Deep-tech startups in fields like space, semiconductors, and biotech take longer to mature than traditional jobs. As a result, India is revising its original laws, and pooling public funds, in hopes of helping more of them access commercial products.
This week, the Indian government revised its first draft, which doubled the time period for deep-tech companies to be considered startups to 20 years and raised the income limit for direct start-up taxes, subsidies, and regulatory benefits to R3 billion (about $33.12 million), from R1 billion (about $11.04 million) previously. This change aims to align policy timelines with the longer development cycles typical of science and engineering-led enterprises.
The change is also part of New Delhi’s effort to build a deeper technology ecosystem by combining regulatory reforms with public funding, including the ₹ 1 trillion (about $11 billion) Research, Development and Innovation (RDI) Fund, announced last year. That fund is intended to increase patient funding for science-led and R&D-driven companies. In contrast, US and Indian business firms later came together to launch the India Deep Tech Alliance, a $1 billion consortium of private investors that includes Accel, Blume Ventures, Celesta Capital, Premji Invest, Ideaspring Capital, Qualcomm Ventures, and Kalaari Capital, with Nvidia acting as an advisor.
For founders, these changes may address what some see as an artificial pressure point. Under the previous framework, companies often risked losing ground when they were still pre-commercial, creating a “false failure signal” that judged science-led businesses in times of policy rather than technological progress, said Vishesh Rajaram, founding partner at Speciale Invest, an Indian deep tech venture capital firm.
“By formally recognizing deep technology as unique, the policy reduces friction in fundraising, follow-up funding, and dealing with the government, which is really reflected in the founder’s performance over time,” Rajaram told TechCrunch.
Still, investors say access to capital remains a burden, especially beyond the early stages. “The biggest gap in history has been the depth of funding in Series A and beyond, especially in deep tech companies,” Rajaram said. This is where the government’s RDI fund is meant to play a complementary role.
“The real benefit of the RDI framework is to increase the funding available to deep technology companies in the early stages of growth,” said Arun Kumar, managing partner at Celesta Capital. By channeling public funds through mutual funds with employers similar to private equity funds, he said, the fund is designed to address persistent gaps in funding without changing the business model that governs private equity investment decisions.
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Siddarth Pai, founder of 3one4 Capital and chairman of regulatory affairs at the Indian Venture and Alternate Capital Association, said India’s deep tech infrastructure avoids the “graduation cliff” that has cut companies off from support as they grow.
These policy changes come as the RDI fund becomes operational, Pai said, with the first set of fund managers identified and the process of selecting corporate and private managers.
While deep tech private equity already exists in India — especially in areas like biotech — Pai told TechCrunch that the RDI Fund is intended to serve as a nucleus where capital formation can take place. Unlike a traditional fund, he noted, the vehicle is also designed to take specific positions and provide credit and grants to technology-intensive startups.
Funding for deep tech in India is growing
On average, India remains an emerging market rather than a deep technology market. Indian deep tech startups have raised a total of $8.54 billion so far, but the latest data points to renewed momentum. Indian tech startups have raised $1.65 billion by 2025, a sharp return from $1.1 billion two years ago after funding reached $2 billion by 2022, per Tracxn. The recovery suggests growing investor confidence, particularly in areas associated with national priorities such as advanced manufacturing, defense, climate technology, and semiconductors.
“Overall, the funding acquisition suggests a gradual move towards long-term investing,” said Neha Singh, co-founder of Tracxn.
By comparison, US tech startups raised about $147 billion in 2025, more than 80 times the amount sent to India that year, while China raised about $81 billion, data from Tracxn shows.
The contrast highlights the challenge India faces in developing capital-intensive technologies, even with its wealth of engineering talent. So the hope is that these measures by the Indian government will lead to more fiscal consolidation in the medium term.
A long-term signal
For global investors, New Delhi’s structural change is being read as a sign of long-term policy intent rather than a trigger for sudden changes in allocations. “Deep technology companies operate for seven to twelve years, so regulatory recognition that extends the life cycle gives investors a lot of hope that the policy environment won’t change during the journey,” said Pratik Agarwal, partner at Accel. While he said the change would not change allocation models overnight or remove policy risk entirely, it increased investor comfort that India is thinking about deep technology in the long term.
“The change shows that India is learning from the US and Europe how to build patient structures to build borders,” Agarwal told TechCrunch.
Whether the move will reduce the tendency of Indian startups to shift their headquarters overseas as they grow remains an open question.
An expanded rail network strengthens the case for building and living in India, Agarwal said, although access to capital and customers is still important. In the past five years, he added, India’s public markets have shown a growing appetite for venture-backed technology companies, making domestic listings a more credible option than ever before. That, in turn, may ease some of the pressure on deep-tech founders to incorporate overseas, even if access to buying and financing will continue to stand in the way of companies ultimately growing.
For long-term technology backers, the big test will be whether India can deliver global competitive results. The real signal, Celesta Capital’s Kumar said, will be the emergence of a number of Indian deep-tech companies that are succeeding in the world.
“It would be great to see 10 globally competitive tech companies from India achieve sustained success over the next decade,” he said, explaining that it would be a benchmark to assess whether India’s deep tech ecosystem is growing.
