India’s deeptech sector which includes startups in artificial intelligence (AI), space technology, advanced manufacturing, and semiconductor design saw major growth in 2023. Over 480 new deeptech startups were launched, which is double the number from the previous year.
Now, there are almost 4,000 deeptech startups in total. In 2024, funding in this sector jumped by 78% compared to 2023. This growth was supported by favourable government policies, fast progress in generative AI, and cutting-edge innovations from both Indian and global startups.
The skilled youth demography stands to greatly benefit from these developments since homegrown talent is key for such cutting-edge sectors to thrive. The penetration of deeptech startups calls for rapid upskilling of youth in technical roles – such vacancies are expected to rise to 20 lakh by the year 2030.
According to a report by Nasscom and Zinnov, deeptech startups raised a total of $1.6 billion in 2024. Out of this, the top 10 funding rounds alone brought in about $600 million. Interestingly, 9 out of these 10 top-funded companies are focused on AI-based software solving different kinds of problems. Deeptech startups are now attracting not only more funding but also larger amounts per investment deal, sometimes even more than what traditional tech startups get.
However, investors and founders are warning that India needs to grow its ecosystem further. To succeed long-term, deeptech needs more than just early support. It needs strong local demand, steady funding over time, and clear ways for startups to eventually exit (like getting acquired or going public).
Kaushik Mudda, cofounder of Ethereal Machines (which makes precision CNC machines), said that the best way to make sure big government funds reach the right startups is by working with experienced venture capital firms. He pointed out that many investors don’t fully understand the technologies they’re investing in, and instead rely on reports or past trends.
Mudda also said that deeptech startups often face a delay in making money because their products take years of research and development. These companies usually need a lot of funding upfront. He shared that his company has managed to survive by being extremely careful with spending. Now, with more investors interested in deeptech, he hopes the new funds will be used wisely. Another founder, Saurabh Chandra of Ati Motors (which makes industrial vehicles), mentioned that one major problem is the small size of India’s market for deeptech products. This forces startups to look abroad, which can increase costs and complexity.
