India’s New Startup Regulations: A Focus on Deep Tech Innovation

India Adjusts Startup Rules to Support Deep Tech Ventures

Deep tech startups in sectors like space, semiconductors, and biotech have longer maturity cycles compared to traditional ventures. In response, India is making changes to its startup regulations and mobilizing public funds to assist more of these startups in reaching commercial success.

This week, the Indian government updated its startup framework, extending the period for deep tech companies to be classified as startups to 20 years and raising the revenue threshold for startup-specific benefits to ₹3 billion (approximately $33.12 million). These changes aim to align policy timelines with the extended development cycles inherent in science- and engineering-focused businesses.

The modifications are part of New Delhi’s strategy to build a robust deep tech ecosystem by combining regulatory reforms with public funding initiatives. The ₹1 trillion Research, Development and Innovation Fund (RDI), established last year, is intended to provide patient financing for science-driven companies. Additionally, the India Deep Tech Alliance, a private investor coalition exceeding $1 billion, has been launched with prominent venture firms like Accel, Blume Ventures, and Qualcomm Ventures participating.

According to Vishesh Rajaram, founding partner at Speciale Invest, the policy changes aim to alleviate the fundraising challenges faced by deep tech startups, enabling easier access to capital and government support.

Despite these positive developments, investors highlight the need for increased capital availability, especially in the later stages of funding. The RDI Fund is expected to address this gap, providing financial support to deep tech companies during critical growth phases.

Siddarth Pai, founding partner at 3one4 Capital, commends the Indian deep tech framework for avoiding a “graduation cliff” that could hinder companies as they scale. He notes that the operationalization of the RDI Fund is progressing well, with fund managers being identified and selection processes for venture partners underway.

India’s Growing Deep Tech Funding Landscape

While India’s deep tech market is still emerging, recent data indicates a significant uptick in funding activities. In 2025, Indian deep tech startups raised $1.65 billion, reflecting renewed investor confidence in sectors aligned with national priorities such as advanced manufacturing and defense technologies.

Compared to the US and China, India’s deep tech funding landscape remains relatively modest. However, the government’s proactive measures are expected to attract more investors over time, further fueling the growth of deep tech innovation in the country.

Long-Term Policy Signals for Deep Tech Investments

The recent policy changes in India’s startup framework are seen as a positive signal for global investors, indicating a commitment to supporting long-term innovation in deep tech sectors. Investors like Pratik Agarwal from Accel believe that the extended policy timelines provide greater assurance and stability for investors considering deep tech ventures in India.

While these changes may not immediately alter investment strategies, they signal a shift towards more patient frameworks for frontier technologies. The goal is to retain deep tech talent within India and create a conducive environment for sustainable growth and innovation.

Ultimately, the success of India’s deep tech ecosystem will be measured by the emergence of globally competitive companies. Investors like Arun Kumar of Celesta Capital look forward to seeing Indian deep tech ventures achieve significant success on the global stage in the coming years.