India Prepares $25 Billion for Deep Tech as U.S. and China Pull Ahead

India is preparing to deploy $25 billion to support Deep Tech start-ups, as it tries to catch up with the U.S. and China and cut its reliance on frontier foreign technology.

Where the money comes from

Over the past decade India invested $11.6 billion in Deep Tech, Rajat Tandon, president of the Indian Venture and Alternative Capital Association (IVCA), told CNBC. The government alone has now committed $11 billion through the Research Development Infrastructure Fund, which venture capital and private equity managers will match. Another $3 billion to $4 billion will be added, he said, bringing the sum available to $25 billion.

Deep Tech is a broad term covering start-ups in artificial intelligence, semiconductors, advanced manufacturing, drones and space tech.

Why now

Experts told CNBC the push reflects a realization that frontier technology has become "very critical" amid rising geopolitical tensions. China and the U.S. lead the global AI race, while Chinese technology is viewed with suspicion in India and Washington's curbs on tech exports make it an unreliable supplier.

"Tariffs from the U.S. actually help this segment a lot," said Anandamoy Roychowdhury, managing director of Crane Venture Partners, adding that India will build local Deep Tech companies because it fears "important technology can get cut off at any point."

Those fears were partly realized in June, when Anthropic disabled access to its new models, Fable 5 and Mythos 5, for foreign nationals to comply with a U.S. export-control directive.

Start-ups and investors

In August IVCA published a survey of 100 Indian funds. Nine out of 10 deploy capital into Deep Tech start-ups, and 37% hold a stake in 11 to 20 such companies.

The sector raised nearly $3 billion in 2025, its highest ever, even as overall start-up funding in India fell. U.S. Deep Tech companies raised $136 billion. Vibe-coding start-up Emergent, space tech firm Skyroot and sovereign AI company Sarvam all became unicorns this year, crossing $1 billion valuations.

"Dramatic acceleration of innovation" is under way in Indian Deep Tech, said Shweta Rajpal Kohli, president and chief executive of Startup Policy Forum, with some companies moving from prototype to "real commercialization."

The gap in domestic capital

A key disadvantage for Indian Deep Tech start-ups is the lack of domestic capital able to back such long-gestation investments. "Our challenge today in India is that only 2% of people are able to sign" checks above $10 million, Tandon said, calling on high-net-worth individuals and family offices to invest more. Roychowdhury described scouting for Deep Tech deals in India as being like "a kid in a candy store"; about 80% of his $150 million APAC fund is concentrated in the country.