The government’s focus on deeptech startups, via the recently announced India AI mission, is a “good starting point” to building a conducive investment environment for the sector, according to industry stakeholders.

The mission’s focus on accelerating research and development (R&D) in these companies, experts say, will bolster innovation and create new business models in the sector.

The Union Cabinet, last week, approved an outlay of Rs 10,372 crore for five years for the India AI Mission, aimed at fostering innovation in artificial intelligence through public-private partnerships (PPPs).

Of this, close to Rs 2,000 crore has been earmarked for financing deep-tech startups, with a focus on accelerating R&D in these firms.

The move will provide much-needed financial assistance to deeptech startups in the country, an area which founders say has been a major roadblock for innovation in the sector.

“The complex nature of their (deeptech startups’) projects, extended development cycles, and perceived risks all contribute to the repeated rejections they face,” said Avi Dahiya, founder and chief executive officer (CEO), Twyn – a deeptech enterprise software-as-a-service (SaaS) startup.

According to industry estimates, there are around 3,000 deeptech startups currently operating in India, less than 20 per cent of which have been able to secure proper financial support.

Industry stakeholders say that the Rs 2,000 crore budgetary allocation for the sector is a good start towards building a conducive investment environment in the country.

“Though Rs 2,000 crore is not a very big amount, it has set the tone for the country’s venture capital or investment ecosystem,” said Amiya Kumar Samantaray, founder and CEO, Datoms – a deeptech Internet of Things (IoT) startup.

“This allocation of a dedicated budget and the AI mission has made AI the talk of the town in the venture capital (VC) ecosystem, which would bring more investors to start looking for ideas in the sector,” he added.

That being said, experts say that the investor community will be keen on getting clarity in areas such as regulations, and data sharing policies.

Sunil Shekhawat, founder and CEO, SanchiConnect – a community for deeptech startups, is of the view that the mission will also promote new corporate social responsibility initiatives for promoting deeptech startup R&D via technology business incubators (TBIs) and government-supported incubators.

Moreover, the focus of the mission to accelerate R&D in deeptech AI startups is expected to further open up opportunities and support the creation of new business models.

“Across sectors, there is a growing realization that R&D is not an option; it is a necessity to stay competitive. The excellence in R&D is no longer limited to tech giants; even startups and small and medium-sized enterprises are actively investing in R&D,” said Dahiya.

The AI mission is in line with ongoing governmental efforts to bolster innovation in the deeptech sector.

In July last year, the government unveiled the Draft National Deep Tech Startup Policy (NDTSP) for public consultation, with the aim to help startups overcome challenges relating to funding, access to the right talent, and scaling their research and development operations.

Later in December 2023, the Department for Promotion of Industry and Internal Trade (DPIIT) said that consultation for the Deep Tech Startup policy was over and a draft Cabinet note was in the works.

The approval of the India AI Mission, industry watchers say, is a strategic leap forward in positioning India as a global leader in AI by “democratizing access to artificial intelligence.”


“The creation of an AI marketplace focused on building a larger ecosystem signifies a pragmatic initiative, streamlining access to critical resources and fostering collaboration within the AI ecosystem,” said Soumendra Mohanty, chief sales officer (CSO), Tredence – an AI and data analytics firm.


Datoms’ Samantaray says that the mission also opens up avenues for government departments to work directly with startups across various areas of AI and solve problems that are very specific to India.

With the availability of proper funding and support, the number of AI startups is likely to increase significantly. As per industry estimates, India is expected to be home to over 10,000 deeptech startups by 2030.

First Published: Mar 10 2024 | 7:52 PM IST

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