India is preparing to channel as much as $25 billion into deep-tech companies as the country seeks to build domestic capabilities in artificial intelligence, semiconductors, advanced manufacturing, drones and space technology and reduce its dependence on foreign suppliers.
The proposed investment would represent a significant expansion of India’s support for technologies that the government regards as important to economic and national security.
India invested $11.6 billion in deep tech over the past decade, according to Rajat Tandon, president of the Indian Venture and Alternative Capital Association. The government is now committing $11 billion through its Research Development Infrastructure Fund, with venture capital and private equity managers expected to match part of the funding.
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An additional $3 billion to $4 billion is expected to be added, bringing the potential pool available for deep-tech investment to about $25 billion, Tandon told CNBC.
The push comes as the United States and China maintain a substantial lead in frontier technologies, while geopolitical tensions have made access to foreign technology and components less predictable.
For India, the issue is not simply about producing more startups. It is about developing companies capable of controlling critical technologies domestically, particularly in areas where access to overseas suppliers can be affected by export controls, trade restrictions, or geopolitical disputes.
“Tariffs from the U.S. actually help this [Deep Tech] segment a lot,” said Anandamoy Roychowdhury, managing director of Crane Venture Partners.
He said India increasingly fears that “important technology can get cut off at any point.”
That concern has become more pronounced as Washington has tightened controls on the transfer of advanced technologies to foreign markets and companies.
Deep tech covers a broad range of technologies that generally require substantial research, engineering, and capital before they can generate significant commercial returns. Artificial intelligence, semiconductor manufacturing, robotics, drones, space technology and advanced industrial systems fall within the category.
Therefore, the sector presents a different financing challenge from conventional software startups.
Deep-tech companies can spend years developing hardware, proprietary technologies and manufacturing capabilities before reaching commercial scale. That increases their dependence on investors willing to provide large amounts of capital for longer periods.
India’s policymakers now see that financing gap as a strategic weakness.
“There is a dramatic acceleration of innovation” in India’s deep-tech sector, said Shweta Rajpal Kohli, president and chief executive of Startup Policy Forum. She said some companies are moving from prototypes to “real commercialization.”
Several Indian startups have already reached billion-dollar valuations. Vibe-coding company Emergent, space-tech company Skyroot and sovereign AI company Sarvam became unicorns this year after their valuations crossed $1 billion during fundraising rounds.
The challenge now is turning that emerging group of startups into companies capable of competing internationally.
India’s deep-tech ecosystem remains considerably smaller than that of the United States. According to an IVCA report, Indian deep-tech startups raised nearly $3 billion in 2025, a record for the sector even as overall startup funding in the country declined.
The comparable figure for the U.S. was $136 billion.
That difference highlights the scale of the financing challenge facing Indian companies. Government-backed capital can provide an initial boost, but startups developing chips, AI infrastructure, aerospace systems, or advanced manufacturing technologies typically need substantially more private capital as they move from research into commercial production.
Domestic Capital Remains A Bottleneck
The availability of capital, rather than the absence of technical talent, is increasingly emerging as one of India’s biggest constraints.
“Our challenge today in India is that only 2% of people are able to sign” checks above $10 million, Tandon said, arguing that wealthy individuals and family offices need to increase their exposure to deep-tech companies.
The problem requires a quick solution because deep-tech startups often require successive funding rounds before they can reach meaningful revenue. Venture investors can finance research and early product development, but companies eventually need much larger pools of growth capital to build factories, acquire equipment, establish supply chains, and expand internationally.
India’s government-backed approach is intended to help bridge that gap by attracting private capital alongside public funding. The IVCA said its survey of 100 funds found that nine out of 10 Indian funds were investing in deep-tech startups. About 37% held stakes in between 11 and 20 such companies.
The interest from investors is also becoming visible outside India’s traditional technology hubs.
“I feel like a kid in a candy store,” Roychowdhury said of his search for deep-tech investment opportunities in India. About 80% of Crane Venture Partners’ $150 million Asia-Pacific fund is currently concentrated in India, he said.
That enthusiasm contrasts with the relatively small amount of capital that has so far reached the sector.
Export Controls Sharpen India’s Push for Self-Reliance
India’s drive to develop domestic technology is also being shaped by the increasingly fragmented global technology landscape. The country has strong links to both the U.S. and China but does not control many of the critical technologies at the center of the current technology race. China dominates several parts of the manufacturing and hardware supply chain, while U.S. companies remain leaders in advanced AI models, computing infrastructure, and semiconductor technologies.
India’s position leaves it exposed when geopolitical tensions disrupt technology flows.
The restrictions placed by the U.S. on advanced technologies have highlighted that vulnerability. At the same time, Chinese technology is viewed with suspicion in India, creating another constraint on the country’s ability to rely on imports.
That leaves domestic development as a potential third route.
The government’s objective is therefore broader than encouraging another generation of software companies. The emphasis is shifting toward technologies that could determine India’s industrial capacity and technological autonomy over the coming decades.
The scale of the proposed funding also suggests that policymakers recognize that building such capabilities requires substantially more money than the country’s startup ecosystem has historically attracted. Still, $25 billion would not immediately close India’s funding gap with the U.S. Much of the capital will have to support companies whose technologies have long development cycles, uncertain commercial outcomes, and significant infrastructure requirements.
The more important test will be whether government funding can attract sustained private investment and help Indian startups move beyond prototypes into commercially viable businesses.
India already has the engineering talent and a growing pool of entrepreneurs. What has been missing is the depth of domestic capital required to finance the transition from promising technology to global-scale companies.
The new funding push is an attempt to address that weakness. If the government succeeds in mobilizing private capital around its commitments, India’s deep-tech sector is expected to move from an emerging startup category toward a more substantial part of the country’s industrial and technology strategy.