Deep Tech Finally Gets Breathing Room in India’s Startup Rulebook

Over the last decade, the government has evolved the definition of a ‘startup’ to suit the needs of the time. 

In the mid-2010s, the focus was on biotech, with the sector being granted exemptions while other startups required a ‘recommendation’ from an incubator to avail schemes. Then, in 2019, the Department for Promotion of Industry and Internal Trade (DPIIT) expanded the scope. It included all private limited companies under the umbrella definition, granted they were less than a decade old and had an annual turnover of under ₹100 crore—a shift from ₹25 crore earlier.

Now, the focus is on deep tech. DPIIT defines a deep tech startup as one that develops solutions based on scientific or engineering advances, allocates a high share of funding to research and development, creates or owns novel intellectual property, and faces long development cycles and technical uncertainty.

Deep tech startups typically have much longer gestation periods, are heavily reliant on hardware-led research and development, and require costly pilots and prototypes. They cannot afford to rush, abandon, or iterate casually, as each decision carries financial and technical risks that extend beyond software. 

Progress is therefore slower, more capital-intensive, and highly dependent on long-term vision, patient funding, and rigorous validation before any meaningful scale or commercial return can be achieved.

This prompted the union government to revise India’s startup recognition framework to expand access to policy benefits and formally create a separate category for deep tech companies, as it seeks to reset the Startup India Action Plan for the next decade.

A New Deep Tech Lane

The new framework, notified by DPIIT on February 4, 2026, raised the general turnover threshold for recognised startups to ₹200 crore from ₹100 crore.

Officials said the revised framework aims to improve access to benefits for innovation-driven companies and enable longer-term capital for research-intensive sectors. The increase of the turnover cap reflects the government’s view that many ventures now scale faster and reach meaningful revenue earlier in their life cycles.

For deep tech companies, the government has introduced a distinct category for the first time. It has also extendeded their eligibility to 20 years, with a higher turnover cap of ₹300 crore.

According to the DPIIT notification, deep tech startups must show ownership of, or progress toward, novel intellectual property and that face longer development timelines and capital needs. The recognition process will continue through the DPIIT portal, where applicants must submit incorporation documents and a write-up on innovation and scalability, over and above the required documentation. DPIIT retains the power to seek further information and reject applications with reasons.

Capital Spring

For investors, the extended recognition window addresses a structural gap that often leave deep tech firms hanging before they reach commercial readiness.

Ajay Modi, Investments Director at Piper Serica VC Fund, tells AIM, “Extending the recognition window from 10 years to 20 years from incorporation reflects the economic reality of deep tech. Most companies spend 7–8 years in intensive R&D and lab-scale validation, often losing their startup status just as they enter early commercialisation.”

“By correcting this structural mismatch, the new definition ensures that deep tech companies are not penalised for long gestation cycles,” he adds. 

This improves access to growth capital, grants, and institutional participation at the critical transition from lab to market. This, Modi hopes, will help India build globally competitive deep tech champions.

From an ecosystem perspective, the formal recognition of deep tech as a distinct category marks a broader repositioning of Startup India toward science-led entrepreneurship.

“This sends a clear signal that the country is serious about building IP-driven deep tech companies from India for the world, and gives founders and investors the confidence to commit long-term capital to that journey,” Vishesh Rajaram, Managing Partner at deep tech venture fund Speciale Invest, notes.

The notification also outlines how recognised startups can apply for tax-related certification under Section 80-IAC of the Income Tax Act through an inter-ministerial board, which will assess applications and issue approvals based on documents submitted via the DPIIT portal.

Cooperatives Enter as Startups 

One of the most significant structural changes in the revised framework is the inclusion of cooperative societies, including multi-state cooperatives, as startups for the first time, provided they meet the prescribed conditions. Both registered multi-state cooperative societies and cooperatives registered under state and union territory laws can now seek recognition.

The government said this step aims to enable innovation in agriculture, rural industries, and community-based enterprises. DPIIT has clarified that entities created through business restructuring or splitting will not qualify as startups under the revised rules.

The framework, however, also restricts how recognised startups deploy funds during the recognition period, including limits on investments in real estate, luxury assets, speculative instruments and non-core activities.

For founders building in capital-intensive, research-driven sectors, the revised definition addresses what many describe as a long-standing mismatch between policy timelines and technical realities.

“All startups, deep tech or otherwise, drive fundamental innovations to bolster the economy, and we appreciate the government’s decision, through this DPIIT announcement, to better support deep tech ventures like ours during our extended R&D gestation periods,” says Shashwath TR, Co-founder and CEO of fabless semiconductor startup Mindgrove Technologies.

“This acts as a powerful enabler for growth and a major confidence booster for building transformative tech,” he adds.

For companies operating in frontier sectors such as aerospace and advanced manufacturing, the policy shift is also being seen as a signal to investors and customers.

Srinath Ravichandran, Co-founder and CEO of space tech startup Agnikul Cosmos, remarks “It sets the right tone and expectations for investors, customers, and stakeholders. It affirms that real deep tech is challenging yet profoundly worthwhile, and with time, delivers transformative results.”

Investors say the extended recognition window corrects a structural gap that often pushed deep tech startups out of the policy framework just as they approached early commercial deployment.

These revisions acknowledge that deep technology innovation in India does not follow the same pace or economics as software-first startups, and that meaningful scale often begins only after years of scientific and engineering validation.