Union Commerce Minister Highlights the Lack of Deep-Tech Innovation in Indian Startups

1. The Union Commerce Minister recently acknowledged the impressive growth of consumer-driven startups in India, such as food delivery and Q-commerce apps.
2. However, the minister also highlighted a significant gap in the emergence of deep-tech innovations within Indian startups.

Understanding Deep-Tech Startups

Deep-tech startups focus on high-risk, long-term ventures that leverage advanced technologies like AI/ML, blockchain, and more. These startups aim to create innovative solutions for complex, real-world problems. Notable examples include Skyroot Aerospace and Sarvam AI.

Current Status of the Startup Ecosystem in India

1. Unicorns: India is home to over 100 unicorns, positioning itself as the third-largest startup hub globally.
2. Global Innovation Index: India ranks 39th in the 2024 Global Innovation Index, reflecting the country's progress in fostering innovation.
3. Deep-Tech Startups: There are approximately 4,000 deep-tech startups in India, which collectively attracted $1.6 billion in 2024—a significant 178% year-over-year increase.
4. Tier II and III Cities: Nearly 50% of Indian startups originate from Tier II and Tier III cities, expanding the startup ecosystem beyond the major metropolitan areas.

Government Policies and Initiatives for Startups

India has introduced several policies and schemes to support the startup ecosystem:

1. Draft National Deep-Tech Startup Policy (2023): A comprehensive policy aimed at fostering deep-tech startups.
2. Startup India Seed Fund: A fund to support early-stage startups in India.
3. IndiaAI Mission and Fund of Funds for Deep-Tech: A Rs 10,000 crore initiative to boost deep-tech startups.
4. BHASKAR (Bharat Startup Knowledge Access Registry): An initiative to provide knowledge access and promote startup growth.

Challenges Facing the Indian Startup Ecosystem

Despite the positive growth, several issues are hindering the full potential of the startup ecosystem:

1. Funding Challenges:
   1. The availability of both government and private capital is limited, which stifles startups working on complex problems.
   2. From 2014 to 2024, India’s total tech investment is estimated at $160 billion, significantly lower than China’s $845 billion.
   3. India’s venture capital (VC) landscape tends to prioritize quick returns, making it harder for deep-tech startups to secure patient capital.
2. Education and Research Infrastructure:
   1. India faces a lag in developing its ecosystem due to subpar educational infrastructure.
   2. Key issues include a lack of quality research, weak industry-academia linkages, and a shortage of skilled workers, contributing to brain drain.
3. Governance Issues:
   1. Policy uncertainty and regulatory challenges hinder the ease of doing business in India.
   2. Startups face difficulties in accessing credit, dealing with taxation, navigating import barriers on raw materials, and overcoming bureaucratic hurdles like approvals, red tape, and corruption.

Way Forward: Proposed Solutions

To address these challenges and foster innovation, several steps are needed:

1. Policy Reforms:
   1. Provide grants and create regulatory sandboxes to test prototypes and allow startups to refine their solutions.
   2. Offer logistical support to help startups commercialize their innovations.
   3. Promote deep-tech-focused skill development programs to bridge the talent gap.
2. Investment Promotion:
   1. Set up dedicated deep-tech innovation funds to support startups in the sector.
   2. Create co-investment programs in partnership with venture capitalists to attract long-term investments.
3. Education Reform:
   1. Strengthen academia-startup collaborations to foster quality research and innovation.
   2. Build strong industry-academia bridges to ensure a continuous flow of skilled talent into the startup ecosystem.

 

Also Read
FREE NIOS Books	UPSC Daily Current Affairs
UPSC Monthly Magazine	Previous Year Interview Questions
Free MCQs for UPSC Prelims	UPSC Test Series
ENSURE IAS NOTES	Our Booklist