Relevance: GS III (Science & Tech / Indian Economy) | Source: The Hindu

1. The Context: Official Recognition

For the first time, the Department for Promotion of Industry and Internal Trade (DPIIT) has issued a notification officially defining “Deep Tech” startups. Until now, this was just a buzzword without legal backing.

• The Goal: To differentiate high-science, high-risk ventures (like space or biotech) from regular consumer apps (like food delivery) and provide them with tailored support.

2. What is a “Deep Tech” Startup?

Unlike a regular startup, a Deep Tech firm must satisfy specific criteria:

• Innovation Base: It must be built on a scientific or engineering breakthrough (new knowledge).
• R&D Focus: A significant portion of its expenditure must go into Research and Development.
• Intellectual Property (IP): It must own or be developing novel IP (patents) to commercialize technology.
• High Risk & Gestation: These firms face a “long road to revenue” and high scientific uncertainty compared to service startups.

3. Relaxed Norms: The “20-Year” Rule

Recognizing that science takes time to mature, the government has relaxed the definition of “Startup” for this specific category:

• Age Limit: Deep Tech firms remain “startups” for up to 20 years (compared to 10 years for others).
• Turnover Limit: The cap is raised to ₹300 Crore (compared to ₹100 Crore for regular startups).
• Constraint: They are strictly prohibited from investing in speculative assets like real estate or shares.

4. Why is this needed? (The “Valley of Death”)

Deep Tech firms (e.g., in quantum computing or semiconductors) often die in the “Valley of Death”—the long period between research and commercial revenue—because regular VCs find them too risky.

• Support: Certification allows access to “Patient Capital” (long-term, low-interest funds), potentially from the Anusandhan National Research Foundation (ANRF).

UPSC Value Box

Q. With reference to the “Deep Tech” startups in India, consider the following statements based on the recent DPIIT notification:

1. A Deep Tech startup is defined as an entity that is working towards innovation or improvement of products or processes with a high potential of employment generation or wealth creation.
2. The maximum age limit for an entity to be considered a Deep Tech startup has been extended to 20 years from the date of incorporation.
3. Deep Tech startups are prohibited from investing in real estate and shares to prevent speculative activities.

Which of the statements given above is/are correct?

(a) 1 only

(b) 1 and 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

Correct Answer: (c)