Indian government extends startup status to 20 years for deep tech

The Indian government has updated its startup framework, extending the period for which deep tech companies are treated as startups to 20 years. Alongside this extension, the government raised the revenue threshold for startup-specific tax, grant, and regulatory benefits to ₹3 billion (about $33.12 million), up from the previous limit of ₹1 billion (around $11.04 million). This policy shift aims to align state support with the extended development cycles typical of science- and engineering-led businesses, which often take far longer to mature than conventional ventures.

According to Siddarth Pai, founding partner at 3one4 Capital and co-chair of regulatory affairs at the Indian Venture and Alternate Capital Association, the updated framework helps companies avoid a “graduation cliff”—the point where startups lose regulatory support as they scale. The policy changes complement the ₹1 trillion (around $11 billion) Research, Development and Innovation (RDI) Fund, a government-backed fund for deep tech announced last year. The RDI Fund is intended to expand patient financing, which is defined as capital provided with a long-term horizon, suitable for R&D-heavy companies. Arun Kumar, managing partner at Celesta Capital, noted that the fund is designed to address chronic gaps in follow-on funding without altering the commercial criteria that govern private investment decisions.

While the policy reduces friction in fundraising and engagement with the state, investors emphasize that access to capital remains a constraint. Vishesh Rajaram, founding partner at Speciale Invest, noted that “The biggest gap has historically been funding depth at Series A and beyond, especially for capital-intensive deep tech companies.” To help address these gaps, private investors have formed the India Deep Tech Alliance, a $1 billion-plus private investor coalition that includes Accel, Blume Ventures, Celesta Capital, Premji Invest, Ideaspring Capital, Qualcomm Ventures, and Kalaari Capital, with chipmaker Nvidia acting as an adviser.

The policy adjustments arrive as funding shows signs of recovery. According to data from Tracxn:

• Indian deep tech startups raised $1.65 billion in 2025, up from $1.1 billion in both 2023 and 2024, though still below the 2022 peak of $2 billion.
• To date, Indian deep tech startups have raised a total of $8.54 billion.
• By comparison, U.S. deep tech startups raised about $147 billion in 2025, while Chinese deep tech startups raised roughly $81 billion.

Pratik Agarwal, a partner at Accel, noted that deep tech companies operate on seven- to 12-year horizons, and the extended regulatory lifecycle gives investors greater confidence that the policy environment will not change mid-journey. Agarwal added that the shift shows India is learning from the U.S. and Europe on how to create patient frameworks for frontier building.

Why it matters

The Indian government is extending startup status duration and raising revenue thresholds for deep tech companies to better align with their long development cycles, aiming to reduce “false failure signals” and improve access to capital.