Positioning India amongst the top three deeptech ecosystems globally will require focussed approach across policy, patient capital, intellectual property (IP), procurement and R&D infrastructure, said a report by Nasscom and Zinnov on Thursday.
The report titled ‘India’s DeepTech Dawn: Forging Ahead’, conducted by Nasscom and management consulting firm Zinnov, highlighted some of the key challenges for the deeptech ecosystem and the need for an integrated approach to accelerate its growth adding that while India is ranked third in the technology start-up ecosystem, it is at the sixth position for deeptech start-ups.
It said that the global downturn in start-up funding has also seen an impact in the Indian deeptech start-up ecosystem. In calendar year (CY) 2023, Indian deeptech start-ups secured $850 million in investments (decline of 77 per cent over CY2022), with AI start-ups garnering a majority share of this.
Downturn
Both early and late-stage deals have witnessed a reduction of over 60 per cent this year. This downturn is primarily attributed to smaller average investment sizes at both the seed and late stages and investors remaining cautious largely due to the extended gestation periods typical of these ventures, the report opined.
The report by the industry body further said that 31 merger and acquisition (M&A) deals were reported in CY2023, a decline of about 45 per cent as focus shifted to accelerate tech capabilities that provide the AI edge. However, it also highlighted that India is home to more than 3,600 deeptech start-ups, with over 480 being established in CY2023 — 2X higher than the number established in 2022.
Of these 480 start-ups launched in 2023, over 100 are inventive deeptech firms that have developed IP or innovative solutions in new domains. Notably, 74 per cent of the deeptech start-ups established this year have concentrated on AI, a significant increase from 62 per cent in the period from 2014 to 2022, it added. “For India to be in the top three deepTech start-ups ecosystem, key areas that need support are : access to patient capital for deeptech start-ups to build and scale their products, strong R&D partnerships with academia for nextgen innovation, streamlining government procurement for start-ups to build India-specific solutions and implementation of the deeptech policy that was tabled in 2023,” Kritika Murugesan, Head, Nasscom DeepTech said.
Deeptech is becoming increasingly integrated into the fabric of innovation and areas such as AI, quantum computing, space tech, next-gen robotics and others will come together in interesting ways and be applied across every domain from education, entertainment, commerce, agriculture, industrial manufacturing, mobility, and several others, said Jeyandran Venugopal, Chair, Nasscom DeepTech Council. “India, with its deep talent base and traditional strength of producing top notch STEM (science, technology, engineering and mathematics) talent is well positioned to play a dominant role in this technology-led societal transition process,” he added.