India has modified its startup guidelines for deep tech

Deep tech startups in sectors comparable to area, semiconductors, and biotech take far longer to mature than typical ventures. Due to that India is adjusting its startup guidelines, and mobilizing public capital, hoping to assist extra of them make it to business merchandise.

This week, the Indian authorities up to date its startup framework, doubling the interval for which deep tech corporations are handled as startups to twenty years and elevating the income threshold for startup-specific tax, grant, and regulatory advantages to ₹3 billion (about $33.12 million), from ₹1 billion (round $11.04 million) beforehand. The change goals to align coverage timelines with the lengthy growth cycles typical of science- and engineering-led companies.

The change additionally types a part of New Delhi’s effort to construct a long-horizon deep tech ecosystem by combining regulatory reform with public capital, together with the ₹1 trillion (round $11 billion) Analysis, Growth and Innovation Fund (RDI), introduced final yr. That fund is meant to broaden affected person financing for science-led and R&D-driven corporations. In opposition to that backdrop, U.S. and Indian enterprise corporations later got here collectively to launch the India Deep Tech Alliance, $1 billion-plus personal investor coalition that features Accel, Blume Ventures, Celesta Capital, Premji Make investments, Ideaspring Capital, Qualcomm Ventures, and Kalaari Capital, with chipmaker Nvidia appearing as an adviser.

For founders, these modifications could repair what some see as a man-made strain level. Beneath the earlier framework, corporations typically risked shedding startup standing whereas nonetheless pre-commercial, making a “false failure sign” that judged science-led ventures on coverage timelines moderately than technological progress, stated Vishesh Rajaram, founding associate at Speciale Make investments, an Indian deep tech enterprise capital agency.

“By formally recognizing deep tech as completely different, the coverage reduces friction in fundraising, follow-on capital, and engagement with the state, which completely exhibits up in a founder’s working actuality over time,” Rajaram informed TechCrunch.

Nonetheless, buyers say entry to capital stays a extra binding constraint, notably past the early levels. “The most important hole has traditionally been funding depth at Sequence A and past, particularly for capital-intensive deep tech corporations,” Rajaram stated. That’s the place the federal government’s earlier RDI fund is supposed to play a complementary function.

“The actual advantage of the RDI framework is to extend the funding out there to deep tech corporations at early and progress levels,” stated Arun Kumar, managing associate at Celesta Capital. By routing public capital by enterprise funds with tenors just like personal capital, he stated, the fund is designed to handle continual gaps in follow-on funding with out altering the business standards that govern personal funding selections.

Siddarth Pai, founding associate at 3one4 Capital and co-chair of regulatory affairs on the Indian Enterprise and Alternate Capital Affiliation, stated India’s deep tech framework avoids a “commencement cliff” that has traditionally lower corporations off from assist simply as they scale.

These coverage modifications come because the RDI fund is starting to take form operationally, Pai stated, with the primary batch of fund managers recognized and the method of choosing enterprise and personal fairness managers beneath means.

Whereas personal capital for deep tech already exists in India — notably in areas comparable to biotech — Pai informed TechCrunch the RDI Fund is meant to behave as a nucleus round which higher capital formation can happen. In contrast to a conventional fund-of-funds, he famous, the automobile can be designed to take direct positions and supply credit score and grants to deep tech startups.

India’s deep tech funding grows

By way of scale, India stays an rising moderately than dominant deep tech market. Indian deep tech startups have raised $8.54 billion in complete thus far, however latest information level to renewed momentum. Indian deep tech startups raised $1.65 billion in 2025, a pointy rebound from $1.1 billion in every of the earlier two years after funding peaked at $2 billion in 2022, per Tracxn. The restoration suggests rising investor confidence, notably in areas aligned with nationwide priorities comparable to superior manufacturing, defence, local weather applied sciences, and semiconductors.

“General, the pickup in funding suggests a gradual transfer towards longer-horizon investing,” stated Neha Singh, co-founder of Tracxn.

Compared, U.S. deep tech startups raised about $147 billion in 2025, greater than 80 instances the quantity deployed in India that yr, whereas China accounted for roughly $81 billion, information from Tracxn exhibits.

The disparity highlights the problem India faces in constructing capital-intensive applied sciences, even with its wealth of engineering expertise. So the hope is that these strikes by the Indian authorities will result in extra investor participation over the medium time period.

An extended-term sign

For international buyers, New Delhi’s framework change is being learn as a sign of longer-term coverage intent moderately than a set off for speedy shifts in allocation. “Deep tech corporations function on seven- to twelve-year horizons, so regulatory recognition that stretches the lifecycle offers buyers higher confidence that the coverage setting is not going to change mid-journey,” stated Pratik Agarwal, a associate at Accel. Whereas he stated the change wouldn’t alter allocation fashions in a single day or get rid of coverage danger completely, it elevated investor consolation that India is considering deep tech on longer time horizons.

“The change exhibits that India is studying from the U.S. and Europe on easy methods to create affected person frameworks for frontier constructing,” Agarwal informed TechCrunch.

Whether or not the transfer will cut back the tendency of Indian startups to shift their headquarters abroad as they scale stays an open query.

The prolonged runway strengthens the case for constructing and staying in India, Agarwal stated, although entry to capital and clients nonetheless issues. Over the previous 5 years, he added, India’s public markets have proven a rising urge for food for venture-backed tech corporations, making home listings a extra credible choice than prior to now. That, in flip, may ease a few of the strain on deep tech founders to include abroad, even when entry to procurement and late-stage capital will proceed to form the place corporations in the end scale.

For buyers backing long-horizon applied sciences, the final word check can be whether or not India can ship globally aggressive outcomes. The actual sign, Kumar of Celesta Capital stated, can be the emergence of a vital mass of Indian deep tech corporations succeeding on the world stage.

“It will be nice to see ten globally aggressive deep tech corporations from India obtain sustained success over the following decade,” he stated, describing that because the benchmark he would search for in assessing whether or not India’s deep tech ecosystem is maturing.