What is DeepTech?

Why in news ?  Recently ,the Department for Promotion of Industry and Internal Trade (DPIIT) officially notified the New Startup India Rules 2026. These rules represent a paradigm shift in how the government supports high-tech, research-heavy ventures.

Why the Change?

The previous 10-year window was found to be insufficient for “Deep Tech” sectors (AI, Semiconductors, Biotech, Spacetech). These ventures spend 7–8 years in intensive R&D and lab-scale validation, often losing their “Startup Status” and tax benefits just as they reach the commercialization phase.

Key Revisions at a Glance:

Feature	Regular Startups (Revised)	Deep Tech Startups
Eligibility Age	Up to 10 years	Up to 20 years
Turnover Limit	Up to ₹200 crore (Revised from ₹100cr)	Up to ₹300 crore
Primary Focus	Innovation & Scalability	Breakthrough science/engineering knowledge
Investment	General	High R&D intensity & Intellectual Property (IP)

Definition of “Deep Tech Startup”:

For the first time, the government has provided an official definition. An entity is classified as “Deep Tech” if:

• It works on solutions based on new scientific or engineering knowledge that is yet to be developed.
• It spends a major portion of its expenditure on Research & Development (R&D).
• It owns or is in the process of creating significant novel Intellectual Property (IP).
• It faces high technical/scientific uncertainty and capital-intensive development.

Major Benefits & Implications :

• Extended Tax Holidays: Deep Tech firms can now benefit from Section 80-IAC tax holidays and angel tax exemptions for a longer duration (up to 20 years).
• Access to Patient Capital: The rules aim to attract “Patient Capital” (long-term investment) from family offices and institutional investors who were previously deterred by the 10-year expiration of benefits.
• Loss Offsetting: Entities can now carry forward accumulated losses for up to 20 years to offset future profits, which is critical for R&D-heavy sectors that stay in the red for over a decade.
• Inclusion of Cooperatives: Interestingly, the 2026 rules have also opened startup recognition to Multi-State Cooperative Societies, aiming to bring innovation to rural and agricultural sectors.

Compliance & Restrictions:

To ensure these benefits reach genuine innovators, the DPIIT has tightened fund-use rules:

• Startups are prohibited from investing in non-productive or speculative assets (e.g., residential real estate, luxury assets, or unrelated shares/securities).
• Funds must be deployed primarily toward core business activities, innovation, and scaling.