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Deep tech startups, which operate in highly specialized fields such as aerospace, semiconductor manufacturing, and biotechnology, often face extended timelines to reach maturity. In response, India is revising its startup regulations and mobilizing public investment to enhance the chances of these ventures transitioning into viable commercial products.
Recently, the Indian government revised its startup policies, extending the duration for which deep tech firms can be classified as startups to 20 years and increasing the revenue threshold qualifying them for tax exemptions, grants, and other regulatory benefits from ₹1 billion (approximately $11.04 million) to ₹3 billion (approximately $33.12 million). This adjustment aims to align government policies with the lengthy development phases common in technology and science-led enterprises.
This initiative is part of New Delhi’s broader goal of establishing a robust deep tech ecosystem by combining regulatory reforms with public investment measures. Notably, the government introduced a ₹1 trillion (around $11 billion) Research, Development, and Innovation Fund (RDI) last year to promote patient capital financing for research-driven and science-focused companies. Furthermore, U.S. and Indian venture firms have recently joined forces to create the India Deep Tech Alliance, a private investment coalition estimated at over $1 billion, which includes numerous well-respected firms such as Accel and Qualcomm Ventures, with Nvidia serving as an advisor.
For founders, these policy reforms address a significant concern in the startup ecosystem. Previously, companies risked losing their startup classification while still in pre-commercial phases, leading to a misleading perception of failure that evaluated science-driven ventures against policy benchmarks rather than technological advancements, as noted by Vishesh Rajaram, founding partner at Speciale Invest, a venture capital firm focused on Indian deep tech.
“Acknowledging deep tech fundamentally changes the landscape,” Rajaram explained to TechCrunch. “It alleviates difficulties in securing funding and engaging with governmental bodies, which significantly influences a founder’s operational landscape over time.”
Despite these changes, investors emphasize that access to financing remains a critical barrier, particularly in the later stages of funding. Rajaram pointed out that capital depth, especially beyond Series A rounds, has historically been limited for capital-intensive deep tech ventures. He indicated that the RDI fund is designed to complement existing funding sources in this area.
“The true advantage of the RDI initiative lies in increasing available funds for deep tech companies during early and growth phases,” highlighted Arun Kumar, managing partner at Celesta Capital. The fund aims to provide support through venture funds while maintaining similar investment tenors as private capital, targeting chronic follow-on funding gaps without changing private investment criteria.
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June 23, 2026
Siddarth Pai, founding partner at 3one4 Capital and co-chair of regulatory affairs at the Indian Venture and Alternate Capital Association, emphasized that India’s deep tech guidelines help avoid a “graduation cliff” that has previously cut off support for companies as they scale.
These policy adaptations coincide with the operational development of the RDI Fund, with fund managers being selected and the search for venture and private equity leaders currently in progress, according to Pai.
While private capital for deep tech exists in India, particularly in biotechnology, Pai argues that the RDI Fund aims to be a central force for augmenting capital formation. Unlike traditional fund-of-funds, this setup is designed to take direct contributions while offering credits and grants to deep tech startups.
Growth in India’s deep tech funding
In terms of scale, India is still establishing its presence in the deep tech market. Current data shows that Indian deep tech startups have amassed $8.54 billion in funding, but a resurgence is evident. They secured $1.65 billion in 2025, rebounding from $1.1 billion in each of the previous two years after a peak of $2 billion in 2022, as reported by Tracxn. This uptick indicates growing confidence among investors, particularly in sectors aligned with national priorities like advanced manufacturing, defense, climate technologies, and semiconductors.
“The increase in funding reflects a slow shift toward longer-term investment strategies,” noted Neha Singh, co-founder of Tracxn.
In contrast, U.S. deep tech startups raised about $147 billion in 2025—more than 80 times the investments made in India that year, while China attracted roughly $81 billion, according to Tracxn. This disparity illustrates the hurdles India faces in fostering capital-intensive technologies, even with a vast pool of engineering expertise. Thus, the measures taken by the Indian government are expected to enhance investor engagement in the medium term.
A signal for the long term
For international investors, the recent changes in New Delhi are seen as an indication of a commitment to long-term policy stability, rather than an immediate catalyst for reallocating funds. “Deep tech ventures typically operate over seven to twelve-year timelines, so recognition that extends their lifespans fosters investor confidence that the regulatory landscape will remain stable during their journey,” remarked Pratik Agarwal, a partner at Accel. While he noted that the changes won’t instantly transform allocation strategies or entirely mitigate policy risks, they do enhance investor confidence in India’s long-term vision for deep tech.
“This reform signifies India’s efforts to learn from the U.S. and European approaches to creating frameworks supportive of long-term technological advancements,” Agarwal commented.
Whether this initiative will deter Indian startups from relocating abroad as they grow remains an unanswered question. However, Agarwal posited that the extended timeframe bolsters the case for developing and maintaining operations in India, though access to funding and markets remains critical. He highlighted that India’s public markets have shown increasing interest in technology-powered ventures over the last five years, making domestic listings a more promising avenue than in previous years. This shift could alleviate some pressures on deep tech founders to seek foreign incorporation, even as the challenge of securing procurement and late-stage funds will continue to influence their scaling decisions.
For investors focusing on long-term technological innovations, the real test lies in whether India can cultivate globally competitive outcomes. According to Kumar from Celesta Capital, the emergence of a substantial number of successful Indian deep tech companies on the international stage will serve as a true measure of the maturation of India’s deep tech ecosystem.
“It would be remarkable to witness ten Indian deep tech firms achieving sustained global success over the next decade,” he articulated, setting that as a benchmark for evaluating the ecosystem’s growth.
### Hustle Verdict
Our take is that these regulatory changes could fundamentally transform India’s deep tech landscape by providing the essential support and funding that these ventures desperately need. We believe this will attract more investor participation and foster a more robust ecosystem that can compete on the global stage. The bottom line is that by addressing longer timelines and capital requirements, India is positioning itself to become a key player in the evolving deep tech sector.
