift is part of New Delhi’s strategy to cultivate a long-horizon deep tech ecosystem by combining regulatory reform with public capital, including the ₹1 trillion Research, Development, and Innovation Fund (RDI) announced last year. To further support deep tech startups, U.S. and Indian venture firms have come together to form the India Deep Tech Alliance, a coalition of private investors with over $1 billion in funding.
According to Vishesh Rajaram, founding partner at Speciale Invest, the updated policy framework reduces friction in fundraising and provides a more supportive environment for founders of deep tech startups. Access to capital, especially beyond the early stages, remains a challenge, but the RDI Fund aims to address this gap by providing patient financing for science-led and R&D-driven companies.
Siddarth Pai, founding partner at 3one4 Capital, noted that India’s deep tech framework avoids a “graduation cliff” that could hinder companies as they scale. As the RDI Fund begins to take shape operationally, the goal is to attract more investor participation and foster greater capital formation in the deep tech sector.
While India’s deep tech market is still emerging, recent data shows a rebound in funding for deep tech startups, indicating growing investor confidence in sectors aligned with national priorities. The extended policy framework is seen as a signal of longer-term policy intent, providing investors with greater confidence in India’s commitment to deep tech innovation.
Ultimately, the success of India’s deep tech ecosystem will be measured by the emergence of globally competitive companies in this space. Investors are hopeful that India’s supportive policy environment and access to capital will enable deep tech startups to thrive and succeed on the world stage in the coming years.
