India ranks sixth globally in deeptech startup ecosystems: Nasscom

According to the report, in CY23, Indian deeptech startups witnessed a dip of 77 per cent in funding compared to last year and secured $850 million in investments

India is home to over 3,600 startups in the deeptech space, and ranks sixth in the global deeptech ecosystem, according to a recent Nasscom-Zinnov study.

Of the 3,600 deeptech's over 480 deeptech startups were established in CY23 alone, which is two times higher than 2022, the report titled ‘India's deeptech dawn: forging ahead’ said.

The report added that over 100 were deeptech firms, which have developed intellectual property or innovative solutions in new domains. 

Notably, 74 per cent of the deeptech startups established in 2023 have concentrated on AI, a significant increase from 62 per cent in the period from 2014 to 2022, the report said.

 

Though the country is seen as the hub for global AI talent and largest pool of developers, when it comes to deeptech, it is ranked sixth. 

“For India to be in the top three deeptech startups ecosystem, key areas that need support are access to patient capital for deeptech startups to build and scale their products, strong R&D partnerships with academia for nextgen innovation, streamlining government procurement for startups to build India specific solutions and implementation of the deeptech policy that was tabled in 2023,” said Kritika Murugesan, head, Nasscom Deeptech. 

According to the CY23 report, Indian deeptech startups witnessed a dip of 77 per cent in funding compared to the last year and secured $850 million in investments.

“Both early and late-stage deals have witnessed a reduction of over 60 per cent this year. This downturn is attributed to smaller average investment sizes at both the seed and late stages and investors remaining cautious largely due to the extended gestation periods typical of these ventures. 31 M&A deals were reported in CY2023, a decline of about 45 per cent as focus shifted to accelerate tech capabilities that provide the AI edge,” it added.

Another trend the report notes is an increased thrust on building solutions that are sector- focused in the deeptech startup ecosystem. 

The report highlights four sectors to be of strategic importance, including space and defence, healthcare, automotive and industrial manufacturing, where more than 500 startups were found to be building solutions for electrification, industrial robotics, surveillance and drones, satellite imagery, propulsion systems, cancer diagnostics, among others.

More than 110 deeptech startups were incepted in the emerging hubs in 2023 -- a twofold increase from 2022 and the highest growth in the last five years, driven by an expanding talent pool, cost advantage, supportive ecosystems, and proactive policies enhancing innovation in these areas, it added.