National Deep Tech Startup Policy: An Overview
Context
The preliminary version of the National Deep Tech Startup Policy (NDTSP) has been made public for feedback. The main goal of this policy is to strengthen India's position in the global deep tech value chain, focusing on key areas such as semiconductors, Artificial Intelligence (AI), and space technology.
Meaning of Deep-Tech
The term "deep-tech startup" lacks a precise definition, but it generally refers to startups that emerge from research-based disruptive innovations originating in STEM labs at academic and research institutions. These startups are characterized by their ability to address complex problems and tackle challenging issues.
Scope of the Policy
The core objective of the policy is to fortify India's position in the global deep tech value chain, with particular emphasis on semiconductors, Artificial Intelligence (AI), and space tech. Its primary focus is on empowering research and development in deep tech startups, streamlining intellectual property regulations, providing financial support, and nurturing the growth of these startups through various means. Notably, the policy targets deep tech startups that tackle fundamental and technical challenges, setting them apart from companies that primarily capitalize on technology through innovative business models. Additionally, the policy outlines strategies for funding deep tech startups during critical stages, such as before their products or ideas are launched in the market.
Notable provisions of the policy
India's National Deep Tech Startup Policy, aiming to fuel the country's knowledge-driven economy, encompasses a range of strategic initiatives.
Strengthening the research and innovation ecosystem is at its core, fostering scientific breakthroughs and technological advancements. To attract international deep tech startups, the policy emphasizes bolstering the Indian intellectual property regime and ensuring competitiveness.
Facilitating access to diverse sources of capital is another vital aspect of the policy, achieved through specialized funding programs, increased venture capital, angel investments, and tailored government financial support avenues. Encouraging a culture of industry-relevant research in academia is also highlighted, with an emphasis on translating such research into product and technology leads.
To expedite product development, the policy advocates for infrastructure and resource sharing with academic institutions, R&D laboratories, and large manufacturing corporations. For hardware-based deep tech startups, the creation of facilities for product prototyping and validation is sought.
Streamlining the regulatory environment for innovation is a key focus, aiming to create a conducive atmosphere with clear requirements, exemptions, and incentives. Retaining and attracting the finest human capital is also highlighted, emphasizing equity, diversity, and inclusion as core principles.
Furthermore, the policy promotes the adoption of indigenous deep technologies, both in the public and private sectors, through favorable procurement rules and innovative adoption mechanisms. The aim is to tap into global markets and position India in the global deep tech value chain.
In alignment with existing national policies and missions, the policy seeks to solve local, societal, and business problems, focusing on key sectors of national interest. Additionally, the policy addresses the sustenance of deep tech startups, providing targeted solutions to overcome the challenges during the Valley of Death (VoD) phase, such as funding limitations, resource constraints, business knowledge limitations, and risk management.
It recommends the establishment of an Export Promotion Board to facilitate their entry into international markets and advocates for the inclusion of provisions in foreign trade agreements to ensure favorable market access.
To attract global talent and expertise, the policy proposes resource-intensive measures, including networking opportunities and attractive incentives (visa and immigration support) for international experts interested in contributing to India's deep tech ecosystem.
Recognizing the diverse nature of deep tech and its intersection with different ministries, the policy suggests the formation of an "Inter-Ministerial Deep Tech Committee." This committee would be tasked with reviewing and coordinating the necessary requirements to create a thriving deep tech ecosystem.
The focus of the NDTSP is directed towards deep tech startups operating in the defense and space domains, with the primary goal of augmenting their role in bolstering national security and advancing space exploration efforts.
Furthermore, the policy highlights the importance of engaging with international partners and multilateral institutions in a well-coordinated manner. This strategic approach is crucial for safeguarding India's interests in deep tech development and manufacturing on the global stage.
Challenges NDTSP aims to overcome
Deep-tech startups have a longer development timeline, typically requiring 5-8 years to reach revenue, compared to 1-3 years for other startups.
These startups need more capital, specialized talent, and expert knowledge in multiple domains to develop and validate science-based innovations.
Deep-tech startups face higher risks of failure at every stage, as they must identify real-life problems and validate market demand for their technology.
Most venture funds in India prefer lower-risk investments, focusing on startups in the consumer economy or those with cloned products.
Academic researchers in India face challenges converting their research into deep-tech startups due to a lack of entrepreneurial mindset and limited resources and support from incubators and policymakers.