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Addressing a long-standing demand of the homegrown startup ecosystem, the Centre has notified a revised definition of startups, significantly relaxed the framework for deeptech entities to be recognised as a startup.
As part of its efforts to support long-gestation, R&D-intensive ventures, the central government said that deeptech startups will now qualify for recognition and benefits for up to 20 years, with a higher turnover threshold of INR 300 Cr.
To qualify, startups must be working towards innovation, product or process improvement, or operate a scalable business model with high potential for employment or wealth creation.
These startups will be eligible to apply for tax benefits under Section 80-IAC of the Income-tax Act, subject to certification by an inter-ministerial board comprising representatives from DPIIT, the Department of Biotechnology and the Department of Science and Technology.
Deeptech startups have been defined as entities working on scientific or engineering-led innovation, with high research and development expenditure, significant intellectual property (IP) creation. These companies also have longer gestation periods which are often characterised by higher capital and infrastructure requirements. This is the first time that the Union government has defined the deeptech ecosystem.
The notification also tightens compliance norms. Recognised startups must primarily deploy funds towards core business activities such as innovation, research, scaling and operations and not for building land, own business purposes, among others. The government has also reserved the right to revoke recognition or tax certification if it is found to have been obtained on the basis of false information.
Beyond deeptech, the broader startup ecosystem, will continue to be eligible for recognition for up to 10 years from incorporation, with an annual turnover cap of INR 200 Cr.
The revised rules are expected to provide greater policy certainty and a longer growth runway for India’s deeptech ecosystem, aligning regulatory definitions more closely with the capital-intensive and time-consuming nature of scientific and engineering innovation.
“This change unlocks a meaningful pool of domestic capital and removes a structural bottleneck that many high‑quality companies were facing. This directly enables capital formation. Several companies in our pipeline were held back simply because they fell outside earlier definitions, despite having strong technology depth and commercial traction. This is a critical move toward building long‑cycle, globally competitive deeptech businesses from India,” Artha Ventures’ Anirudh Damani said.
The post Centre Increases Recognition Period For Deeptech Startups To 20 Years appeared first on Inc42 Media.
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