Minimal resources, excess regulations: Why India's deep-tech start-ups are struggling
What's the story
Harish Mehta, the first Chairperson of NASSCOM, has shed some light on the challenges faced by India's deep tech start-ups.
Despite India's global reputation for software development, it lags behind nations like the US and China in emerging technologies such as artificial intelligence (AI), robotics, quantum computing, and Internet of Things.
Mehta identifies a lack of resources, a surplus in regulations, and lack of unity among start-ups as key obstacles to progress in this field.
Funding issues
Start-ups struggle to attract funding
Mehta emphasizes that many successful deep tech projects in India are funded by foreign investors as intellectual property rights are not adequately protected.
This absence of an enabling environment deters local entrepreneurs from seeking investment.
According to the latest NASSCOM-Zinnov report, 95% of Indian tech start-ups focused on deep tech in 2024, receiving $1.6 billion in funding.
R&D concerns
India's R&D funding falls short
Mehta also stressed on the need for more government support in research and development (R&D).
He noted that India's annual R&D allocation from state and central governments was just $71 billion. Meanwhile, the US spends almost $900 billion while China spends around $500 billion on similar projects.
"If there is no R&D, how do you expect deep tech to emerge?" Mehta questioned.
Regulation challenges
Regulatory hurdles and need for collaboration
Mehta also highlighted the regulatory challenges that hold India's deep tech start-ups back.
The US has categorized India as a Tier-2 country, restricting exports of graphics processing units (GPUs), critical for high-performance computing.
Meanwhile, stringent data privacy and security rules create compliance challenges.
To tackle this, NASSCOM has suggested setting up start-up-focused cells in ministries for faster approvals and more self-regulation in emerging tech.