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India updates start-up rules to help deep tech firms
08 Feb 2026

In a major policy shift, the Indian government has revised its start-up framework to support deep tech companies.

The new rules double the period of classification as a start-up from 10 years to 20 years for these companies.

The revenue threshold for availing start-up-specific tax, grant, and regulatory benefits has also been raised from ₹1 billion ($11 million) to ₹3 billion ($33 million).

Aligning government policies with deep tech start-ups' development cycles
Strategic adjustment

The policy changes are aimed at aligning the timelines of government policies with the long development cycles of science and engineering-led businesses.

This is especially true for sectors like space, semiconductors, and biotech where start-ups take longer to mature than conventional ventures.

The move is part of India's broader strategy to create a sustainable deep tech ecosystem through regulatory reform and public investment.

Research, Development and Innovation Fund to support deep tech ventures
Ecosystem development

The revised policy is also part of India's effort to build a long-term deep tech ecosystem by combining regulatory reform with public capital.

This includes the ₹1 trillion ($11 billion) Research, Development and Innovation Fund (RDI), announced last year.

The fund seeks to expand patient financing for science-led and R&D-driven companies.

US and Indian venture firms have also formed the India Deep Tech Alliance, a private investor coalition with over $1 billion in commitments.

Addressing the funding constraint for deep tech companies
Funding challenges

Despite the policy changes, investors still see access to capital as a major constraint, especially beyond the early stages.

The RDI fund is intended to address this issue by increasing funding for deep tech companies at early and growth stages.

It aims to bridge chronic gaps in follow-on funding without changing the commercial criteria that govern private investment decisions.

Deep tech funding in India reached $1.65 billion in 2025
Market growth

India's deep tech start-ups have raised a total of $8.54 billion so far.

However, recent data shows a resurgence in momentum with Indian deep tech start-ups raising $1.65 billion in 2025, a sharp increase from previous years.

This growth indicates increasing investor confidence, especially in sectors that align with national priorities such as advanced manufacturing, defense, climate technologies, and semiconductors.

India's challenge in capital-intensive technologies
Funding disparity

In 2025, US deep tech start-ups raised around $147 billion, over 80 times the amount raised by India in that year. China accounted for about $81 billion, according to Tracxn data.

This stark difference highlights the challenge India faces in building capital-intensive technologies despite its strong engineering talent pool.

The hope is that these government initiatives will attract more investor participation over time.