CABINET NOD FOR NATIONAL DEEP TECH START-UP POLICY SOON

Context: -

1. Recently, In January 2024, the Principal Scientific Advisor announced to present the 'deep tech' policy for Union Cabinet approval in the upcoming weeks, shared during a public event.
2. The Indian government is ready to approve a new 'deep tech' policy. After gathering public feedback on the draft released in July 2023, the final version of the policy is set for Cabinet approval.
3. During her Interim Budget speech, the finance minister introduced a Rs 1 lakh crore fund intended to provide long-term, low-cost, or zero-interest loans for research and development projects.

What is Deep Tech?

About:

1. Deep tech, also known as deep technology, refers to a class of startup businesses that develop new offerings based on tangible engineering innovation or scientific discoveries and advances.
2. Deep tech fields such as Artificial Intelligence, advanced materials, blockchain, biotechnology, robotics, drones, photonics, and quantum computing are rapidly transitioning from early research to market applications.

Characteristics of Deep Tech:

1. Potential:

   1. The innovations revolving around deep tech are highly radical and have the potential to disrupt existing markets or create entirely new ones.
   2. These innovations often bring about significant changes to lives, economies, and societies.

2. Time & Scale:

   1. Developing deep technology and bringing it to market-ready maturity typically requires much more time compared to shallow technology development, such as mobile apps and websites.
   2. The complexity and depth of research and development involved contribute to this prolonged timeline.

3. Financial Investment:

   1. Deep tech ventures often necessitate substantial early-stage funding to support various aspects of research and development, including prototyping, validating hypotheses, and technology development.
   2. The capital requirements for deep tech ventures can be significantly higher compared to ventures in other sectors.

4. Intellectual Property:

   1. Intellectual property plays a crucial role in deep tech innovation, as it safeguards unique technological advancements and ensures competitive advantage.
   2.  Establishing robust IP strategies and protection mechanisms is necessary for sustaining innovation and fostering growth in the deep tech landscape.

5. Collaboration and Interdisciplinarity:

   1.  Deep tech innovation thrives on collaboration across diverse fields, combining expertise from multiple disciplines to tackle complex challenges.

b. Interdisciplinary collaboration fosters innovation by leveraging diverse perspectives and skill sets to drive breakthrough advancements.

What is the importance of Deep tech?

1. Addressing Global Challenges:

1. Deep tech holds the potential to tackle intricate global issues such as climate change, hunger, epidemics, energy access, mobility, and cyber security.
2. These innovations offer promising solutions to urgent societal and environmental challenges.

2. Advancing Science and Technology:

1. Deep tech encompasses cutting-edge scientific research and technological developments in fields like artificial intelligence, biotechnology, quantum computing, and more. 
2. Progress in these areas pushes the boundaries of human knowledge and understanding, resulting in breakthroughs that benefit society as a whole.

3. Driving Economic Growth and Competitiveness:

1. Investment in deep tech fuels economic expansion by promoting innovation, generating high-value jobs, and encouraging entrepreneurship.
2. Nations and companies leading in deep tech innovation gain a competitive edge in the global market, attracting investment, talent, and collaboration opportunities.

4. Disaster Preparedness and Response:

1. Deep tech solutions contribute to disaster management efforts, such as AI-powered predictive models enhancing the accuracy of natural disaster forecasts.

5. Strengthening Counterterrorism Measures:

1. Deep tech facilitates the development of advanced surveillance systems, biometric identification techniques, and predictive analytics tools crucial in counterterrorism efforts.
2. These technologies aid in identifying and tracking individuals involved in extremist activities, disrupting terrorist networks, and preventing future attacks.

Top of Form

State of India’s Deep Tech Startups

1. Strengths and Opportunities

1. India possesses a substantial reservoir of highly skilled science and engineering professionals, alongside a flourishing technology ethos. This places the nation at the forefront of pioneering deep-tech solutions.
2. At the end of 2021, India had a plethora of over 3,000 deep-tech startups, specializing in cutting-edge technologies such as Artificial Intelligence, Machine Learning (ML), the Internet of Things, Big Data, quantum computing, robotics, and more.
3. NASSCOM reports indicate that in 2021 alone, deep-tech startups in India raised USD 2.7 billion in venture funding, constituting over 12% of the nation's entire startup landscape.
4. Over the past decade, India's deep tech ecosystem has witnessed a remarkable growth rate of 53%, placing it on par with established markets like the US, China, Israel, and Europe.
5. Bengaluru leads the charge, hosting 25-30% of India's deep-tech startups. It closely followed by Delhi-NCR (15-20%) and Mumbai (10-12%).

2. Potential Contributions

1. India possesses the capacity to make substantial contributions to the progression of deep tech, thereby promoting early adoption, sharing of intellectual property, fostering indigenous knowledge development, and cultivating self-sufficiency.
2. This potential can result in the emergence of spin-off technologies, the enhancement of a skilled workforce, the encouragement of entrepreneurship, and the facilitation of technology exports.
3. Deep-tech startups are increasingly leaving their mark across various sectors, including drone delivery, cold chain management, climate action, and clean energy initiatives.

Government Efforts in building Deep Tech Startup Ecosystem:

1. Promotion of Research and Innovation:

1. The government is actively promoting research and innovation in transformative technology domains like mobility, battery storage, and quantum technology.
2. Initiatives such as the National Mission on Transformative Mobility and Battery Storage and the National Quantum Mission exemplify these endeavors.

2. Policy Framework Development:

1. In 2023, a policy framework aimed at cultivating a conducive environment for companies in the deep tech sectors was finalized. Known as the National Deep Tech Startup Policy (NDTSP), it is currently waiting for government approval.
2. This policy is a result of collaborative efforts between the Department for Promotion of Industry and Internal Trade and the Office of the Principal Scientific Adviser.
3. Objectives of the Policy: The NDTSP aims to tackle the particular challenges faced by technology startups and furnish them with a favorable platform for global competition and collaboration.
4. Key Areas of Focus in the NDTSP:
   1. Sustainable Funding: Creating mechanisms for continuous financial support to nurture the growth of deep tech startups.
   2. Intellectual Property Protection: Establishing a robust yet simplified framework to safeguard intellectual property, thereby encouraging innovation and bolstering startup confidence.
   3. Tax Incentives: Providing tax benefits to stimulate investment in research and development within the deep tech sector.
   4. Supportive Regulations: Developing regulatory frameworks that foster the growth of deep tech startups while ensuring compliance and safety.
   5. Quality Standards: Setting industry benchmarks and certifications to guarantee the excellence and reliability of deep tech products and services.
   6. Talent Development: Investing in the training and development of skilled professionals to cultivate a talent pool conducive to innovation in deep tech.
   7. Collaboration: Facilitating partnerships between industry, research institutions, and educational establishments to promote knowledge exchange and collaborative efforts.
5. Through these strategic initiatives, the NDTSP aims to establish a resilient and thriving ecosystem that fosters innovation and growth in the deep tech startup sector.

3. Policy and Programme Linkages: - Currently, numerous policies, schemes and initiatives are in place to support the various focus areas within the Indian Deep Tech Startup ecosystem. Here are some examples
   1. Tamil Nadu Technology Hub (iTNT Hub): Located in Chennai, iTNT Hub acts as a central platform linking startups in emerging and deep tech fields with over 570 engineering colleges.
   2. TIDE 2.0 Scheme: Supporting tech entrepreneurship in India, the TIDE 2.0 scheme provides financial and technical aid to incubators nurturing ICT startups using emerging technologies. Over 5 years, 51 incubators nationwide will support around 2000 startups, with a total investment of Rs 264 crore.
   3. Next Generation Incubation Scheme (NGIS): Funded by the Ministry of Electronics and Information Technology (MeitY), NGIS focuses on supporting innovative startups in software product development and embedded electronics. It spans 12 Tier-II locations across India.
   4. Scientific and Useful Profound Research Advancement (SUPRA): A research grant from Science and Engineering Research Board (SERB), SUPRA supports high-quality proposals challenging existing theories and offering disruptive solutions across disciplines.
   5. Fund for Industrial Research Engagement (FIRE): Co-funded by SERB and industry, FIRE accelerates research and innovation in India by supporting impactful projects addressing major national issues.
   6. NECTAR: NECTAR is an autonomous society under DST, Government of India. It leverages frontier technologies from central scientific departments to address socio-economic challenges in the Northeast region.
   7. National Supercomputing Mission (NSM): Launched in 2015, NSM aims to establish India as a global leader in supercomputing, providing advanced facilities to scientists nationwide for research in areas like climate change and healthcare.
   8. National Quantum Mission (NQM): Initiated in 2023, NQM seeks to position India as a global leader in quantum technologies, facilitating cutting-edge research and its application in various sectors including healthcare and national security.
   9. National Education Policy (NEP): Prioritizing multidisciplinary education, NEP advocates for a new curriculum allowing students to explore diverse subjects ranging from science and technology to humanities and arts.
   10. International Initiatives:
       1. Indo-US Joint Working Group on Artificial Intelligence: Established in 2020 to foster collaboration on AI-powered solutions for various sectors.
       2. Indo-Israel Deep Tech & Life Sciences Mission: Launched in 2021 to promote collaboration in deep tech and life sciences, generating economic and social benefits.
       3. Indo-Japan Deep Tech & Startups Partnership: Initiated in 2022 to facilitate collaboration between India and Japan in deep tech and startups, enhancing access to markets, talent, and funding.

National Research Foundation (NRF) Implementation:

1. 1. The government has set up the National Research Foundation (NRF) with the goal of fostering collaboration between various sectors to advance research.
   2. It is expected that approximately 70% of the NRF's funding, amounting to Rs. 50,000 crores over five years, will come from contributions made by the private industry.

Challenges faced by Deep Tech Policies and their respective solutions: -

Challenges Encountered by Deep Tech Policies	Solutions
High Risk and Long-term Investment:- Deep tech projects necessitate significant upfront investment in research and development and often require years or even decades to materialize into marketable products. This lengthy timeline for returns makes them less appealing to conventional investors who seek shorter-term and lower-risk ventures.	Establish dedicated venture funds or investment vehicles specifically tailored for deep tech startups to mitigate risk and provide long-term support.   Encourage government-backed grants and subsidies for deep tech projects to incentivize investment and reduce financial burden.
Scarcity of Specialized Talent:- Deep tech projects rely on highly skilled researchers, engineers, and entrepreneurs, whose expertise is in high demand and short supply. Acquiring and retaining such talent pose challenges for deep tech startups, particularly in emerging markets.	Develop educational and training programs focusing on deep tech fields to bridge the skill gap and cultivate a pool of qualified professionals.   Foster partnerships between academia and industry to facilitate knowledge transfer and talent acquisition.
Market Readiness Obstacles: Regulatory, ethical, social, or environmental barriers may impede the adoption and scalability of deep tech projects. Additionally, educating and convincing potential customers and stakeholders about the feasibility and value of these solutions can be intricate and unfamiliar.	Collaborate with regulatory bodies to streamline approval processes and create frameworks that support the adoption of deep tech solutions.   Launch awareness campaigns and educational initiatives to inform stakeholders about the benefits and feasibility of deep tech innovations.
Inadequate Research Funding in India Despite a targeted 2% GDP allocation for research, funding remains insufficient in India, with current R&D spending standing at 0.65% of GDP, well below the global average. This shortfall undermines India's competitiveness with scientifically advanced nations and signals a concerning trend of dwindling support for essential research activities.	Advocate for increased government funding for research and development, emphasizing the importance of deep tech in driving innovation and economic growth.   Promote public-private partnerships to leverage private sector resources and expertise in funding research initiatives.
Skepticism within the Scientific Community: Doubts persist within the scientific community regarding the efficacy of relying solely on the private sector for research funding. Many argue that government funding remains indispensable, and expectations for private investment may be overly optimistic.	Foster open dialogue and collaboration between government, industry, and academia to address concerns and build trust in the effectiveness of private sector involvement in research funding.   Showcase success stories and case studies highlighting the positive impact of private investment in advancing scientific knowledge and innovation.
Financial Constraints: Despite governmental emphasis on innovation, budgetary increments for key departments are modest. Departments such as the Council of Scientific and Industrial Research (CSIR) and the Department of Space see only marginal increases, while others face budget reductions.	Allocate a larger portion of the national budget to scientific research and development, prioritizing funding for key departments and initiatives Implement measures to improve budget allocation efficiency and reduce bureaucratic red tape in the disbursement of funds.
Bureaucratic Hurdles: Even when funds are available, bureaucratic delays and obstacles often impede their efficient distribution. Complex administrative procedures contribute to interruptions in project funding, hindering the progress of research endeavors.	Streamline administrative procedures and create dedicated support structures to facilitate the application and approval process for research funding. Provide training and resources to government officials to enhance their understanding of deep tech projects and expedite decision-making processes.

In conclusion, the government's announcement of a Rs 1 lakh crore fund for R&D, coupled with initiatives to bolster deep-tech capabilities, marks a significant milestone in India's innovation journey.

However, addressing remaining challenges requires careful attention and concerted efforts from all stakeholders.

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