DPIIT Redraws Startup Rules to Reflect DeepTech Reality

India’s startup policy framework has taken a notable step away from one-size-fits-all definitions. With the latest notification, the Department for Promotion of Industry and Internal Trade (DPIIT) has formally recognised DeepTech startups as a distinct category, reshaping how long-horizon innovation is evaluated, funded, and supported.

At its core, the update acknowledges a long-standing gap between policy timelines and the commercial realities of science-led ventures. Unlike consumer or software startups, DeepTech companies often spend years in research, prototyping, and validation before revenue scales meaningfully. The revised definition signals an attempt to align regulation with that reality.

A Formal Identity for DeepTech Startups

For the first time, DPIIT has introduced a clear definition of a “Deep Tech Startup”, distinguishing such ventures from conventional startups. The notification characterises DeepTech startups as those built on new scientific or engineering knowledge, marked by high R&D intensity, creation of novel intellectual property, extended development cycles, and significant technical or scientific uncertainty.

This formal recognition lays the foundation for differentiated treatment, whether in funding eligibility, evaluation criteria, or policy support, rather than forcing DeepTech ventures into frameworks designed for faster, market-ready businesses.

Longer Timelines, Higher Thresholds

One of the most consequential changes is the extension of the recognition period for DeepTech startups to 20 years from incorporation, compared to 10 years for other startups. Alongside this, DPIIT has raised the turnover ceiling to ₹300 crore for DeepTech startups, while the broader startup threshold now stands at ₹200 crore.

These changes reflect the long gestation periods, often spanning 10 to 15 years, required to translate deep research into commercially viable products, particularly in areas such as semiconductors, biotechnology, space technologies, quantum systems, and advanced materials.

By adjusting these limits, the policy reduces the pressure on DeepTech founders to “graduate” prematurely from the startup category before their technologies reach maturity.

Rather than relying solely on sector-based classifications, the notification adopts an attribute-driven approach to identifying DeepTech startups. R&D intensity, intellectual property creation, and scientific uncertainty take precedence over industry labels.

Importantly, DPIIT has retained the flexibility to issue additional frameworks and parameters for determining eligibility. This opens the door to future alignment with more objective measures, such as Technology Readiness Levels (TRLs), an approach frequently discussed in industry-policy dialogues as a way to ensure consistent and credible classification.

Recognition, Benefits, and Compliance

Startups seeking DeepTech recognition will need to submit additional documentation via the DPIIT portal to demonstrate compliance with the prescribed attributes. Once recognised, DeepTech startups will continue to qualify as “startups” for applicable benefits, including eligibility for certification under Section 80-IAC of the Income Tax Act, subject to existing conditions.

The notification also reinforces expectations around the use of funds. Investments in speculative or non-productive assets remain restricted, with an emphasis on deploying capital to core business activities such as research, innovation, scaling, and operations, to ensure public incentives support genuine value creation.

Industry Sees Policy Catching Up with Innovation Cycles

The revisions have been welcomed by parts of the ecosystem that have long argued for policy frameworks better suited to growth-stage and research-led ventures.

Dr Sunil Shekhawat, co-founder & CEO of SanchiConnect, highlighted the practical implications of the changes for founders navigating long innovation cycles.

“At SanchiConnect, we welcome the revised startup framework notified by DPIIT, which reflects an evolved understanding of how modern ventures are scaling. Expanding the startup definition to a turnover ceiling of ₹200 crore will allow many growth-stage startups to continue benefiting from policy support. The extended 20-year eligibility and enhanced ₹300 crore turnover cap for deep-tech startups is particularly encouraging, as such enterprises require longer gestation periods and sustained investment. These reforms will help founders focus on innovation rather than regulatory timelines, improve access to incentives and capital, and strengthen India’s position as a global hub for technology-led entrepreneurship. Overall, this is a timely and forward-looking move for the startup ecosystem.”

Taken together, the revisions point to a structural recalibration of India’s startup policy architecture. By explicitly differentiating DeepTech from other startup categories, DPIIT has moved closer to recognising that innovation-led enterprises operate on fundamentally different clocks.

For investors, the framework improves alignment with patient capital models. For founders, it reduces regulatory friction during long development phases. And for policymakers, it creates room to design future support mechanisms that reflect scientific risk rather than short-term revenue metrics.

While implementation details will matter, the updated definition signals a broader shift: India’s startup policy is beginning to reflect how deep innovation actually happens – slowly, experimentally, and often outside conventional growth timelines.