The Indian deep-tech startup ecosystem has matured significantly, boasting over 3,000 companies that have expanded at a 53 per cent compound annual growth rate (CAGR) over the past decade. This growth is highlighted in a report by the National Association of Software and Service Companies (Nasscom), representing India’s $245 billion technology sector. By 2030, Nasscom anticipates a surge of at least 10,000 deep-tech startups from India, many gaining global recognition in their respective fields, according to Ramkumar Narayanan, chairperson of Nasscom’s DeepTech Council and vice president of technology and managing director at VMware India, during an interview with Peerzada Abrar at the Future Forge event. Narayanan outlined Nasscom’s collaboration with the government in developing policies to tackle challenges faced by deep-tech firms, including funding, talent acquisition, market access, and regulatory obstacles. Edited excerpts below:
What prompted Nasscom to concentrate on deep-tech companies?
Our division, previously known as the Product Council for two decades, pivoted this year to focus entirely on deep tech. However, this pivot doesn’t mean losing the essence of product tech companies cultivated over the past 20 years and the insights gained from them. With tech startups now well-established and supported by ample investors and personnel, our attention has turned to aiding deep-tech firms. As India’s ambitions and focal areas grow, deep tech becomes crucial, intersecting diverse sectors like health tech, climate tech, agriculture tech, and energy and mobility.
What challenges do deep-tech companies face?
Deep tech demands patient capital, differing from the quicker returns expected in consumer internet or software-as-a-service (SaaS) sectors. Tackling deep science-driven issues can require 5-6 years, sometimes extending to eight, before marketable products emerge. Most institutional investors seek returns within three to five years, but deep-tech ventures often necessitate longer periods. Funding sources for these firms include government grants and institutional investors. Venture capital investors need to ensure their limited partners are aware of the extended timeframe for returns in this field. Additionally, the talent required for deep-tech firms is distinct; for instance, a biology-based company might need scientists or microbiology experts. Addressing these needs involves collaboration between academia and industry. Other key areas include market access and navigating policy and regulatory frameworks.
How is Nasscom addressing these challenges?
In India, securing $1 million in funding is a prolonged process for deep-tech firms, contrasting sharply with their US counterparts, which can receive $20 million to $100 million in grant funding. Acknowledging this, the Indian government has initiated the creation of a national research fund, akin to the US National Science Foundation (NSF). The details of accessing these funds are still under development. Nasscom is enhancing industry-academia engagement, facilitating connections between researchers and industry, and fostering company formation. Further, we’re influencing curriculum changes to generate future deep-tech job opportunities. As India builds its deep-tech stack, these challenges must be addressed collaboratively, with Nasscom uniting its resources for this purpose. For instance, we’ve announced funding partnerships and collaboration with the Indian Institute of Technology (IIT) Madras Research Center.
What opportunities exist for deep-tech companies?
India is rife with profound issues for deep-tech firms to resolve. For example, at the Future Forge event, a startup showcased its development of vision technology for the Pragyan rover, part of the Chandrayaan-3 mission, enabling it to navigate the moon’s cratered surface. This innovation has sparked interest in low-light computer vision products worldwide. Another company in the agriculture tech sector is pioneering precision deployment of fertilisers and pesticides, starting in India and now expanding to Californian farmers. Additionally, a firm specialising in amphibious drone boats is making strides. Unlike earlier tech companies that garnered significant attention, these deep-tech firms operate discreetly while tackling some of the most complex challenges.
How is Nasscom collaborating with the government on policy support for deep-tech companies?
The upcoming National Deep Tech Startup Policy (NDTSP) is a key focus of our collaboration with the Principal Scientific Advisor to the Government of India. Currently in its feedback phase, this policy is anticipated to be announced shortly. It addresses various aspects such as patient capital, talent development, research commercialisation, supply chain navigation, and the role of artificial intelligence (AI). The policy aims to spotlight innovations from deep-tech firms, which differ from pure software companies in their integration of software, hardware, and science. Understanding regulatory challenges and supply chain complexities, especially post-Covid-19 and in light of global political dynamics, is crucial for global expansion. For instance, entering battery technology for electric vehicles necessitates access to materials like lithium, some of which may need to be imported. Nasscom is keenly assessing these layers and fostering necessary partnerships to support the ecosystem in overcoming these challenges. Our ongoing dialogue with the government includes sharing insights from working with startups. By 2030, we aspire to see a substantial increase in globally recognised Indian deep-tech startups, a goal we believe is achievable. Business Standard