India Extends Runway for Deep tech Startups, Unveils $11 Billion Funding Boost
India is substantially adjusting its startup regulations and mobilizing ample public capital in an effort too foster the growth of deep tech ventures – companies specializing in areas like space, semiconductors, and biotechnology – which typically require longer development timelines than conventional businesses.
The Indian government this week updated its startup framework, effectively doubling the period for which deep tech companies qualify for startup status to 20 years. together, the revenue threshold for accessing startup-specific tax benefits, grants, and regulatory advantages has been raised to ₹3 billion (approximately $33.12 million),up from the previous limit of ₹1 billion (around $11.04 million).This policy shift is designed to align regulatory timelines with the extended development cycles inherent in science- and engineering-driven enterprises.
The changes are a key component of New Delhi’s broader strategy to cultivate a robust, long-term deep tech ecosystem. This strategy combines regulatory reforms with notable public investment, including the ₹1 trillion (around $11 billion) Research, Development and Innovation (RDI) Fund announced last year. The RDI Fund aims to provide “patient financing” – long-term capital – for companies heavily invested in scientific research and development. Building on this momentum, a coalition of U.S. and Indian venture firms, including Accel, Blume Ventures, Celesta Capital, Premji Invest, Ideaspring Capital, Qualcomm ventures, and Kalaari capital, have launched the India Deep Tech Alliance, a $1 billion-plus private investor group. Chipmaker Nvidia is serving as an advisor to the alliance.
For founders, these changes address a critical pain point. Previously, companies risked losing their startup designation while still in the pre-commercialization phase, creating what one venture capital firm partner described as a “false failure signal.” “By formally recognizing deep tech as different, the policy reduces friction in fundraising, follow-on capital, and engagement with the state, which absolutely shows up in a founder’s operating reality over time,” saeid Vishesh Rajaram, founding partner at Speciale Invest, an Indian deep tech venture capital firm.
Despite the positive changes, investors are seeing a pickup in funding across key areas like climate technologies, and semiconductors.
“the pickup in funding suggests a gradual move toward longer-horizon investing,” said Neha Singh, co-founder of Tracxn.
However, a substantial gap remains between India and global leaders in deep tech funding. In 2025, U.S. deep tech startups raised approximately $147 billion – more than 80 times the amount secured by their Indian counterparts. China accounted for roughly $81 billion in funding. this disparity underscores the challenges India faces in developing capital-intensive technologies, despite its strong engineering talent pool. The government’s recent moves are aimed at attracting greater investor participation in the medium term.
For global investors, the regulatory changes are viewed as a signal of long-term policy commitment rather than an immediate catalyst for investment shifts. “Deep tech companies operate on seven- to twelve-year horizons, so regulatory recognition that stretches the lifecycle gives investors greater confidence that the policy environment will not change mid-journey,” explained Pratik Agarwal, a partner at accel. He added that while the changes won’t instantly alter investment models or eliminate policy risk,they increase investor confidence in India’s long-term vision for deep tech.
“The change shows that India is learning from the U.S. and Europe on how to create patient frameworks for frontier building,” Agarwal told TechCrunch.
Whether the new policies will discourage Indian startups from relocating their headquarters overseas as they scale remains to be seen. Agarwal believes the extended runway strengthens the case for remaining in India,although access to capital and customers remains crucial.He also noted that India’s public markets have become increasingly receptive to venture-backed tech companies in recent years, making domestic listings a more viable option.
Ultimately,the success of India’s deep tech ecosystem will be measured by its ability to produce globally competitive companies. arun Kumar of Celesta Capital stated that the emergence of “ten globally competitive deep tech companies from India achieving sustained success over the next decade” would be a key indicator of the ecosystem’s maturation.
