Why India still lags behind the US, China in terms of numbers and funding in deep tech startups 

A recent statement by Union Commerce Minister Piyush Goyal revealed that many startups in India were mainly focused on food delivery, betting and fantasy sports apps while those in China were working on EV, battery tech, semiconductors and AI. However, many startup founders and even Infosys former Chief Financial Officer Mohandas Pai came strongly in support of the grocery and food delivery startups, stating that a lot more needs to be done in India to encourage deep tech startups, which were doing fantastic work but needed a lot more push to excel.

 

Deep tech start-ups in India had raised about 10 billion U.S. dollars in funding in 2023 and had made over 1,400 deals in the same year and funding for deep tech start-ups had consistently increased since 2019. India had over 3,600 deep tech startups, with 480 established in 2023 alone, and ranked sixth globally in the deep tech ecosystem. 

 

India still indeed lags way behind the US and China. As per a report by Traxcn, the deep tech sector in the United States comprises 26.1K companies, including 11.1K funded companies, having collectively raised $591B in venture capital money and private equity. Out of these, 5.57K are Series A+ funded, and 190 have achieved unicorn status. In China, as per Traxcn, the deep tech sector comprises 6.44K companies, including 2.51K funded companies, having collectively raised $ 99.1B in venture capital money and private equity.

 

Former Infosys CFO Mohandas Pai had said that though India does have many deep tech startups but they lacked funds. He compared the Indian situation with China and the US and said that from the year 2014 to 2024 Indian startups got just 160 billion $ in investment compared with China with 845 billion $ and the US with 2.3 trillion $ in investment. He said that long-term investors like endowments, insurance still do not invest in India despite the government's best efforts and urged Goyal to improve the situation. 

 

Pai went on to say that AIF investments were facing regulatory overreach, and the flow had come down. He also said that the RBI was harassing overseas investors on remittances. 

 

Experts feel that a lot more push is required by the government to push these deep-tech startups in the country and the government can very well do this, said Aadit Palicha Zepto CEO-Co-founder in his LinkedIn. He urged the Indian decision-makers to emphasise consumer internet companies as they have been a testament to success in the past. He had drawn examples from Amazon, Facebook and Google and had said that there was a need to create dynamism in the Indian economy and our capital markets.

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