India just did something most governments struggle with: it acknowledged that building actual hard tech takes forever. The government doubled the period for which deep tech companies count as startups to 20 years, up from 10. They also tripled the revenue threshold for startup benefits to about $33 million.
This isn’t just paperwork shuffling. It’s recognition that a semiconductor company or a biotech venture can’t be judged on the same timeline as a food delivery app. The old framework was basically forcing companies to lose their startup status right when they were still burning through R&D budgets and nowhere near commercial products.
Vishesh Rajaram from Speciale Invest called it a “false failure signal” that judged science-led ventures on arbitrary policy timelines instead of actual technological progress. Which is accurate. Imagine spending eight years developing a chip architecture only to have the government tell you you’re no longer eligible for support because the calendar says so.
The Money Problem Runs Deeper
But let’s be real about what this actually solves. The policy change helps, but access to capital remains the bigger headache. India’s deep tech startups raised $1.65 billion in 2025. Sounds decent until you realize U.S. deep tech companies pulled in $147 billion the same year. That’s not a gap, that’s a canyon.
The government knows this, which is why they announced a $11 billion Research, Development and Innovation Fund last year. The RDI fund is supposed to provide patient capital that sticks around through the long, unglamorous middle years when a technology company is too mature for seed funding but too experimental for traditional growth investors.
Arun Kumar from Celesta Capital pointed out that the real bottleneck has always been Series A and beyond for capital-intensive ventures. That’s where companies need serious money but don’t yet have the revenue numbers that make conventional investors comfortable. The RDI fund is designed to fill that gap by routing public capital through venture funds instead of setting up some bureaucratic government program.
Does This Actually Keep Companies In India?
The bigger question is whether any of this stops Indian startups from packing up and reincorporating in Delaware the moment they get serious. That pattern has been frustrating for years. You train the engineers, provide the initial ecosystem, and then watch the company become legally American once it scales.
Pratik Agarwal from Accel thinks the extended runway helps make the case for staying, but he’s careful not to oversell it. Access to customers and late-stage capital still matters more than regulatory timelines for most founders making that decision. Though he did note that India’s public markets have gotten better at digesting venture-backed tech companies, which creates more exit options domestically.
Siddarth Pai from 3one4 Capital made an interesting point about avoiding what he called a “graduation cliff” where support vanishes right when companies are scaling. That’s been a chronic problem in emerging business ecosystems. You get help as a scrappy startup, then suddenly you’re on your own at the exact moment when you need infrastructure support the most.
The Billion Dollar Alliance Shows Private Interest
Shortly after the RDI fund announcement, a coalition of U.S. and Indian investors launched the India Deep Tech Alliance with over $1 billion in commitments. Accel, Blume Ventures, Qualcomm Ventures, and others joined, with Nvidia advising. That’s not charity, these are commercial investors betting that India’s deep tech ecosystem is about to get interesting.
The timing wasn’t coincidental. Private capital tends to show up when government signals long-term policy stability. Nobody wants to invest in seven-year development cycles if the regulatory environment might flip halfway through.
But the scale still matters. India’s total deep tech funding to date sits at $8.54 billion. That’s the entire historical total. U.S. deep tech companies raised nearly that much every three weeks in 2025. China deployed $81 billion last year alone. India has engineering talent in abundance, but building actual hard tech requires patient capital at scales most Indian investors aren’t used to deploying.
Ten Companies Would Change Everything
Arun Kumar from Celesta set what he considers the real benchmark: ten globally competitive deep tech companies achieving sustained success over the next decade. Not startups that got acquired early or pivoted to software. Actual deep tech companies competing internationally in areas like advanced manufacturing, semiconductors, or climate tech.
That’s a reasonable standard. Ten companies sounds modest until you consider what it takes to build even one globally competitive semiconductor company or biotech platform. The capital requirements alone are staggering, and that’s before dealing with talent retention, supply chains, and customer acquisition in markets dominated by established players.
Neha Singh from Tracxn noted that the funding pickup suggests a gradual shift toward longer-horizon investing in India. Gradual being the key word. This isn’t going to flip overnight just because the government changed some rules. Building deep tech ecosystems takes decades, not policy cycles.
The real test will be whether five years from now we’re looking at a handful of Indian deep tech companies doing genuinely hard things at global scale, or just more policy announcements about how serious everyone is about innovation.
