India’s deeptech start-ups get a 20-year window as policy catches up with R&D reality

The Department for Promotion of Industry and Internal Trade (DPIIT) has significantly broadened the policy framework for deep-tech startups, extending the period of official recognition to 20 years from the date of incorporation. The change, notified through a recent gazette, marks a sharp departure from the earlier regime, under which startups across sectors were eligible for recognition and benefits for only 10 years.

The revised definition applies specifically to startups classified as deep-tech entities, reflecting the government’s acknowledgment that science-led, IP-intensive businesses follow far longer development and commercialisation cycles than consumer or services startups. By offering a longer runway, the policy aims to align regulatory recognition with the realities of deep-tech innovation, where years of research, prototyping and validation often precede meaningful revenue generation.

Investors have welcomed the move as a long-overdue correction. Artha Venture Fund Managing Partner Anirudh A. Damani said the expanded definition addresses a structural constraint that had kept many promising companies outside the formal startup framework.

“The revised DPIIT definition is a very positive and timely step. Extending recognition for deep-tech startups to 20 years with a higher turnover threshold acknowledges the reality of how these companies are built. This change unlocks a meaningful pool of domestic capital and removes a structural bottleneck that many high-quality companies were facing,” Damani said.

He added that several ventures in Artha’s investment pipeline were previously ineligible for startup benefits despite having strong technology depth and commercial traction. “From our perspective, this directly enables capital formation… This is a critical move toward building long-cycle, globally competitive deep-tech businesses from India,” he said.

Alongside the expanded recognition window, the gazette notification also lays down clear conditions on how recognised startups—including deep-tech firms—can deploy their funds. Startups are required to use capital primarily for core business activities such as innovation, research, scaling and operations. They are restricted from deploying funds into speculative or non-productive assets, including residential real estate, high-value luxury assets, or investments unrelated to their core business, except where such activities are integral to operations or held as stock-in-trade. Restrictions also apply to loans, advances, capital contributions and investments in securities, unless these are incidental to business needs or treasury operations.

Vishesh Rajaram, Managing Partner at Speciale Invest, described the policy shift as a strong signal of intent. “This is a decisive and forward-looking move by the government. By formally recognising deep-tech startups and giving them a longer runway, India is aligning policy with the realities of science-led innovation,” he said, adding that it boosts confidence for founders and investors to commit long-term capital.

Ajay Modi, Investment Director at Piper Serica VC Fund, noted that the earlier definition often worked against deep-tech founders. “Most deep-tech companies spend seven to eight years in intensive R&D and lab-scale validation, often losing their startup status just as they enter early commercialisation,” he said.

By correcting this mismatch, the new framework improves access to growth capital, grants and institutional funding at a critical inflection point—from lab to market—strengthening India’s frontier technology ecosystem and its ambition to build globally competitive deep-tech champions.