Deep tech startup policy likely in new govt’s 100-day agenda; PLI scheme overhaul may have to wait

Last month, Rajesh Kumar Singh, Secretary, DPIIT said that the government is in the final stages of creating a dedicated policy for deep tech startups.

Finalising and implementation of the National Deep Tech Startup Policy (NDTSP) is likely to feature in the government's 100-day agenda after the elections. However, the long-pending review and expansion of the flagship production-linked incentive (PLI) scheme to ensure better utilisation may not be included, a senior government official said.

The agenda by Prime Minister Narendra Modi's government, confident of a rare third term in a row, lists policy measures to be implemented within 100 days of formation after the April-June Lok Sabha elections.

The policy for deep tech startups is intended to stimulate innovation, spur economic growth, and promote societal development through effective utilisation of deep tech research-driven innovations, according to the government's Principal Scientific Adviser. The policy is in the cabinet note stage.

“The Department for Promotion of Industry and Internal Trade (DPIIT) is formulating and finalising the cabinet note, since they have the startup domain. The policy tries to define deep tech startups and create a policy regime tailored towards helping them. Once the policy is approved, then there will be talk about specific schemes, on a separate funding window, whether it is a fund of funds or something else that is a little down the line. But as of now, the cabinet note is in the final stages,” the official said.

According to the draft policy, a deep tech startup involves early-stage technologies based on scientific or engineering advancements that are yet to be developed for commercial applications. It typically produces a solution along an unexplored pathway based on new knowledge within a scientific or engineering discipline or by combining knowledge from many disciplines.

Final stages
The draft policy, which had been made public for comments from stakeholders last year, identifies nine key priority areas that need intervention to create a conducive ecosystem for deep tech startups. These include increasing spending on research and development, facilitating targeted long-term funding, and creating regulatory sandboxes to provide a safe environment to test functionality and potential risks.

Last month, Rajesh Kumar Singh, secretary in the DPIIT, said the government is in the final stages of creating a dedicated policy for deep tech startups.

In July 2023, the central government unveiled the NDTSP for public consultation, with the aim of helping startups overcome challenges related to funding, access to the right talent, and scaling up their research and development operations. The draft policy says that initiatives taken for the startup community as a whole can be extended to deep tech startups as well.

Sectoral policies such as the Indian Space Policy 2023 enable deep tech startups in the space sector through the creation of an independent nodal agency, a predictable and enabling regulatory regime, delineating the roles of stakeholders with the government acting as an anchor investor, as per the draft policy.

Prioritising the policy for deep tech startups is significant when Elon Musk is likely to meet founders of space tech companies next week and may announce plans for his company SpaceX in India.

PLI Scheme
Unlike the draft policy for deep tech startups, an overhaul of the Centre’s flagship PLI scheme will not be taken up in the 100-day agenda, the official said. Instead, measures aimed at reviewing and expanding the output-linked scheme may feature in a broader five-year roadmap.

“Expanding the PLI scheme to sectors such as toys and footwear were on the anvil, but ultimately the new government will take a call. This won’t be on the 100-day agenda, since this is pending for some time, it has not been included, but it may feature in a broader five-year road map,” the official added.

The PLI scheme announced in 2021 covers 14 sectors including telecommunication, white goods, textiles, medical devices, automobiles, speciality steel, food products, high-efficiency solar PV modules, advanced chemistry cell battery, drones, and pharma with an outlay of Rs 1.97 lakh crore.

There has been chatter around the government expanding the PLI scheme to toys and footwear, which has been a long-standing demand of these industries. Beyond that, the commerce and industry ministry has been holding regular meetings to work out ways to enhance lower disbursals in sectors such as textile and steel.