CIOInsider India Magazine
The Rise of Deep Tech in India: Why India Must Play the Long Game
India's deep-tech future depends on sustained government investment, effective policy execution, long-term research, and a strong innovation ecosystem to compete globally in AI, semiconductors, quantum computing, and other frontier technologies.
India's aspiration to emerge as a global tech competitor relies on a significant change in perspective—viewing deep technology as an endless endeavor. Deep tech, which includes advanced fields such as Artificial Intelligence (AI), quantum computing, and semiconductors, does not adhere to short-term business trends. It demands ongoing investment, consistent policies, protective measures for corporate motivations, an environment that fosters innovative research for years, and enduring governmental oversight.
The Rise of India's Deep-Tech Ecosystem
NASSCOM reports that India has over 3,000 startups focused on deeptech. These startups have experienced a total growth of 53 percent in the last ten years. The report from NASSCOM emphasizes the significant increase in capital acquired by deeptech startups, with AI and IoT representing two-thirds of the industry. The leading organization, representing India’s technology sector, states that the deeptech startup ecosystem has expanded at an annual growth rate exceeding 40 percent over the four years prior to March 2021.
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Last year, deeptech was the fourth most funded sector regarding the number of startups and the fifth in terms of total investment, amounting to around $500 million, according to a BCG report. Nevertheless, 2023 saw a notable downturn in seed-stage funding, as the sector faced a 40 percent drop. Nonetheless, funding for growth and late-stage stages stayed strong, drawing in almost $350 million in investments. The rise of investor syndicates, networks, and individual investors, along with participation from large VC funds, has supplied the capital necessary to drive our homegrown deeptech revolution.
Numerous investors have begun directing their interest towards deeptech, moving past simple scale-up software to address fundamental, real-world challenges such as climate change, innovative fuels, developing quantum computers, extending lifespan, overcoming debilitating illnesses, achieving affordable access to space, and utilizing those conditions to create new materials—the possibilities are endless. AI will undoubtedly simplify and reduce the costs of all these tasks, but we cannot ignore the reality that we need to begin placing bets on addressing these intricate, real-world challenges.
Strengthening the Pillars of Deep Tech in India
The Indian government and policymakers are essential in developing initiatives to create a supportive deeptech ecosystem motivated by the urgent requirement to secure India’s presence in all foundational technologies such as AI, quantum computing, semiconductors, electric vehicles, and critical chemicals in various sectors from batteries to pharmaceutical intermediates.
India has established the National Deeptech Startup Policy, a groundbreaking initiative that focuses on cutting-edge technologies such as semiconductors, artificial intelligence, and space technologies to stimulate innovation and drive economic growth.
The National Research Foundation (NRF) is an important effort focused on transforming research and innovation. The NRF has an investment of Rs 50,000 crore across a five-year span (2023-2028). Its aim is to make funding for scientific projects accessible and promote research throughout Indian universities and colleges.
In the Interim Budget 2024, Finance Minister Nirmala Sitharaman revealed Rs 1 lakh crore fund offering interest-free loans for duration of 50 years. This large financial investment is dedicated to ensuring long-term support for technological research projects in India, aiming to motivate the private sector to significantly enhance its research and innovation activities in new, advanced areas.
India's Production Linked Incentive (PLI) schemes are designed to foster industrial expansion, boost domestic production, and draw in investments to develop global leaders in sectors such as automobiles and auto parts, consumer electronics, pharmaceuticals and medical devices, telecommunications and networking products, high-efficiency solar PV modules, and advanced chemistry cell (ACC) batteries, among others.
The government should function as the primary driver and key client, providing domestic deep tech firms with the environment and stability needed to innovate.
The National Quantum Mission (NQM), which received approval from the Union Cabinet on April 19, 2023, is a groundbreaking project spearheaded by the Department of Science and Technology. Its main goal is to initiate, cultivate, and expand research and development in quantum technology (QT) for scientific and industrial applications, with a total budget allocation exceeding Rs 6,000 crore from 2023-24 to 2030-31.
Vivek Prakash, CEO of Codingal argues that India's deep-tech ambitions must be supported by investments in human capital as early as the school level. "My broader ask is simply that we treat early STEM education as deep-tech infrastructure, in the same breath as chips and data centers, because that is exactly what it is."
The Gap Between Ambition and Execution
Recent policy changes indicate a favorable intention. The 2025–26 Union Budget has notably designated resources for crucial deep tech areas such as AI, nuclear energy, quantum, and semiconductors. It has additionally set aside INR20,000 crore (US$2.35 billion) to promote R&D led by the private sector and established 10,000 research fellowships. Nonetheless, the funding is far from matching that of the US and China for developing cutting-edge technologies.
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In India, even decisions to invest often take years to translate into action. The challenge is not merely allocating capital, but sustaining investment over decades. The evolution of generative AI illustrates this reality. ChatGPT, a generative AI chatbot that propelled Natural Language Processing (NLP) models to a significantly higher level, made advanced AI accessible to a wider audience and sped up innovation in various sectors, was introduced in 2022. ChatGPT was built on more than four decades of American leadership in NLP, cloud computing, and foundational research.
The Government of India has resolved to allocate funds to the 'India AI Mission' and domestic Graphics Processing Units (GPUs) by 2025 — three years subsequent to the onset of the global generative AI race. Historically, India has not invested significantly in creating any homegrown Intellectual Property (IP) within this sector. This reflects a shortcoming of the Indian Administration in acknowledging the significance of considering the concept of the infinite game.
In today's rapidly evolving technological landscape, being three years behind the forefront is equivalent to an eternity, and attempting to recover without a solid base to develop from is almost unfeasible. The Administration needs to adopt a new mindset to elevate Indian innovation to the forefront.
From Policy to Execution
Funding gaps are only one part of the challenge. Equally important is the pace at which policy initiatives move from announcement to implementation. In the same way, India’s policy execution requires years to put into practice. The National Deep Tech Startup Policy draft was published in July 2023, offering an extensive framework for policy, financial and resource assistance, public-private partnerships (PPP), procurements and subcontracting, human capital, and startups. Yet, after one temporary budget and two complete budgets, the policy still remains unimplemented.
This expectation that the private sector alone should drive frontier innovation is increasingly visible in policy discussions.
Biju Davis, Senior Vice President & India Site Leader, InvoiceCloud, believes India's deep-tech ambitions will depend on building a stronger ecosystem that supports innovation over the long term. "Three things matter most: patient capital, procurement access, and talent pipelines. Deep-tech has long development cycles that don't fit standard VC timelines; more patient, outcome-linked funding mechanisms would change what gets built. Government and enterprise procurement opening up to deep-tech startups creates the reference customers that unlock everything else. And curricula that prioritise applied AI, systems engineering, and domain expertise over rote fundamentals will determine the quality of talent entering the ecosystem over the next decade."
Additionally, there is a feeling among government officials that the development of technology should be led by the Indian private sector. Piyush Goyal, the Minister of Industry and Commerce, recently stated at the Startup Mahakumbh 2025 that China was advancing in high-end technologies like Electric Vehicles (EVs) and AI, while Indian startups appeared to concentrate on lower-value technologies such as food applications and grocery delivery. The Commerce Minister has ignored the substantial investments made by the Chinese government over many years aimed at achieving real dominance in these industries.
The Limits of Market-Led Innovation
India’s private sector has significantly impacted its digital economy. The IT services sector has evolved into a more than $200 billion export giant, providing jobs for millions and leading international software delivery markets. India's technology-driven startup landscape has emerged on the foundation of the IT sector, boasting over 160,000 startups currently. India's private investment sector is flourishing, with a total of US$ 132 billion in combined investments from CY2014 to JFM2025. Nonetheless, although the private sector excels at expanding commercially successful technologies, deep tech poses a unique challenge.
Numerous deep tech sectors have not yet entered market-oriented commercial areas. In contrast to fintech or SaaS, where companies can rapidly grow by marketing directly to consumers or businesses, deep tech innovation frequently caters to strategic objectives at a national scale.
According to Vivek Prakash, India's long-term competitiveness in deep tech will depend not only on capital and infrastructure but also on building a strong pipeline of talent from an early age."The most powerful lever is in schools, because if we treated coding and computational thinking as core literacy from the primary grades, the way the National Education Policy envisions, we would widen the deep-tech funnel a full decade before that talent is needed. As an ecosystem we tend to over-index on capital at the top while under-investing in curiosity at the base."
Research and development in these sectors could ultimately reach both consumers and businesses through dual-purpose applications, such as the Global Positioning System (GPS).
However, they primarily continue to come from strategic sectors. Venture Capitalists focused on these sectors can only evaluate businesses that can access a sustainable market with consistent demand during their 7-10-year fund lifespan. In sectors with extended funding timelines, the government acts not only as a facilitator but also as the largest and frequently the sole feasible customer.
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Building a Self-Sustaining Deep-Tech Ecosystem in India
If the Indian government and administration do not proactively develop and support domestic markets for homegrown deep tech, these industries will struggle to thrive. The truth is that no nation has developed a successful deep tech ecosystem without considerable and ongoing government investment, along with proactive assistance as the initial customer. A prime illustration is the US defense sector, where firms such as Lockheed Martin and Raytheon have flourished due to the substantial, steady, and reliable financial support from the Department of Defense. Anduril is the most prominent recent startup beneficiary of this system, securing a $22 billion defense application contract in February 2025—seven times DRDO’s yearly budget of $3.15 billion.
In the same way, the government acts as the market maker in quantum computing, space exploration, renewable energy, and nuclear power. The substantial financial commitments of the US government in these sectors have effectively reduced risk for private investment, allowing venture-backed startups to emerge as global leaders over the years.
India needs to put into action its determination to lead in crucial sectors worldwide. The government needs to invest significantly throughout the value chain: basic research, prototyping, product development, protecting intellectual property, constructing manufacturing facilities, and aiding commercialization initiatives. The aim is to promote innovation and proactively establish extensive markets and procurement avenues for local technology. This investment cycle should be consistently reiterated for future generations of emerging technologies within various strategic deep tech sectors, guaranteeing ongoing growth and competitiveness at the forefront.
Without substantial, direct government investment, India's deep tech ecosystem will not have the financial capacity to compete on a global scale. The private sector cannot place long-term investments in technologies that lack an existing commercial market. The government should function as the primary driver and key client, providing domestic deep tech firms with the environment and stability needed to innovate.
Playing the Infinite Game: Deep tech Advancement
Deep tech advancement is not a race with an endpoint—it is an unending endeavor where the sole aim is to persist through innovation and leveraging newfound resilience. India faces a clear decision: incorporate deep technology into its national policy framework, or face ongoing technological reliance—a state India has experienced for two centuries. Nonetheless, it has the chance to turn around today with the appropriate attitude in a digital environment where pioneers lead global markets.
The government should confidently take the initiative, placing trust in its citizens by investing in and taking risks alongside them, guaranteeing ongoing investment, infrastructure development, and policy backing. The issue is whether India is willing to commit to the decades-long investments required to lead the technologies that will define the future. In the infinite game of deep tech, sustained commitment—not short-term success—will determine which nations shape the next era of innovation.
