Expect to see 10,000 deep tech Indian startups by 2030: Nasscom's Narayanan

The Indian deep tech startup ecosystem has come of age with over 3,000 companies that have grown at 53 per cent CAGR over the last 10 years, according to a report by Nasscom, the apex body for the $245 billion technology industry in India.

In an interview with Peerzada Abrar on the sidelines of the Future Forge event in Bengaluru last week, Ramkumar Narayanan, chairperson of Nasscom's DeepTech Council and vice president of technology and managing director VMware India, said by 2030, Nasscom expects to see at least 10,000 deep-tech startups from India and many of them to be world-recognised in their spaces.

What triggered Nasscom to focus on deep tech companies?

Our (division) used to be called Product Council for the last 20 years. This year, we decided to pivot it to a 100 per cent focus on deep tech. But that doesn’t mean losing the flavour of product tech companies that have been built over the last 20 years and the learnings from them. Tech startups are now in good shape as there are enough people and investors. We said we now need to start helping and supporting deep tech companies. As India starts to grow in terms of its own ambitions and areas of focus, deep tech is important because this could cut across various verticals such as health tech, climate tech, agri-tech and energy and mobility sectors.

What are the challenges faced by deep tech companies?

Deep tech requires a lot of patient capital, as the payoff is not the same as consumer internet or software-as-a-service (SaaS) sectors. So, if you're solving a deep science-driven problem, it's going to take you at least 5-6 years or sometimes eight years before you have a product for the market. Today, most of the institutional investors are looking for a payoff in three to four years or five years. But in deep tech, the first product and going to the market may take eight years. The potential sources of capital for deep tech companies include government, grants and institutional investors. Venture capital investors have to make sure that the limited partners investing in their fund are cognisant of the fact that the returns here may take time. The funding ecosystem is a key part of making these companies successful. Also, the talent that is required for these companies is different. In the past, we would look for engineering talent or product management. Now they may require talent having domain knowledge. The other area is market access and issues related to the policies and regulatory environment.

How is Nasscom working on addressing these challenges for these companies?

In India, it takes deep tech firms forever to get $1 million in funding whereas a comparable company in the US gets $20 million to $100 million as grant funding. The government has recognised this and we've been working with them on it. They have created a national research fund. It is similar to the US-based National Science Foundation (NSF). The modalities of how you access those funds are still being worked out. We're building a strong industry-academia engagement model as part of Nasscom. These include connecting the researchers at institutions with the industry and also helping them start companies. The other aspect is affecting the curriculum in such a way that future deep-tech jobs get created in the market. As India is starting to make the deep tech stack, a lot of these (challenges) will have to be solved and Nasscom as an industry body is starting to bring our assets together to focus on this. For example, we have announced a set of partnerships for funding and a collaboration with IIT-Madras Research Center.

How big is the opportunity for the deep tech companies?

There are enough deep problems to solve in India. We had one startup presenting at the Future Forge event. They have built eyes for the Pragyan rover (part of the Chandrayaan-3 mission) to help it traverse the crater-filled lunar surface. They are now seeing a lot of uptick for low light computer vision products and these kinds of requirements are coming from other parts of the world as well. Another company is the agri-tech space. They do precision deployment of fertilisers and pesticides. They started in India and now they are working with the farmers in California. Another firm is making amphibious drone boats. Unlike the earlier generation of tech companies, which attracted a lot of limelight, these companies are operating quietly and solving some of the deepest problems. 

What are the collaborations you are having with the government to come up with policies supporting deep tech companies?

There is a National Deep Tech Startup Policy (NDTSP) coming out. We have been partnering with the office of the Principal Scientific Advisor to the Government of India, related to the framing of that policy. It is going through its feedback phase and is expected to be announced soon…We are in constant dialogue with the government. This includes (sharing) learnings while working with these startups.  By 2030, we hope to see at least 10,000 deep-tech startups from India. I think many of them would be world-recognised in their spaces. I think that's possible.