Consider Plansys, specialising in cutting-edge technologies like marine robotics, non-destructive testing, and analytics. This idea for the start-up came from collaborative academia-industry projects initiated in 2012. It took another three years of research efforts before the company was founded by IIT Madras alumni and faculty. And several more years before it executed hundreds of projects in three countries and transformed underwater asset inspections in the maritime, infrastructure, and energy sectors.

Deep-tech start-ups are enterprises that leverage cutting-edge technologies like AI, robotics, biotechnology, quantum computing, and more to solve complex industrial or societal challenges. Unlike conventional start-ups, deep-tech ventures demand extensive R&D, require long development cycles, and operate at the intersection of science and engineering. Their breakthroughs often stem from university laboratories, characterised by their reliance on scientific discovery and technological ingenuity.

Nurturing deep-tech start-ups is challenging. They face hurdles in the following areas:

Capital and funding: High R&D costs and long timelines demand patient capital, thus deterring many investors.

Talent and infrastructure: Finding skilled personnel and accessing advanced infrastructure remain pressing issues.

Scalability risks: Transitioning innovations from the lab to industrial-scale applications is fraught with technical uncertainties.

Regulatory complexity: Navigating sector-specific compliance, for instance in healthcare or life sciences, adds to delays.

Market adoption: Introducing disruptive technologies can face resistance, making thorough market research and early customer engagement vital.

To unlock India’s deep-tech potential, I propose the following:

Mission-mode translational research programmes: India must increase its research funding to 3 per cent of GDP, with private industry and philanthropy contributing 1.5 per cent, and focus on mission-mode research programmes. For instance, DST’s ‘National Mission on Interdisciplinary Cyber-Physical Systems was launched in December 2018 with a budget of ₹3,660 crore, and aims to position India as a global leader in CPS technologies such as AI, robotics, cybersecurity, and more. A key differentiator is its focus on translational research, establishing 25 technology innovation hubs as Section 8 companies to drive high-TRL, market-ready products. In just six years, over 1,500 new technologies and tech products have come from over 650 start-ups/spin-off companies, resulting in around 16,000 jobs and 150,000 people trained on entrepreneurship. More such programmes are required, and the private industry has a key role to play here.

Strengthen academia-industry collaboration: Partnerships between academia, start-ups, and corporates can accelerate deep-tech innovation. IIT Madras Research Park, India’s first university-based research park, fosters collaboration between industry and academia by translating fundamental research into commercial applications. Its unique credit point system promotes sustained engagement with IIT Madras through multiple models — sponsoring employees as students, undertaking R&D projects and consultancy, offering internships, and more. For instance, at Saint-Gobain Research India, the collaboration resulted in the launch of over 20 new products and 5 per cent of their patents.

Indian industry has an important role in nurturing such research and innovation parks/hubs, by funding and co-creating their next innovations there. This includes both domestic companies and the over 1,000 MNC engineering and R&D Global Capability Centres that are driving innovation in sectors like pharmaceuticals, automobiles, and IT. For instance, Samsung Research International, Bengaluru became the highest patent-holder in India in 2022 (7,500 patents) and partners with institutions like Vellore Institute of Technology, IIT Kanpur, and IISc.

Establish robust incubation and capacity-building ecosystems: Incubation centres like C-CAMP (Centre for Cellular and Molecular Platforms) provide critical support, from infrastructure to funding. C-CAMP has nurtured over 200 start-ups, fostering biotech innovation through grants, technical facilities, and expert mentorship. Such deep-tech incubation centres can come from the private sector too. For instance, Axilor Labs supports deep-tech start-ups with processes like patent-filing, validation studies, getting regulatory approvals, and commercialisation, besides providing grants and funding. MicrobioTx, featured in the introduction, came from the Labs.

In addition, significant capacity building efforts are required to equip stakeholders with the knowledge to navigate the start-up ecosystem. For instance, CII CIES facilitates corporate accelerator programmes that connect start-ups with large companies to co-develop solutions, thus providing start-ups with market access and a platform to pilot their innovations.

Expand funding and incentives: Government-backed funds, like the Fund of Funds for Startups and IN-SPACe Fund, can provide financial lifelines to deep-tech start-ups, ensuring long-term sustainability.

At CII, we have recommended that start-ups, under the proposed National Deep Tech Startup Policy, be granted a reduced income tax rate, specifically an exemption for the first 10 years, followed by a 15 per cent tax rate for the next seven years, before transitioning to the applicable rate from the 16th year onward. Additionally, they should be permitted to claim GST refunds on imported raw materials or equipment used in R&D. Furthermore, there should be provisions allowing these deep-tech start-ups to claim enhanced deductions for R&D expenditures, with compensation at 200 per cent or higher of their actual spending.

The writer is Founding Chairman of CII Centre of Excellence for Innovation, Entrepreneurship & Startups, Co-founder, Infosys, Chairman, Axilor Ventures, and Past President, CII