India Readies $25 Billion for Deep Tech as U.S. and China Race Ahead

India is preparing to deploy $25 billion to support Deep Tech start-ups, aiming to close the gap with the U.S. and China and cut its reliance on frontier foreign technology. The plan pairs an $11 billion government commitment with matching capital from venture and private equity investors.

Rajat Tandon, president of the Indian Venture and Alternative Capital Association (IVCA), laid out the arithmetic. India invested $11.6 billion in Deep Tech over the last decade, he told CNBC. Now the government alone has committed $11 billion under the Research Development Infrastructure Fund, which venture capital and private equity fund managers will match.

"Three or four billion more will be added, making $25 billion available to be spent on Deep-Tech investments," Tandon said.

What counts as Deep Tech?

The term covers start-ups in artificial intelligence, semiconductors, advanced manufacturing, drones and space tech. Experts told CNBC the funding push reflects a government realization that frontier tech is becoming "very critical" amid rising geopolitical tensions.

The geopolitical logic is straightforward. China and the U.S. currently lead the global AI race. Chinese tech is viewed with suspicion in India, while Washington's curbs on tech exports make American suppliers an unreliable partner.

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

That fear crystallized earlier in June, when Anthropic disabled access to its new models — Fable 5 and Mythos 5 — for foreign nationals, complying with an export-control directive from the U.S. government.

How mature is India's Deep Tech ecosystem?

Start-up funding leaders gathered at SuperReturn Asia said India's Deep Tech companies remain at a nascent stage. But they argued the ecosystem is poised to create global champions eventually, given the quality of ideas and talent in the country.

There is a "dramatic acceleration of innovation" in India's Deep Tech space, Shweta Rajpal Kohli, president and chief executive of Startup Policy Forum, said. Some companies are moving from prototype to "real commercialization," she added.

The unicorn ranks already reflect that shift. Earlier this year, vibe-coding startup Emergent, space tech company Skyroot and India's full-stack sovereign AI company Sarvam all crossed $1 billion valuations during their latest fundraising rounds.

Who is actually writing the checks?

"I feel like a kid in a candy store," Roychowdhury said of scouting Deep Tech investments in India. About 80% of his $150 million APAC fund is currently concentrated in the country, he shared.

An IVCA survey published in August, covering 100 funds, found that nine out of 10 funds in India were deploying capital in Deep Tech start-ups. Some 37% held stakes in 11 to 20 such companies.

The sector received nearly $3 billion in funding in 2025 — its highest ever — even as overall start-up funding in India fell. The funding gap with the U.S. remains massive: American Deep Tech raised $136 billion over the same period.

What still holds India back?

The key disadvantage for Indian Deep Tech start-ups versus their U.S. peers is the lack of domestic capital able to fund long-gestation, innovative investments at scale.

"Our challenge today in India is that only 2% of people are able to sign" checks above $10 million, Tandon said. High net worth individuals and family offices need to ramp up their investments for India to develop Deep Tech, he added.

Whether the $25 billion pool closes that structural gap — or simply narrows it — will depend on how quickly India's private wealth moves from sidelines to term sheets.