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India has changed its startup rules for deep tech

India is reforming its startup rules to support deep tech startups, extending their qualification period to 20 years and raising revenue thresholds for benefits. This aligns with the government's aim to cultivate a deep tech ecosystem backed by a ₹1 trillion Research, Development and Innovation Fund. These changes are expected to facilitate funding and reduce pressure on startups during their development phases.

Key points

  • The Indian government has doubled the duration for which deep tech startups can be classified as startups from 10 to 20 years.
  • Revenue thresholds for tax, grant, and regulatory benefits have been increased to ₹3 billion from ₹1 billion.
  • These reforms aim to align policy timelines with the long development cycles of deep tech companies.
  • The changes are part of a broader effort to create a supportive ecosystem for deep tech, forming the basis for the ₹1 trillion RDI Fund.
  • The RDI Fund will provide patient financing and address gaps, especially for capital-intensive deep tech ventures.
  • The formation of the India Deep Tech Alliance underscores private investors' commitment to this sector.
  • The adjustments may relieve pressures on startups perceived as failures under prior frameworks.
  • Investor challenges include access to capital beyond early stages, specifically during Series A funding and beyond.
  • India’s deep tech funding has seen a rebound, with $1.65 billion raised in 2025, signaling increased investor interest.

Why it matters

  • The changes in India's startup landscape reflect a growing recognition of deep tech's unique needs, similar to trends seen in the U.S. and Europe.
  • Historical funding gaps have hindered the growth of India's deep tech sector; this reform aims to rectify that.
  • India's deep tech ecosystem, while growing, remains smaller compared to the U.S. and China, highlighting ongoing challenges.
  • The establishment of the RDI Fund illustrates a shift towards long-term investment strategies, aligning with global venture capital patterns.

These reforms are expected to enhance the long-term viability of India's deep tech startups, reduce immediate pressures, and encourage more financing, aiming for a stronger position in the global deep tech arena.