January 8, 2024
The upcoming wave of innovation globally will be driven by deep tech, resulting in fewer but more valuable startups
Officials anticipate a greater need for policy support compared to the previous phase
Stable policy and taxation, improved valuation norms, and increased research and collaboration initiatives with industry and academia are anticipated
The government will encourage deep tech startups to venture into tier-2 and tier-3 towns
Government officials have announced the forthcoming launch of the second phase of the Startup India program on January 16, with a strategic emphasis on deep technology startups. These startups will be involved in various sectors, including semiconductor chips, related research and design areas, quantum and high-performance computing, artificial intelligence, and cybersecurity. An unnamed official highlighted the shift in focus from the initial phase, which centered on consumer internet and service-based startups, stating that the upcoming wave of innovation globally will be driven by deep tech, resulting in fewer but more valuable startups.
The Startup India initiative, initiated eight years ago, aimed to support young entrepreneurs by facilitating compliance with rules and regulations, expediting the patent application and granting process, and providing exemptions from income and capital gains tax for eligible entrepreneurs and startups. As the second phase zeroes in on deep-tech startups, requiring additional time and funds to establish profitability, officials anticipate a greater need for policy support compared to the previous phase.
Acknowledging lessons learned from adjustments in the initial Startup India plan, officials anticipate potential enhancements in stable policy and taxation, improved valuation norms, and increased research and collaboration initiatives with industry and academia in the upcoming phase. The government is also expected to facilitate eligible startups in securing research and development support from global institutions.
In light of this, officials anticipate a higher corpus for Funds of Funds for Startups, with an extended gestation period. Over the period between 2016 and 2021, the Department for Promotion of Industry and Internal Trade recognized over 41,000 startups across various sectors. The government had amended 39 policies during this period to enhance the ease of doing business, facilitate capital raising, and reduce compliance norms.
Looking ahead, officials express the intention to encourage deep tech startups to venture into tier-2 and tier-3 towns, as their presence in metro cities or tier-1 towns is deemed non-essential for their operations.
Source: Economic Times