The Indian government’s recently unveiled India AI Mission has been met with optimism from industry stakeholders, who view it as a “positive first step” towards fostering a supportive environment for deeptech startups. Experts believe the mission’s emphasis on accelerating research and development (R&D) within these companies will fuel innovation and lead to the creation of novel business models in the deeptech sector.
Last week, the Union Cabinet approved a five-year outlay of Rs 10,372 crore (approximately $1.25 billion USD) for the India AI Mission. This initiative aims to stimulate advancements in artificial intelligence (AI) through public-private partnerships (PPPs). Nearly Rs 2,000 crore (approximately $240 million USD) of this budget is specifically allocated to financing deeptech startups, with a primary focus on accelerating their R&D efforts.
For deeptech startups in India, access to funding has consistently been a significant hurdle to innovation. The dedicated financial support provided by the mission is seen as a much-needed boost.
“The intricate nature of their projects, extended development cycles, and perceived risks often lead to repeated funding denials for deeptech startups,” explained Avi Dahiya, founder and CEO of Twyn, a deeptech enterprise software-as-a-service (SaaS) startup. Industry estimates suggest that of the roughly 3,000 deeptech startups currently operating in India, less than 20% have been able to secure adequate financial backing.
While acknowledging that the Rs 2,000 crore allocation is not a substantial sum, industry stakeholders view it as a positive signal to the venture capital (VC) and investment communities. “This dedicated budget allocation, along with the launch of the AI mission, has positioned AI at the forefront of discussions within the VC ecosystem,” said Amiya Kumar Samantaray, founder and CEO of Datoms, a deeptech Internet of Things (IoT) startup. “This will likely attract more investors to explore opportunities in the sector,” he added.
However, industry experts emphasize that the investor community remains keen on receiving clarification on regulations and data-sharing policies. Sunil Shekhawat, founder and CEO of SanchiConnect, a community platform for deeptech startups, believes that the mission will also encourage new corporate social responsibility initiatives focused on supporting deeptech startup R&D through technology business incubators (TBIs) and government-backed incubators.
The mission’s focus on accelerating R&D in deeptech AI startups is expected to unlock further opportunities and lead to the development of innovative business models. “Across various sectors, there is a growing recognition that R&D is not a luxury; it’s essential for remaining competitive,” said Dahiya. “Excellence in R&D is no longer exclusive to tech giants; startups and SMEs are also actively investing in R&D,” he elaborated.
The India AI Mission aligns with the government’s ongoing efforts to bolster innovation within the deeptech sector. Last July, the government released a draft of the National Deep Tech Startup Policy (NDTSP) for public consultation. This policy aims to address the challenges faced by startups in obtaining funding, securing access to qualified talent, and scaling their R&D operations. In December 2023, the Department for Promotion of Industry and Internal Trade (DPIIT) announced the conclusion of consultations on the Deep Tech Startup Policy and confirmed that a draft cabinet note was under development.
Industry observers view the approval of the India AI Mission as a strategic move towards establishing India as a global leader in AI by “democratizing access to artificial intelligence.” “The creation of an AI marketplace focused on building a more extensive ecosystem signifies a practical approach,” commented Soumendra Mohanty, chief sales officer (CSO) at Tredence, an AI and data analytics firm. “This initiative will streamline access to critical resources and foster collaboration within the AI ecosystem,” he added.
Datoms’ Samantaray believes that the mission also opens doors for government departments to collaborate directly with startups across diverse AI domains to address challenges specific to the Indian context. With the availability of adequate funding and support, the number of AI startups in India is expected to rise significantly. Industry estimates suggest that India could be home to over 10,000 deeptech startups by 2030.
The India AI Mission represents a significant step forward for India’s deeptech sector. By providing much-needed financial resources and fostering a more supportive environment, the mission has the potential to propel India to the forefront of global AI innovation.
