What is the story about?
India’s deep tech ecosystem is entering a more consequential phase, where revenue visibility, IP-led innovation and execution discipline are beginning to matter more than grand narratives. Over the past year, founders, investors and incubators have quietly recalibrated how deep tech startups are built and funded, even as the sector clocked more than $8.51 billion in funding, as per Tracxn report, over the last decade.
While talking to CNBC TV18, experts highlighted one theme clearly: the ecosystem is maturing, but only for those who can move beyond proof-of-concept and demonstrate real-world adoption.
Where traction replaced talk
Anand Sri Ganesh, CEO of NSRCEL at IIM Bangalore, said several deep tech segments showed genuine commercial promise this year, including AI and GenAI, robotics, IoT, drones and defence technology, medical devices, and biotech and life sciences. What differentiated these startups, he noted, was not novelty but preparedness.
“Most startup founders came with good industry and operating experience, and many of the ideas were rooted in IP or research-led discovery,” he said. Founders are increasingly validating both business and technical propositions before going to market, while building operational capability early.
Data from Tracxn reinforces this shift. Amid a challenging investment environment, where the broader Indian technology sector recorded a 15% year-on-year decline in funding in 2025 YTD, India’s Deep Tech ecosystem has shown notable resilience. The sector attracted $1.57 billion in funding during the same period, marking a 25.8% increase over the previous year. Investment activity was predominantly concentrated at the early stage, which raised $966 million and accounted for 61% of total Deep Tech funding. This was followed by late-stage rounds at $345 million and seed-stage investments totaling $262 million, underscoring growing investor confidence in early-stage Deep Tech startups across the country.
According to Neha Singh, Co-founder, Tracxn, generative AI clearly outperformed other segments in 2025 year-to-date, raising $417.6 million, a 201.8 per cent year-on-year increase. Drones and space technology followed with $179.3 million and $172.8 million raised, respectively, both posting strong growth.
“The strong traction in generative AI is being driven by rapid advances in AI capabilities and accelerating enterprise adoption,” Singh said, adding that defence and space startups benefited from sustained government procurement, enabling a transition from pilots to multi-year contracts and production orders.
Revenue quality over fundraising buzz
For investors like Ashish Taneja, Founding Partner and CEO at growX ventures, the real signal was not capital inflows but revenue behaviour. Defence and aerospace systems, space-tech subsystems, industrial robotics, AI-led enterprise infrastructure and climate-resilient agri-tech stood out.
“The strongest signal was pilots converting into repeat contracts, procurement-led demand from government and large enterprises, and early visibility on unit economics despite low production volumes,” Taneja said. Startups solving mission-critical problems with integrated hardware-software stacks and regulatory readiness consistently outperformed those chasing premature scale.
Anjali Bansal also pointed to a visible shift from early promise to commercial readiness. She highlighted three areas in particular: the energy value chain, precision engineering and manufacturing, and space technology. According to her, startups across energy storage, grid intelligence, advanced manufacturing and launch systems are now demonstrating scale potential, backed by policy support and industry demand.
She said that from micro-launch vehicles and software-defined satellites to advanced propulsion systems and earth observation, we are witnessing the rise of a new frontier economy. Startups like Agnikul, Pixxel Space and Skyroot are demonstrating that Indian innovation can lead the way in space tech, with quality, ambition and cost-competitiveness, backed by strong policy support, investor confidence and growing commercial demand.
“These indicators point to a maturing ecosystem where deep tech innovation is increasingly investible and scalable,” she added.
Capital becomes patient, but demanding
While deep tech funding in India grew 25.8% year-on-year to $1.57 billion in 2025 year-to-date, the environment has become more disciplined. Singh notes that 61 per cent of this capital flowed into early-stage rounds, signalling confidence, but also caution.
“Startups are being built and evaluated with a sharper focus on commercialization, early revenue traction, and sustainable unit economics,” she said. Valuations are increasingly milestone-linked, with capital flowing largely from specialised funds, corporate investors and government-backed platforms.
Experts described the funding mood as “cautiously optimistic”, with micro-VCs and early-stage investors backing IP-driven models. However, non-software deeptech continues to face tougher scrutiny due to longer discovery cycles. Some early interest is now emerging from family offices willing to take a more patient, passion-driven approach.
Taneja added that capital discipline has become non-negotiable. “Funding shifted from valuation-led rounds to milestone-based capital, with a sharper focus on capital efficiency, technical depth, and speed of iteration,” he said.
Policy, platforms and the long view
Jogin Desai, Founder and CEO of Eyestem, believed India is at a critical inflexion point. He pointed to the launch of the RDI fund as a catalyst that could shape a new generation of globally competitive deeptech companies over the next five years.
“The next 10–15 years will be extremely exciting as we watch this story unfold,” Desai said, citing frugal innovation, government support and newer financing models as key enablers.
Bansal echoed this view, highlighting large policy initiatives such as the ₹ 1 lakh crore RDI scheme, the ₹10,000 crore Deep Tech Fund of Funds, and the role of the Anusandhan National Research Foundation in building long-term capital and R&D capacity. Corporate participation from groups like L&T and Tata, she notes, is also creating credible pathways to market through partnerships and offtake commitments.
A more selective future
Taken together, expert opinions suggested that India’s deeptech story is no longer about how much capital the sector can attract, but about which startups can convert technology into durable businesses. As regulatory clarity improves and shared testing and manufacturing infrastructure expands, the gap between narrative-driven ventures and execution-led companies is expected to widen.
For founders, the message is clear and visible: deep tech capital exists, but it now demands proof, patience and performance.
While talking to CNBC TV18, experts highlighted one theme clearly: the ecosystem is maturing, but only for those who can move beyond proof-of-concept and demonstrate real-world adoption.
Where traction replaced talk
Anand Sri Ganesh, CEO of NSRCEL at IIM Bangalore, said several deep tech segments showed genuine commercial promise this year, including AI and GenAI, robotics, IoT, drones and defence technology, medical devices, and biotech and life sciences. What differentiated these startups, he noted, was not novelty but preparedness.
“Most startup founders came with good industry and operating experience, and many of the ideas were rooted in IP or research-led discovery,” he said. Founders are increasingly validating both business and technical propositions before going to market, while building operational capability early.
Data from Tracxn reinforces this shift. Amid a challenging investment environment, where the broader Indian technology sector recorded a 15% year-on-year decline in funding in 2025 YTD, India’s Deep Tech ecosystem has shown notable resilience. The sector attracted $1.57 billion in funding during the same period, marking a 25.8% increase over the previous year. Investment activity was predominantly concentrated at the early stage, which raised $966 million and accounted for 61% of total Deep Tech funding. This was followed by late-stage rounds at $345 million and seed-stage investments totaling $262 million, underscoring growing investor confidence in early-stage Deep Tech startups across the country.
According to Neha Singh, Co-founder, Tracxn, generative AI clearly outperformed other segments in 2025 year-to-date, raising $417.6 million, a 201.8 per cent year-on-year increase. Drones and space technology followed with $179.3 million and $172.8 million raised, respectively, both posting strong growth.
“The strong traction in generative AI is being driven by rapid advances in AI capabilities and accelerating enterprise adoption,” Singh said, adding that defence and space startups benefited from sustained government procurement, enabling a transition from pilots to multi-year contracts and production orders.
Revenue quality over fundraising buzz
For investors like Ashish Taneja, Founding Partner and CEO at growX ventures, the real signal was not capital inflows but revenue behaviour. Defence and aerospace systems, space-tech subsystems, industrial robotics, AI-led enterprise infrastructure and climate-resilient agri-tech stood out.
“The strongest signal was pilots converting into repeat contracts, procurement-led demand from government and large enterprises, and early visibility on unit economics despite low production volumes,” Taneja said. Startups solving mission-critical problems with integrated hardware-software stacks and regulatory readiness consistently outperformed those chasing premature scale.
Anjali Bansal also pointed to a visible shift from early promise to commercial readiness. She highlighted three areas in particular: the energy value chain, precision engineering and manufacturing, and space technology. According to her, startups across energy storage, grid intelligence, advanced manufacturing and launch systems are now demonstrating scale potential, backed by policy support and industry demand.
She said that from micro-launch vehicles and software-defined satellites to advanced propulsion systems and earth observation, we are witnessing the rise of a new frontier economy. Startups like Agnikul, Pixxel Space and Skyroot are demonstrating that Indian innovation can lead the way in space tech, with quality, ambition and cost-competitiveness, backed by strong policy support, investor confidence and growing commercial demand.
“These indicators point to a maturing ecosystem where deep tech innovation is increasingly investible and scalable,” she added.
Capital becomes patient, but demanding
While deep tech funding in India grew 25.8% year-on-year to $1.57 billion in 2025 year-to-date, the environment has become more disciplined. Singh notes that 61 per cent of this capital flowed into early-stage rounds, signalling confidence, but also caution.
“Startups are being built and evaluated with a sharper focus on commercialization, early revenue traction, and sustainable unit economics,” she said. Valuations are increasingly milestone-linked, with capital flowing largely from specialised funds, corporate investors and government-backed platforms.
Experts described the funding mood as “cautiously optimistic”, with micro-VCs and early-stage investors backing IP-driven models. However, non-software deeptech continues to face tougher scrutiny due to longer discovery cycles. Some early interest is now emerging from family offices willing to take a more patient, passion-driven approach.
Taneja added that capital discipline has become non-negotiable. “Funding shifted from valuation-led rounds to milestone-based capital, with a sharper focus on capital efficiency, technical depth, and speed of iteration,” he said.
Policy, platforms and the long view
Jogin Desai, Founder and CEO of Eyestem, believed India is at a critical inflexion point. He pointed to the launch of the RDI fund as a catalyst that could shape a new generation of globally competitive deeptech companies over the next five years.
“The next 10–15 years will be extremely exciting as we watch this story unfold,” Desai said, citing frugal innovation, government support and newer financing models as key enablers.
Bansal echoed this view, highlighting large policy initiatives such as the ₹ 1 lakh crore RDI scheme, the ₹10,000 crore Deep Tech Fund of Funds, and the role of the Anusandhan National Research Foundation in building long-term capital and R&D capacity. Corporate participation from groups like L&T and Tata, she notes, is also creating credible pathways to market through partnerships and offtake commitments.
A more selective future
Taken together, expert opinions suggested that India’s deeptech story is no longer about how much capital the sector can attract, but about which startups can convert technology into durable businesses. As regulatory clarity improves and shared testing and manufacturing infrastructure expands, the gap between narrative-driven ventures and execution-led companies is expected to widen.
For founders, the message is clear and visible: deep tech capital exists, but it now demands proof, patience and performance.
