Union Budget 2026: India's deeptech moment needs policy patience, not just capital

As venture capital flows into Indian deeptech, founders and investors say Budget 2026 must deliver policy patience, execution support, and long-term certainty to convert promise into globally competitive outcomes.

As the Union Budget 2026 approaches, expectations in the startup and venture capital ecosystem are running high. With investor interest in deeptech accelerating, spanning semiconductors, climate systems, industrial technologies, and defence; the focus is shifting beyond the availability of capital. Founders and investors are increasingly looking to the Budget for policy patience: long-term certainty, execution-focused support, and frameworks that recognise the extended gestation cycles inherent to deeptech innovation.

According to Ankit Kedia, Founder and Lead Investor at Capital-A, Indian deeptech has entered a phase where innovation, entrepreneurial talent, and early-stage capital are actively converging. Investor interest now cuts across software-led deeptech, climate systems, industrial technology, and advanced hardware, signalling growing confidence in the ecosystem’s technical depth.

“At this stage, outcomes are shaped by how efficiently companies progress from working prototypes to dependable commercial deployments. The Union Budget can play a decisive role by strengthening this execution layer. Applied engineering grants linked to certification and validation milestones, streamlined regulatory pathways for testing and approvals, and predictable tax treatment for long-cycle development and pilot costs directly accelerate scale. These interventions translate investor interest into sustained commercial outcomes.”

Deeptech value creation, however, unfolds over extended timelines shaped by engineering maturity, qualification cycles, and the slow build-up of customer trust. In this journey, public procurement plays a pivotal role globally by providing credibility, reference deployments, and pathways to long-term revenue once qualification is achieved. “India’s Union Budget can strengthen this lever through mission-aligned procurement programmes with clear technical benchmarks and predictable evaluation timelines,” Kedia added.

Echoing the need for long-term policy credibility, Pranav Pai, Managing Partner and Chief Investment Officer at 3one4 Capital, told Business Today that the Government of India’s Research, Development and Innovation (RDI) scheme is the most credible, long-term deeptech policy initiative the country has announced so far.

The RDI Scheme is India’s Rs 1 lakh crore flagship initiative, launched in late 2025 by the Department of Science and Technology, to catalyse private-sector R&D in high-impact technologies such as AI, quantum computing, energy, and biotechnology, with the goal of strengthening technological self-reliance.

The key expectation from Budget 2026, he said, is continuity and credibility, clear safe-harbour provisions and assured, multi-year funding that allows founders and investors to plan a 15-year innovation marathon with confidence.

“There is also a strong case for aligning tax incentives with India’s deep tech ambitions,” Pai added. As the government evaluates incentives across FII, FDI, and sovereign capital, investments into deeptech startups and IP-led projects would benefit materially from a long-term regime similar to the US QSBS framework.

“A clearly articulated 15-year roadmap combining RDI capital with predictable tax incentives can give Indian innovators the runway needed to build globally competitive deep tech companies,” he says.

The semiconductor sector, in particular, is emerging as a key test case for India’s deeptech ambitions. Shashwath TR, Co-founder and CEO of Mindgrove Technologies, says the sector stands at a pivotal moment to supercharge India’s chip design ecosystem. “Beyond initial prototyping support, we need a holistic strategy. Collaborative testing and fab facilities, robust talent pipelines, strong local demand, and clear paths to global competitiveness and this demands expanded access to EDA tools and IP cores for startups building VLSI expertise, plus public-private R&D to tackle fabless design bottlenecks.”

“Targeted investments in critical sectors will cut import reliance and power high-performance chips essential for national security. Upgrading Design Linked Incentives (DLI) and scaling talent skilling will position India as a global chip design hub. Bold allocations here will forge resilient, homegrown value chains and drive economic strength,” he added.