India’s Deep Tech Startup Struggles: Study Reveals Critical Gaps in Public R&D Support

- Dr. Sanjaykumar Pawar
Table of Contents

Introduction
Understanding Deep Tech Startups
The State of Public R&D Support in India
Challenges Faced by Deep Tech Startups
Government Initiatives and Policies
Comparative Analysis: India vs. Global Peers
Recommendations for Strengthening Support
Conclusion
Frequently Asked Questions (FAQs)

Introduction

India has set its sights on becoming a global powerhouse in technology and innovation, showcasing this ambition through strategic initiatives and increased investments in research and development (R&D). From fostering STEM education to promoting digital infrastructure and startup culture, the nation is clearly pushing forward. Yet, beneath this momentum lies a crucial and often overlooked concern: the support system for deep tech startups remains underdeveloped. A recent study, commissioned by the Office of the Principal Scientific Advisor and carried out by the Confederation of Indian Industry (CII) along with the Centre for Technology, Innovation, and Economic Research, brings this issue to light. The findings reveal a stark gap in institutional and financial backing for startups working on breakthrough technologies—those involving cutting-edge innovations in fields such as artificial intelligence, biotechnology, robotics, and quantum computing. These ventures often require longer gestation periods and higher risk tolerance, which makes them less attractive to traditional investors. This blog aims to explore the insights from the study, outline the specific hurdles these startups face, and discuss what measures are necessary to build a robust ecosystem that not only nurtures but propels deep tech entrepreneurship in India toward global relevance.

Understanding Deep Tech Startups

Deep tech refers to startups that emerge from breakthrough scientific discoveries or advanced engineering innovations. Unlike typical tech startups that might focus on apps or platforms, deep tech ventures delve into complex technologies that could transform industries or create entirely new ones. These startups often tackle significant global challenges—like climate change, healthcare, or computing—with innovative solutions.

Here are key characteristics that define deep tech startups:

High R&D intensity: They heavily invest in research and development, often pushing the boundaries of what's currently possible.
Extended timeframes: These startups typically have long development cycles and take years to bring a product to market.
Capital-intensive: The journey from lab to market requires substantial funding, often involving multiple investment rounds.
Interdisciplinary teams: Success in deep tech demands collaboration across physics, biology, computer science, engineering, and more.

Examples of deep tech areas include quantum computing, which could revolutionize problem-solving capacity; biotechnology, with its potential to cure diseases; advanced materials for stronger, lighter, or more sustainable products; and artificial intelligence, which powers smarter automation and decision-making.

Though risky, deep tech has the power to create lasting societal impact, offering transformative solutions to some of the world's most pressing problems.

The State of Public R&D Support in India

India’s public R&D ecosystem plays a critical role in driving innovation, but a recent study sheds light on several challenges that limit its broader impact, especially in nurturing startups and fostering deep tech innovation.

Limited Incubation Support: Alarmingly, only 25% of public-funded R&D institutions offer incubation facilities. This becomes more concerning when looking at deep tech startups—just 16% of these organizations extend support to ventures working on cutting-edge, high-risk technologies. Without proper incubation, many promising innovations struggle to evolve beyond the lab.
Minimal Industry Collaboration: Just 15% of public R&D bodies have collaborated with international industries. This suggests that India is missing out on valuable global partnerships that could enhance technology transfer, commercialization, and innovation exchange.
Restricted Access: About half of these institutions have opened their labs and resources to external researchers and students. While that’s a start, the limited openness still hampers collaboration, cross-pollination of ideas, and talent development.
Exclusion of Strategic Sectors: Notably, the study excludes strategic sectors like defense, space, and atomic energy due to national security concerns. However, these sectors consume a substantial share of R&D funding, and their exclusion means we lack a complete picture.

To realize India’s innovation potential, public R&D support must become more inclusive, collaborative, and globally connected—especially for deep tech startups.

Challenges Faced by Deep Tech Startups

Deep tech startups in India face a unique set of challenges that hinder their ability to innovate, scale, and compete globally. These barriers are multifaceted and deeply rooted in both systemic limitations and sector-specific demands.

Funding Constraints: Deep tech ventures require sustained investments due to their long R&D cycles and high upfront costs. In 2023, these startups secured only $850 million in funding—a sharp 77% drop from the $3.7 billion raised in 2022. This funding winter limits their ability to build prototypes, hire experts, or commercialize products.
Limited Access to Infrastructure: Many startups struggle to access high-end research facilities, as public R&D institutions often restrict or complicate their use. This deprives startups of critical equipment and expertise needed for early-stage development.
Talent Acquisition: Recruiting top-tier talent—especially scientists and engineers—is difficult. Established companies typically offer higher salaries and greater job stability, leaving startups at a disadvantage in the talent race.
Regulatory Hurdles: Sectors like biotechnology, healthcare, and aerospace are highly regulated. Startups often lack the legal expertise or resources to efficiently navigate these complex frameworks.
IP Challenges: Intellectual property is central to deep tech success, yet many startups lack awareness, legal counsel, and funds to effectively protect and monetize their innovations.

Government Initiatives and Policies

Recognizing the vital role of innovation in driving economic growth and global competitiveness, the Indian government has introduced a series of forward-looking policies and initiatives aimed at nurturing the startup ecosystem, especially in the deep tech space.

Atal Innovation Mission (AIM): Since its launch in 2016, AIM has played a key role in fostering innovation at the grassroots level. Through Atal Incubation Centres (AICs) and Atal Tinkering Labs (ATLs), it supports early-stage startups and encourages students to experiment with cutting-edge technologies, cultivating an innovation mindset from a young age.
National Deep Tech Startup Policy (NDTSP): Introduced in 2023, this landmark policy addresses core issues faced by deep tech startups, such as access to capital, infrastructure, and complex regulatory requirements. It aims to create a more enabling environment where groundbreaking technologies can thrive.
Space Sector Reforms: With a ₹10 billion fund approved in 2024, the government is actively encouraging private participation in the space sector. This investment reflects India’s ambition to expand its footprint in the $44 billion global space market by 2033.
Boost in R&D Spending: While India's GERD has doubled in the last decade to ₹1.27 lakh crore, it still trails behind innovation leaders globally, indicating room for more aggressive support.

These initiatives are promising, but their long-term impact on deep tech remains to be fully realized.

Comparative Analysis: India vs. Global Peers

A global comparison of R&D investment highlights key disparities between India and its peers in terms of funding, ecosystem support, and private sector involvement:

South Korea leads the pack, dedicating a substantial 4.8% of its GDP to R&D. Its success is driven by strong government backing and a thriving private sector that actively engages in research and innovation. South Korea’s model showcases the power of coordinated public-private collaboration.
China invests 2.4% of GDP in R&D, strategically targeting high-tech and emerging sectors. A hallmark of China's approach is its emphasis on collaboration between academia and industry, ensuring research outcomes are effectively commercialized and scaled.
The United States allocates 3.5% of GDP to R&D. Its innovation ecosystem is bolstered by dynamic startup culture, supported by venture capital, federal grants, and world-class research institutions that create a fertile ground for cutting-edge development.
India, in contrast, spends only 0.64% of GDP on R&D. Over 60% of this comes from government sources, with limited participation from the private sector. This underscores a pressing need to enhance industry involvement, foster academia-industry linkages, and develop funding mechanisms that encourage innovation across sectors.

Recommendations for Strengthening Support

To truly unlock the potential of India’s deep tech startup ecosystem, a multi-pronged, human-centric approach is essential. Here are key recommendations, expanded with context and clarity:

Enhance Funding Mechanisms
Deep tech ventures often require long development cycles and substantial capital. Dedicated funding schemes—such as innovation grants, low-interest loans, and targeted tax incentives—can reduce financial strain and encourage risk-taking.
Facilitate Access to Infrastructure
Startups often lack access to high-end labs or testing equipment. Public R&D institutions should be encouraged to share facilities with emerging companies, creating innovation clusters that foster collaboration and reduce infrastructure costs.
Streamline Regulatory Processes
Complex and rigid regulations can delay innovation. Simplifying approval processes, standardizing compliance protocols, and offering regulatory sandboxes can help startups move from lab to market faster.
Promote Industry-Academia Collaboration
Bridging the gap between academic research and commercial application is crucial. Joint R&D programs, talent exchanges, and mentorship networks can stimulate practical innovation and product development.
Strengthen IP Support
Many startups struggle with protecting their innovations. Dedicated IP cells, legal aid, and financial support for patent filing can empower founders to secure their competitive edge.
Encourage Private Sector Participation
Public-private partnerships and incentives for corporate R&D investment can bring in much-needed capital, market access, and industry expertise, further accelerating the growth of deep tech ventures.

Conclusion

India's journey towards becoming a global innovation hub hinges on its ability to nurture and support deep tech startups. While government initiatives have laid the groundwork, a concerted effort involving policy reforms, increased funding, and enhanced collaboration between stakeholders is essential. By addressing the existing gaps and challenges, India can unlock the full potential of its deep tech ecosystem, driving economic growth and technological advancement.

Frequently Asked Questions (FAQs)

Q1: What defines a deep tech startup?

A deep tech startup is characterized by its foundation in scientific research or engineering innovation, often involving significant R&D efforts, long development timelines, and substantial capital investment.

Q2: Why is support for deep tech startups crucial for India?

Supporting deep tech startups is vital for fostering innovation, enhancing technological capabilities, and driving economic growth. These startups can address complex challenges and contribute to strategic sectors like healthcare, defense, and energy.

Q3: What challenges do deep tech startups face in India?

Challenges include limited access to funding, infrastructure, and skilled talent; complex regulatory environments; and difficulties in protecting intellectual property.

Q4: How can the government enhance support for deep tech startups?

The government can enhance support by increasing funding, simplifying regulations, facilitating access to research infrastructure, promoting industry-academia collaboration, and strengthening IP protection mechanisms.

Q5: How does India's R&D spending compare globally?

India's R&D spending is approximately 0.64% of its GDP, which is lower than countries like South Korea (4.8%), China (2.4%), and the United States (3.5%).

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