India is well known for being a global information technology (IT) services powerhouse. Now, its tech sector, powered by a surge in domestic venture capital and government support, is shifting into high gear, moving beyond back-end support into the frontier of deep-tech innovation.
Across India’s elite technology campuses, a new generation of startups is rising. At the Indian Institute of Technology (IIT) Madras campus alone more than 100 deep-tech startups were launched in the year ending March 2025, while students and researchers filed patents at a pace of more than one patent a day.
This momentum mirrors a national shift to redefine India from “being the back office of the world to becoming a global technology and innovation powerhouse,” as the country’s Minister of Commerce and Industry Piyush Goyal remarked recently.
Building on the country’s success in IT services, India is now mobilizing capital for deep tech or technologies that grounded in advanced scientific and technological breakthroughs that are often hard to replicate. This encompasses sectors such semiconductors, space and defense tech, life sciences, robotics and climate tech. According to Tracxn, as of July 2025, deep-tech companies in India have raised USD1.06 billion in equity funding across 137 rounds, double the amount raised in the same period in 2024. Last year, deep-tech startups attracted USD1.6 billion in total funding, a 78% increase from 2023.
“I think it's a good time to be a VC (venture capital investor) and an entrepreneur in India,” said Vikram Gupta, Founder and Managing Partner of IvyCap Ventures, a homegrown VC firm that invests in deep tech and other tech sectors.
“The government has started supporting startups in a big way, especially after January 2016 when they started bringing down regulations. That mindset and approach have encouraged a lot more startups. Entrepreneurs are quite mature now. They have seen this ecosystem, the cycles of fundraising, growth and exits. LPs (limited partners) have seen substantial exits, and the confidence in the startup ecosystem has multiplied. Foreign investors have experienced the full cycle, and domestic capital has substantially increased and continues to grow,” he added.
Rajat Tandon, President of the Indian Venture and Alternate Capital Association (IVCA), says that, until recently, startups looked offshore to Silicon Valley for deep-tech funding.
But a new wave of domestic VCs has entered the space, with partners who have significant tech experience from founding their own startups or working in global tech companies. That led to the emergence of specialized funds focused on deep-tech investing.
“We have people who’ve done tech investments and who’ve been in the tech environment come to invest. We have successful entrepreneurs who have already made money come back to invest in this asset class. So, a lot of specialized funds are coming in. We see more and more first-time, micro or founder VCs coming into play in this area,” said Tandon.
VC funding for deep tech as a share of total VC funding in India has grown in recent years (See Figure 1).
Deep-tech funding gaps
India’s deep-tech surge is a direct play into Prime Minister Narendra Modi’s vision to transform the nation into a developed economy by 2047. To reach this goal, reversing India’s historically low research and development investment (less than 1% of GDP) is critical. The government recently launched the Research Development and Innovation (RDI) scheme with an INR1 trillion (USD11.4 billion) budget to increase private sector R&D and seed a deep-tech fund of funds. The latter is seen as a boost for smaller VCs investing in India’s rapidly expanding startup opportunity set.
“I think now we are seeing different pockets of capital, including government capital, getting allocated for very high-risk opportunities at very early stages, which is boosting the entire ecosystem. And it is going to various incubation centers, various institutions supporting research projects or intellectual property creation. All that is creating a good set of opportunities for investors like us,” said Gupta. While seed funding for deep tech is more readily accessible, larger Series A to C investments have lagged, partly due to the nascent stage of this industry. But this could be an opportunity for global investors.
But this could be an opportunity for global investors.
“This is where the domestic VCs can play alongside global VCs, and make global VCs understand that there is merit in growth investments as well as exits,” Tandon added.
Increasing domestic liquidity, driven by a surge in retail investing, has allowed initial public offerings to flourish in recent years, making it easier for VCs and other institutional investors to monetize their investments and recycle capital.
India’s advantages
Until recently, tech investments in India have been largely concentrated on consumer tech, SaaS (software as a service), and fintech startups. But opportunities are now opening up in industries that are not traditionally closely associated with India.
“There’s a lot of investments into defense tech especially because the government is the customer and is also supporting research. Space tech has become a big opportunity. We’re seeing startups setting up end-to-end opportunities for launching different kinds of (space) vehicles at very low cost. Semiconductors historically haven’t been a big opportunity in India, but as manufacturing is moving to India, we’re seeing many manufacturing companies coming up in semiconductors, and I think it will offer further opportunities for boosting the entire AI ecosystem,” said Gupta.
While other countries like the US and China may have more mature deep-tech ecosystems and larger fund flows, India is banking on cost advantages and its deep pool of engineering and tech expertise to drive the industry onto the global stage. For instance, India produced around 2.5 million STEM graduates in FY2022-2023 and its IIT network boasts a formidable alumni base of over 200,000, with a number of them active in deep tech. In addition, India’s well-entrenched public digital infrastructure offers the foundation for innovation to grow from the bottom up.
Tandon says the aim is for deep-tech innovations to not only solve for India’s challenges, but also for the rest of the world, just like its IT services industry has done for decades.
“We understand deep tech takes longer to commercialize, but it does not take too much time to scale up. Yes, it requires complex tech, but we have the technical depth. We do have the infrastructure gaps, but then today the government is putting all its efforts into testing labs, IP enforcements, you know, and making our startups absolutely export ready,” said Tandon.
He adds that India has already proven itself in SaaS (Software as a Service), EdTech, FinTech, and e-commerce. “Now is the time for deep tech. This is one shuttle India cannot afford to miss.”
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