India has changed its startup rules for deep tech

In a significant move aimed at nurturing deep tech startups, the Indian government has announced an extension of its startup policies to accommodate the unique challenges faced by ventures in fields such as space, semiconductors, and biotechnology. Recognizing that these sectors typically require more time to mature than traditional startups, the government has doubled the period for which deep tech companies can be classified as startups from 10 to 20 years. Additionally, the revenue threshold for accessing startup-specific tax benefits and grants has been raised from ₹1 billion (approximately $11.04 million) to ₹3 billion (about $33.12 million). This policy update aligns with New Delhi’s vision to cultivate a robust deep tech ecosystem, integrating regulatory reforms with substantial public investment. A key element of this initiative is the ₹1 trillion (around $11 billion) Research, Development and Innovation Fund (RDI), which was established last year to enhance funding opportunities for science-led and R&D-focused companies. In a collaborative effort to bolster this sector, U.S. and Indian venture firms have come together to form the India Deep Tech Alliance, a private investor coalition exceeding $1 billion. Notable participants include Accel, Blume Ventures, and Qualcomm Ventures, with chipmaker Nvidia serving as an advisor. This coalition aims to provide the necessary capital for deep tech startups, addressing what many see as an artificial pressure point in the previous framework that prematurely forced companies to forfeit their startup status before achieving commercial viability. Vishesh Rajaram, a founding partner at Speciale Invest, emphasized that the new policy reduces obstacles in fundraising and state engagement, which can significantly impact a founder’s operational journey. Despite these advancements, investors like Rajaram point out that access to capital remains a pressing issue, particularly for companies looking for funding beyond the early stages. Arun Kumar, managing partner at Celesta Capital, noted that the RDI fund aims to fill these gaps by providing financial support at various stages of growth. The fund is designed to complement private investments without altering the fundamental criteria that guide them. Siddarth Pai, co-chair of regulatory affairs at the Indian Venture and Alternate Capital Association, highlighted that the new framework helps prevent a “graduation cliff” where companies lose support just as they begin to scale. As the RDI fund begins to operationalize, it is expected to play a pivotal role in fostering deeper capital formation in the deep tech space. While Indian deep tech startups have collectively raised $8.54 billion to date, recent statistics indicate a resurgence in funding, with $1.65 billion raised in 2025—an increase from the previous years. This uptick signals growing investor confidence, especially in sectors aligned with national priorities such as advanced manufacturing and semiconductors. Yet, the funding landscape in India still pales in comparison to the U.S. and China, which raised $147 billion and $81 billion, respectively, in 2025. The Indian government’s recent reforms are seen as a proactive approach to stimulate investor participation and encourage the growth of deep tech companies domestically. According to Pratik Agarwal, a partner at Accel, the extended regulatory framework not only reassures investors of a stable policy environment but also reflects India’s commitment to developing a competitive deep tech landscape. The challenge remains whether these changes will deter Indian startups from relocating abroad as they scale, as access to capital and customers remains crucial. Ultimately, the success of these initiatives will be measured by the emergence of globally competitive deep tech companies from India. Kumar from Celesta Capital expressed hope that the next decade will see a significant number of Indian startups thrive on the international stage, marking a maturation of the country’s deep tech ecosystem.