Deep technology startups operating in sectors such as space, semiconductors, and biotechnology often require decades to transition from laboratory research to fully commercial products. Recognising these realities, the Indian government has revised its startup policy framework to better support science- and engineering-led ventures with longer development timelines.
This week, New Delhi announced a significant policy shift by doubling the period during which deep tech companies are officially recognised as startups—from 10 years to 20 years. In parallel, the government raised the revenue threshold required to qualify for startup-specific tax, grant, and regulatory benefits to Rs. 3 billion (approximately $33.12 million), up from the previous limit of Rs. 1 billion (around $11.04 million).
The changes are designed to prevent deep tech ventures from being evaluated prematurely under frameworks originally built for faster-moving digital or services-based startups. Unlike conventional tech companies, deep tech firms typically face prolonged research, testing, regulatory approvals, and capital-intensive development phases before generating meaningful revenue.
By aligning regulatory timelines and public funding mechanisms with these extended innovation cycles, policymakers aim to reduce friction in fundraising and long-term planning. The revised framework also seeks to mobilise both public and private capital to strengthen India’s deep tech ecosystem.
The policy update complements the government’s broader push to build a long-horizon innovation environment. A cornerstone of this effort is the Rs. 1 trillion (about $11 billion) Research, Development and Innovation (RDI) Fund announced last year. The RDI fund is intended to expand access to patient capital for companies driven by intensive research and development, particularly beyond the seed stage.
Private capital is also playing a growing role. U.S. and Indian venture capital firms have launched the India Deep Tech Alliance, a private investor coalition with commitments exceeding $1 billion. The group includes major investors such as Accel, Blume Ventures, Celesta Capital, Premji Invest, Ideaspring Capital, Qualcomm Ventures, and Kalaari Capital, with Nvidia acting as an adviser.
Investors have welcomed the policy shift. Vishesh Rajaram, managing partner at Speciale Invest, said the previous framework often created a “false failure signal” by forcing pre-commercial companies to age out of startup status before their technologies were market-ready. By formally recognising deep tech as a distinct category, he noted, the new policy reduces friction in fundraising, follow-on investments, and engagement with government agencies.
However, challenges remain. While early-stage funding has improved, access to capital at Series A and later stages continues to be a bottleneck for many deep tech startups. Arun Kumar of Celesta Capital said the RDI fund is specifically designed to address these gaps without distorting private investment decisions.
Together, these measures signal India’s intent to position itself as a global hub for deep technology innovation—one that understands patience, scale, and sustained capital are essential ingredients for scientific breakthroughs to reach the market.