India Rewrites Startup Rules for Deep Tech Giants

India has updated its startup framework, extending the duration for which deep tech companies qualify for startup status to 20 years. The revenue threshold for receiving startup-specific tax, grant, and regulatory benefits has also been elevated to ₹3 billion (approximately $33.12 million) from the previous ₹1 billion.

This policy adjustment is designed to match regulatory timelines with the extended development periods characteristic of science and engineering-driven businesses. It is part of a broader strategy to cultivate a long-horizon deep tech ecosystem through regulatory reform and the mobilization of public capital.

Key to this strategy is the ₹1 trillion (around $11 billion) Research, Development and Innovation Fund (RDI), announced last year, intended to provide patient financing for R&D-focused companies. Furthermore, a coalition of over $1 billion in private investment, known as the India Deep Tech Alliance, has been established with U.S. and Indian venture firms.

These changes aim to alleviate pressures faced by founders, who previously risked losing startup status before commercialization, creating misleading failure signals. By formally acknowledging the distinct nature of deep tech, the policy intends to reduce obstacles in fundraising and engagement with government bodies.

Investors acknowledge that access to capital, especially at Series A and beyond, remains a critical constraint for capital-intensive deep tech ventures. The RDI fund is positioned to address these funding gaps by increasing capital availability at early and growth stages, routing public funds through venture funds with similar tenors to private capital.

Recent data indicates a resurgence in deep tech funding in India, with startups raising $1.65 billion in 2025, a notable increase from previous years, suggesting growing investor confidence in areas aligned with national priorities. However, India's deep tech market is still emerging compared to the U.S. and China, highlighting the challenge in building capital-intensive technologies.

The government's framework changes are perceived by global investors as a signal of long-term policy commitment, offering greater confidence in a stable regulatory environment for companies with extended development horizons. This may encourage more companies to build and remain in India, with domestic public markets offering a more credible listing option.

The ultimate success of India's deep tech ecosystem will be measured by the emergence of globally competitive companies achieving sustained success on the world stage, a benchmark investors are looking to track over the next decade.