India commits $25 billion to build next generation AI, chip and space start-ups

India is preparing a $25 billion funding push for Deep Tech start-ups, signalling a major effort to strengthen domestic capabilities in artificial intelligence, semiconductors, advanced manufacturing, drones and space technology.

Speaking to CNBC, Rajat Tandon, President of the Indian Venture and Alternative Capital Association (IVCA), said the government has committed $11 billion under the Research Development Infrastructure Fund, with venture capital and private equity managers expected to match the contribution. Additional capital of around $3 billion to $4 billion is also expected to be added, taking the total available pool for Deep Tech investments to approximately $25 billion.

The planned investment comes as India seeks to reduce dependence on foreign frontier technologies while strengthening its position in a rapidly evolving global technology landscape dominated by the United States and China.

Funding scale marks a sharp shift in Deep Tech ambitions

According to Tandon, India invested $11.6 billion in Deep Tech over the last decade. The proposed funding pool represents a significant increase in available capital for sectors requiring long development cycles and substantial research investments.

Deep Tech broadly covers businesses operating in:

• Artificial intelligence
• Semiconductors
• Advanced manufacturing
• Drones
• Space technology

Industry leaders cited by CNBC said growing geopolitical uncertainty has increased the strategic importance of building indigenous technology capabilities.

The funding initiative reflects a broader recognition that access to critical technologies can become uncertain amid changing global trade and technology policies.

Geopolitics drives focus on sovereign technology

Experts speaking to CNBC said India's Deep Tech push is being shaped by concerns around technology access and supply chain resilience.

Anandamoy Roychowdhury, Managing Director at Crane Venture Partners, said increasing trade restrictions and export controls are encouraging countries to develop domestic technology ecosystems. He noted that India is placing greater emphasis on local innovation because access to critical technologies could be disrupted unexpectedly.

The issue gained attention earlier this year when AI company Anthropic restricted access to certain advanced models for foreign nationals in compliance with a US government export-control directive, highlighting the growing influence of technology controls on global innovation ecosystems.

For India, the development reinforces the importance of building domestic capabilities in strategic sectors rather than relying exclusively on overseas providers.

Start-up ecosystem shows signs of maturity

Industry leaders attending SuperReturn Asia told CNBC that India's Deep Tech sector remains at an early stage but is increasingly demonstrating the ability to create globally competitive companies.

Shweta Rajpal Kohli, President and Chief Executive of the Startup Policy Forum, said innovation activity in India's Deep Tech ecosystem is accelerating rapidly, with several companies progressing from research and prototyping towards commercial deployment.

Recent milestones include:

• AI start-up Emergent achieving unicorn status
• Space technology company Skyroot crossing a $1 billion valuation
• Sovereign AI company Sarvam reaching unicorn status following fundraising activity

These developments have strengthened investor confidence in India's ability to build globally relevant technology businesses.

Investors increase exposure to Deep Tech

Investor interest in the sector continues to grow despite broader funding challenges across the start-up market.

Roychowdhury told CNBC that approximately 80% of Crane Venture Partners' $150 million Asia-Pacific fund is currently concentrated in India, reflecting growing conviction in the country's innovation ecosystem.

An IVCA survey covering 100 investment funds found:

• Nine out of 10 funds are investing in Deep Tech start-ups
• 37% of funds hold stakes in between 11 and 20 Deep Tech companies
• The sector attracted nearly $3 billion in funding during 2025, its highest annual level on record

The report noted that Deep Tech funding increased even as overall start-up investment activity in India declined.

Capital gap remains a key challenge

Despite the momentum, industry leaders acknowledge that India still trails major global markets in available growth capital.

The IVCA report highlighted that US Deep Tech companies raised approximately $136 billion during the same period, underlining the scale difference between the two ecosystems.

Tandon told CNBC that one of India's biggest constraints is the limited availability of large domestic investment cheques required to scale research-intensive businesses. He said only a small proportion of investors currently have the capacity to deploy investments exceeding $10 million, and called for greater participation from high-net-worth individuals and family offices.