Government Eases Funding Norms to Boost Deep-Tech Start-ups

₹1 Crore Funding Boost for Deep-Tech Start-ups: A Policy Shift with Loose Ends

On 6 January 2026, the Union government announced the removal of the three-year viability criterion for deep-tech start-ups seeking financial assistance up to ₹1 crore under the Industrial Research and Development Promotion Programme (IRDPP), overseen by the Department of Scientific and Industrial Research (DSIR). This marks an ambitious shift in how India supports its nascent deep-tech ecosystem, with the aim to energise innovation pipelines in frontier technologies like quantum computing, AI, and green hydrogen.

A Break From the Pattern: Early-stage Support Finally Acknowledged

The decision is significant precisely because it shatters the cumbersome eligibility norm requiring start-ups to demonstrate their financial sustainability for three years. For deep-tech innovators, whose research gestation periods often extend far longer — due to technological complexities and the absence of “quick commerce” revenue models — this change promises to bring relief. It acknowledges what should have been obvious: disruptive technologies rarely align with immediate sustainability goals.

The funding revision also aligns with the broader ambitions under India’s ₹1 lakh crore Research Development and Innovation (RDI) Scheme, introduced in the Union Budget 2025–26. Notably, ₹20,000 crore from the scheme is already allocated for FY 2025–26, managed by the Department of Science and Technology (DST). By removing procedural rigidities for deep-tech funding, the government positions itself to support innovation beyond incremental improvements.

The longer-term implications are noteworthy. As supply-chain geopolitics accelerates under the “China+1” strategy, India’s deep-tech sector could attract R&D partnerships and investment as global entities increasingly seek alternatives outside Beijing’s sphere. The irony, however, is that while the funding norms have been relaxed, the scale of support — capped at ₹1 crore per start-up — may prove insufficient for high-risk domains like semiconductors or space technologies.

The Institutional Machinery: DSIR and Legal Underpinnings

The DSIR, functioning under the Ministry of Science and Technology, derives its mandate from Section 3 of the Technology Development and Innovation Act, granting it powers to finance industrial research. Under the IRDPP, the department could previously only extend funding to start-ups with proven viability, a design intended to guard government resources against speculative failures.

Despite this shift, critical questions around execution persist. While the ₹1 crore cap addresses initial stages, deep-tech innovation demands sustained investments due to high capital requirements for R&D infrastructure, testing, and industry-grade prototyping. There’s also ambiguity over coordination between DSIR and DST as both administer overlapping schemes. Fragmented governance invites inefficiencies, especially in assessing technology readiness levels (TRL) highlighted in the RDI Scheme objectives.

Promises vs Reality: The Data Tells a Mixed Story

The ₹1 lakh crore RDI Scheme sounds transformational, but the first tranche — ₹20,000 crore for FY 2025–26 — pales compared to global investments. For instance, South Korea committed over $10 billion (₹82,000 crore) in 2023 alone to develop strategic technologies such as semiconductors and advanced robotics. India’s funding pool, while impressive on paper, may struggle against existing structural gaps in public-private partnerships.

The challenges don't stop at funding quantum. Official claims about cutting-edge research often fail to reflect ground realities of innovation ecosystems. For instance, India filed 58,502 patents in FY 2022–23, a significant rise but far below China’s staggering 1.4 million filings in the same period. Without a robust Intellectual Property Rights (IPR) infrastructure and clearer pathways for tech-commercialisation, disruptive innovation risks remaining theoretical.

The Uncomfortable Questions: Regulatory Capture and Pay-out Constraints

What no one is asking — yet — is whether relaxed norms invite exploitation. The deep-tech funding ecosystem might become vulnerable to regulatory capture, where well-connected entities absorb public funds without delivering substantive technological advancements. The absence of stringent mid-term appraisal systems or termination clauses adds to this risk.

Furthermore, implementation bottlenecks remain unaddressed. While the Ministry has removed sustainability requirements as an entry barrier, it is unclear how technical rigor will be assessed in sectors demanding specialised knowledge. Will DSIR rely exclusively on bureaucratic committees, or will independent scientific review boards play a role? Much depends on these mechanisms, and history illustrates that fund allocation without stringent oversight easily devolves into fragmented inefficiency.

International Contrast: South Korea’s Aggressive Deep-Tech Playbook

India’s regulatory shift invites parallels from recent global initiatives, particularly South Korea's strategies to dominate semiconductors. In 2023, Seoul committed $10 billion for R&D in its state-funded K-Semiconductor Strategy, integrating direct grants with tax incentives and streamlined approvals for startups. Unlike India’s ₹1 crore cap, Korea gives scalable access to billions in tech financing while also incentivising continual innovation through strong patent protection frameworks.

What differentiates Korea’s model is its emphasis on leveraging both universities and industries as co-partners in deep-tech incubation. India’s fragmented funding landscape between DST, DSIR, and state-level agencies lacks such cohesive design.

Practice Questions for UPSC

Prelims Practice Questions

Frequently Asked Questions