India’s Deep-Tech Moment: Building innovation for a $10 trillion future

Deep-tech ventures have longer gestation periods, complex technical risks, and often don’t align with traditional venture capital timelines.

By Anjali Bansal

India is at a pivotal inflection point in its innovation journey. With over 1.59 lakh DPIIT recognised startups that have created over 17.6 lakh direct jobs, India’s startup ecosystem has emerged as an engine of innovation and economic activity. Today, we are uniquely positioned to take a strategic leap forward by focusing on frontier sectors such as energy, food systems, critical and advanced materials, biotech, mobility, space, and industrial innovation—areas critical to shaping our future economy. To realise the ambition of a Viksit Bharat by 2047—from today’s ~$4 trillion baseline to a projected $10 trillion economy within the next decade—will require deliberate investment in foundational innovation and deep tech, with solutions built in India, both for India and for the world.

India has the scientific and entrepreneurial talent to make this shift. We have a proven playbook from our digital transformation over the last 15 years—initiatives like Aadhaar and UPI succeeded through interoperable infrastructure, supportive policies, and enabling regulatory frameworks and have demonstrated what is possible when these elements align. A similar, cohesive ecosystem of enablers—shared infrastructure, domestic demand, regulatory support, and capital—is now essential to accelerate our deep-tech momentum.

Deep-tech startups require access to specialised labs, pilot-scale facilities, and manufacturing capabilities to validate and refine their technologies. The IIT Madras Research Park is an example of an ecosystem where academic research, startup incubation, and industry collaboration are helping to create deep-tech leaders.  BIRAC, under the Department of Biotechnology, has played a pivotal role in supporting early-stage biotech ventures through incubators, seed funding, and grant support. IDEX grants and support from the Armed Forces and DRDO have led to a vibrant defence oriented deep-tech sector. The creation of Anusandhan National Research Foundation (ANRF) further strengthens this institutional foundation—acting as an apex body that aligns strategic R&D with national objectives, while fostering cross-sector collaboration. DPIIT’s MoUs to promote domestic deep-tech and manufacturing and the recently expanded FFS 2.0 scheme are aimed at boosting venture funding access for deeptech. This shared infrastructure approach for labs and pilot scale manufacturing and supply side incentives extended across advanced materials, green manufacturing, biotech, precision engineering, and agriculture  would serve as the proverbial runway for deep-tech to take off.

Equally important is the role of demand-side enablers. Indian innovators need access to a domestic market willing to adopt and validate new technologies. Countries such as Germany and Israel have demonstrated how early industry adoption of domestic innovation can accelerate commercialisation. The public sector, particularly in infrastructure, energy, defence, and urban development, can be an enabling first customer. Providing access through paid pilots, time-bound procurement schemes, and performance-based contracts can dramatically reduce the risk burden on startups and give them the operational track record needed to attract follow-on investment. Early revenue is the best form of capital. We are seeing promising efforts on this front, with ministries and agencies increasingly engaging with startups through challenge grants and pilot programs. These efforts need to be institutionalised and scalable.

Large corporations must actively invest—not only as early customers but as collaborators and co-creators. This means allocating budgets for open innovation, hosting sector-specific challenges, and creating structured pathways to partner with startups. Achieving global competitiveness through innovation - both from internal R&D and through targeted academic and startup partnerships needs to be a Board and C-Suite level imperative. There is a need for corporations to create win-win partnerships with external innovators and to bypass the traditional procurement processes when bringing these innovations in-house. The boundaries between corporate R&D, academic research, and entrepreneurial innovation must continue to blur.

This evolution calls for a purposeful reorientation of our innovation priorities. Between 2019 and 2023, deep-tech startups in India attracted approximately $10 billion in funding that accounts for only 5% of India’s total startup funding, significantly lower when compared to leading countries where ~35% of capital is going to deep-tech. For 40 years, the country’s R&D spends have stayed under 0.7% of GDP—one of the world’s lowest—with corporate India contributing only 36%, compared to 70% in the US, 79% in China, and 57% in the EU. There is an urgent need to step up not just Research but also the Development and Engineering (D&E) stages that turn scientific promise into market-ready solutions.

A timely example is India’s rare earth deposits. While we possess significant reserves of these critical minerals, we must rapidly invest to build the refining and engineering capabilities needed to convert them into high-value, end-use components

Deep-tech ventures have longer gestation periods, complex technical risks, and often don’t align with traditional venture capital timelines. India needs a broader spectrum of financing instruments—early catalytic capital, innovation-linked debt, and blended finance models that allow commercial investors to participate as the companies scale up. Public development finance institutions and commercial banks have to step in with innovation-linked products for equity, first loss, abd debt for working capital and capex.

The challenge lies in balancing long-term investments in deep tech with short-term economic gains. Patient capital combined with strong technical and business teams oriented to building fundamental unit economics can build scaled business and outsized returns over time.

India is high on ambition, and the foundations are being built. We are witnessing the green shoots—from increased policy focus and capital interest to emerging deep-tech clusters and early commercial traction. With the right enablers in place, we have the opportunity to build a globally competitive deep-tech ecosystem.

(Anjali Bansal is Founding Partner of Avaana Capital.)

Views are personal, and do not represent the stance of this publication.