India Extends Deep Tech Startup Recognition to 20 Years and Triples Revenue Cap: Major Boost for Innovation

The Indian government has updated its startup framework, extending recognition for deep tech companies from 10 to 20 years to better support their extended development timelines.

This policy shift also raises the revenue threshold for tax exemptions, grants, and other benefits from ₹1 billion to ₹3 billion (about $33 million), announced this week by the Department for Promotion of Industry and Internal Trade (DPIIT).

Key Changes Driving Deep Tech Growth

Previously, deep tech startups in sectors like space, semiconductors, and biotech often lost benefits prematurely during pre-commercial phases, creating artificial hurdles.

The new rules address these 'graduation cliffs' by allowing firms more time to scale without losing critical support.

Historical Context and Funding Challenges

India's deep tech ecosystem has raised $8.54 billion to date, with $1.65 billion in 2025, rebounding from prior years but lagging behind U.S. ($147 billion) and China ($81 billion) figures.

Past policies mismatched with the 7-12 year horizons of deep tech ventures, pressuring founders amid capital-intensive needs.

Expert Insights on Impacts

Vishesh Rajaram of Speciale Invest noted that the changes reduce friction in fundraising and state engagement, directly aiding founders.

Pratik Agarwal from Accel highlighted how this signals policy stability, boosting investor confidence similar to frameworks in the U.S. and Europe.

The RDI Fund, a ₹1 trillion initiative from last year, complements these reforms by channeling public capital through venture funds for patient financing.

Looking ahead, experts anticipate a surge in globally competitive Indian deep tech firms over the next decade, fostering a mature ecosystem.