OPINION | Can India Become the Global Deep Tech Powerhouse?

India is becoming the hotbed for Artificial Intelligence (AI) and deep tech research, therefore, it comes as no surprise that during the 2021-2023 period, the industry saw an investment of more than $1 billion. According to a report, ‘The India Deep Science Tech Report’, investments in India’s deep-science technologies (tech) have consistently doubled or more every three years since 2010.

According to the report, India is at a point of inflection in the AI and deep tech arena. Projections see investments in this space surpassing $10 billion by 2029.

The report, analyzing investment data from 2010 to 2023 sourced from Tracxn and media reports, reveals a steady increase in the total number of investments in deep-science tech companies. It also highlights an exponential growth in the number of investment rounds exceeding $5 million. Importantly, since 2017, there has been a greater frequency of follow-up investments compared to new funding rounds, indicating investors’ dedication to scaling up.

However, the massive investments did not just occur overnight, there have been massive scaling up of the economy, a boost to the automobile industry, along with the push by the Indian government to set up a semiconductor manufacturing value chain in the country. These have all helped in settling investors’ nerves, seeing India on an upward trajectory.

Before we dive in, let us understand what Deep Tech actually is.

WHAT IS DEEP TECH?

Deep technology or deep tech refers to sophisticated technologies built on significant scientific advancements, capable of revolutionising conventional industries and sparking the emergence of new markets. It encompasses groundbreaking innovations that turn what was previously considered science fiction into tangible reality.

Think of it like this. Regular tech is like your smartphone or social media apps, they’re cool and all. Deep tech, on the other hand, is like the stuff straight out of a science fiction movie. It’s based on groundbreaking scientific discoveries and engineering feats, and it has the potential to totally transform industries and create entirely new markets.

Take AI, for example. We’re not just talking about Siri or Alexa here, we’re talking about machines that can learn and think for themselves, making decisions and solving problems in ways that even the smartest humans can’t. That’s the kind of game-changing tech that falls under the umbrella of deep tech.

Deep tech is revolutionary technology built on scientific breakthroughs. It includes AI, biotechnology, quantum computing and advanced materials science. Unlike everyday gadgets, deep tech has the potential to transform industries and create new markets.

DEEP TECH AND INDIA

India’s deep tech scene is booming, with startups spearheading innovation across sectors. Here’s how:

• Niki.ai simplifies daily tasks with its AI-powered voice assistant.
• SigTuple transforms healthcare diagnostics with AI precision.
• Vedantu redefines education through personalized AI-driven learning experiences.
• Pixxel, a Bengaluru-based space startup, uses an AI-powered analytics platform to study satellite images.

These are just a few examples of the many deep tech startups flourishing in India and reshaping industries. Their efforts are also positioning India as a global hub for cutting-edge innovation.

More startups are leveraging deep tech. India has seen a surge in startups using AI, machine learning, blockchain, robotics and biotechnology. The number is steadily growing, fueled by increased access to technology, supportive policies, growing investor interest, and a vibrant entrepreneurial culture.

Billions are pouring into India’s booming deep-tech scene, fueling a surge of innovative startups across various sectors. Bengaluru takes the top spot, followed by Delhi and Mumbai, attracting a staggering $2.7 billion in venture funding for deep-tech in 2021 alone. This funding frenzy is partly driven by the explosion of interest in generative AI, with technologies like ChatGPT paving the way.

India’s deep-tech ecosystem has witnessed remarkable growth, expanding by 53% in the last decade and reaching par with developed markets like the US, China, and Europe. This impressive growth reflects investor confidence in the transformative potential of deep-tech solutions, evident in their commanding 12% share of total startup funding in India.

Deep science in electronics, particularly focusing on AI and chip design, is propelling innovations in space tech and telecom. With over $1 billion in private investment already secured, Indian space startups are soaring towards a potential $100 billion space economy by 2040, according to analysts. This sector saw a meteoric rise with 54 new startups established in just one year, collectively raising $123.9 million in funding.

Digantara, a company mapping space debris, and Skyroot Aerospace, developing launch vehicles, are just a few examples of the many exciting players in this rapidly growing field.

WHAT IS THE GOVERNMENT DOING?

India’s deep tech scene is experiencing a seismic shift, driven not just by financial muscle, but by a carefully orchestrated strategy. The government is playing a pivotal role, injecting billions into transformative technologies such as electric vehicles, battery storage, and even quantum computing. This unprecedented investment signals a resolute commitment to accelerating R&D and solidifying India’s position as a global innovation leader.

However, it’s not merely throwing money at the problem. India is meticulously crafting a supportive ecosystem for deep tech startups. Imagine the National Deep Tech Startup Policy (NDTSP) as a launchpad, streamlining regulations, simplifying funding access, and offering robust intellectual property protection.

This nurturing environment empowers game-changing ventures to thrive. Recognizing the power of collaboration, India is fostering dynamic partnerships between industry giants, research institutions, and educational powerhouses. This strategic collaboration unlocks optimal resource utilization and expedites the translation of groundbreaking ideas into tangible solutions.

Furthermore, the government’s commitment extends beyond funding and policy. A dedicated Rs 1 lakh crore corpus fuels the Anusandhan National Research Foundation (ANRF), a powerhouse for research across diverse fields. This strategic investment provides resources and sets the strategic direction, ensuring research efforts align with national innovation goals.

India’s talent pool is another crucial ingredient in this recipe for success. World-class individuals eager to contribute to cutting-edge technologies are attracted by the supportive ecosystem, strategic investments, and vibrant research landscape. This confluence further accelerates the pace of innovation.

The future of Indian deep tech is brimming with potential. Mark your calendars and keep your eyes peeled, because the next big innovation might just be around the corner. With unwavering government support, a treasure trove of untapped opportunities, and a pool of world-class talent, this is not just a tech story; it’s a story of transformation. India is not just catching up; it’s setting the pace for innovation in key sectors, and the world is watching.

KEY AREAS OF DEEP INVESTMENTS

The four leading areas of deep tech in India – AI, biotech, advanced materials, and electronics – each hold immense potential for unlocking multi-billion dollar market opportunities.

AI

• Dominating force: Accounts for 80% of deep tech investments since 2010.
• Early-stage traction: 5 ventures secured over $10 million follow-up funding in 2022 alone.
• Real-world applications: Image analysis in robotics, satellite, radiology data, and genomic analysis for healthcare.

Biotech

• Pandemic boom: Nearly $900 million invested between 2013 and 2023.
• Investor optimism: Highlighting belief in sector’s post-pandemic growth.
• Health focus: 91% of investments in therapeutics and diagnostics to tackle COVID-like diseases and AMR.

Advanced Materials

• Battery solutions lead: Attracting significant investments due to energy transition focus.
• Beyond batteries: Materials for renewable grid and space technologies gaining traction.
• Strategic partnerships: On the rise, indicating long-term commitment to collaboration.

ELECTRONICS

• Climbing the ladder: Shift towards later-stage investments in electronics companies since 2019.
• Funding gap: Average investment size of $1.77 million compared to $8.2 million in other sectors.
• Chip development challenge: Growth-stage capital exceeding $10 million needed for cutting-edge technology.

Forget Silicon Valley, India’s deep tech landscape is experiencing a meteoric rise, fueled by a potent duo: a surge in investments and a government policy acting as a launchpad. While the billions flowing into AI, biotech, and advanced materials grab headlines, the real star of the show is the strategic vision guiding this growth.

This ascent is not merely about numbers, though the figures are impressive. Over $1 billion invested in deep-science technologies since 2021, projections exceeding $10 billion by 2029, and a 53% growth in the deep tech ecosystem within a decade – but they only tell part of the story. The true power lies in how these investments are being guided to achieve maximum impact.

The road ahead isn’t without its challenges. Gaps in funding for certain areas, particularly chip development in electronics, need to be addressed. But with unwavering government support, a treasure trove of untapped opportunities, and a relentless focus on impact, India’s deep tech revolution is poised for even greater heights.