The Indian government has officially recognized deep tech startups under the Startup India initiative, extending eligibility for key benefits up to 20 years from incorporation.
This policy update, notified by the Department for Promotion of Industry and Internal Trade (DPIIT), also raises the turnover threshold for deep tech firms to Rs 300 crore, compared to Rs 200 crore for regular startups.
Defining Deep Tech and Eligibility Criteria
Deep tech startups are defined as entities developing novel solutions based on new scientific or engineering knowledge, with significant R&D expenditure and intellectual property creation.
These companies must demonstrate high technical uncertainty, longer gestation periods, and plans for commercializing innovative IP to qualify.
Historical Evolution and Key Changes
The new framework supersedes the 2019 Startup India definition, marking the first formal category for deep tech amid India's growing innovation ecosystem.
Previously, startups lost recognition after 10 years or Rs 100 crore turnover, creating a 'graduation cliff' that hindered scaling for capital-intensive ventures.
Regular startups now benefit from a doubled turnover cap to Rs 200 crore, broadening access to tax exemptions under Section 80-IAC.
Impacts on Funding and Growth
The extended timeline aligns policy with deep tech's 7-12 year horizons, boosting investor confidence and easing access to follow-on funding.
Indian deep tech firms have raised $8.54 billion to date, with $1.65 billion in 2025 signaling renewed momentum in sectors like semiconductors and biotech.
Experts like Vishesh Rajaram of Speciale Invest note reduced friction in fundraising and state engagement for founders.
Future Outlook and Support Mechanisms
Complementing this, the Rs 1 trillion Research, Development and Innovation (RDI) Fund will channel public capital through VCs for patient financing.
These reforms aim to nurture 10 globally competitive Indian deep tech companies over the next decade, solidifying India's position in frontier technologies.
Restrictions on fund usage ensure benefits fuel core R&D, prohibiting speculative investments.
Maria Lourdes
