India’s deep-tech revolution: Paving the path to global innovation leadership

Before the economic liberalisation of 1991, the Indian economy relied heavily on agrarian cultivation, as the markets were closed and licence raj was prevalent, with few players controlling the majority of production. This led to Indian products being uncompetitive at the global level, with exports being below 4 per cent of India’s GDP and creating huge demand for imported goods in India.

Post-liberalisation and opening of the economy, India shifted its focus from being an agrarian economy to information technology and software engineering. India’s economic rise was fuelled by its ability to build products, complex engineering solutions and it labelled itself as a ‘back-end’ team of every major IT corporation across countries. India’s first unicorn was ‘InMobi’, a mobile advertising and consumer technology firm.

Though it was laudable that India became a global services powerhouse, it could not become a nation that owns, develops and exports foundational technologies. This next phase of transformation requires a deeper understanding of the deep-tech (deep technology) opportunity.

Deep-tech opportunity: Deep-tech start-ups' underlying technology is built on significant advances in scientific discoveries and hard engineering. Sectors shaping this landscape are semiconductors, quantum technologies, space systems, robotics, bio-technology, advanced materials and next-generation battery technologies.

The characteristic features of deep-tech start-ups are long R&D gestation periods, proprietary engineering innovation, core scientific or IP-driven breakthroughs, highly defensible technologies, significant research and technical barriers and strong patent-led platforms. It also requires specialised infrastructure, extensive testing and substantial capital before reaching commercial maturity.

These deep-tech start-ups create high-value employment, strengthen strategic supply chains, increase industrial productivity, reduce dependency on imported critical technologies or components and build entirely new industries. India has several ingredients to its advantage; it includes a young, strong & scientific engineering talent pool, world-class premier research institutions, growing entrepreneurial ambitions and expanding industrial base.

The deep-tech opportunity lies in bringing these strengths to create global-level products, while owning defensible intellectual property and lasting economic value.

The missing link

Research to market: Translating lab research (TRL 3) to commercially successful products (TRL 9) remains a daunting structural challenge. A promising laboratory prototype should demonstrate reliability standards, achieve repeatable performance, meet certification requirements, and attain manufacturing readiness.

The transition from scientific validation to commercial adoption is often termed the ‘valley of death’, where the majority of technologies fail due to the availability of patient capital, infrastructure availability, industry partnerships, market access or early customers. Though government support may fund initial research, venture capital typically seeks proof of technical validation, a commercial pipeline, early customers and a credible path to scale. Hence, traditional venture capital is not designed for this journey of deep-tech start-ups. This funding gap has to be addressed for India to convert its research prowess into globally competitive business.

Unique architecture: A growing range of government initiatives apart from RDI to address different parts of the innovation journey. This unique financing structure ensures that different technologies and stages of development require multiple forms of financing.

* The Government of India’s Research, Development & Innovation (RDI) scheme of Rs1 lakh crore aims to address the financing and ecosystem gap over six years to catalyse private-sector investment in high-impact research and innovation.

* SIDBI Fund of Funds for start-ups (FFS) of Rs10,000 crore, acting as a limited partner, channelising public capital into SEBI-registered AIFs for start-up investment.

* The Design Link Incentive (DLI) scheme supports semiconductor design companies with access to design infrastructure, IP and financing incentives. Indian Semiconductor Mission (ISM) helps strengthen semiconductor manufacturing and promote self-sufficiency of the chip ecosystem.

* Indian AI Mission of Rs10,300 crore helps bridge the AI infrastructure gap by deploying 18,000+ high-end GPUs.

* National Quantum Mission (NQM) of Rs6,000 crore has a goal to accelerate quantum technology R&D and build a self-reliant ecosystem.

* IN-SPACe financing includes a Seed Fund Scheme of Rs1 crore for start-ups, a Technology Adoption Fund of Rs500 crore, and a Venture Capital Fund of Rs1,000 crore.

* The National Green Hydrogen Mission seeks to build domestic capabilities across an emerging clean-energy value chain, including electrolysers, materials, and industrial applications.

As a product nation: To become a ‘product nation’, India needs more than research expenditure; it needs an entrepreneurial research ecosystem about converting research know-how into world-class defensible technology, while owning IP and creating enterprise value. Universities and research institutions should act as centres of venture creation.

India’s deep-tech opportunity is ultimately about economic competitiveness and technological sovereignty. The objective is not to manufacture everything domestically but to develop ownership in critical technologies, build strong domestic capabilities and compete globally on innovation.

The author is Founder and Managing Partner, Unicorn India Ventures