Improving hardware capabilities must for deeptech ecosystem: Nasscom V-C

Nasscom says India must build stronger hardware capabilities and deepen industry-academia collaboration as AI reshapes software development and the deep-tech ecosystem

India should focus on developing its hardware capabilities and deep-tech architecture for the next phase of growth as software capabilities have reached a limit, Nasscom vice chairman Srikanth Velamakanni said. 

The deep-tech industry still lacks entrepreneurial energy, risk appetite for big bets, conviction and product building, even as funding for it remains challenging, he added. However, the government and the venture capital ecosystem are attempting to improve this, with certain sectors such as space technology and defence technology showing improvement in funding amounts. 

“The low-hanging fruit of software services is gone as AI (artificial intelligence) and agentic AI have made coding easier and thus, easy to make software. There is an abundance of it now,” he said at a Nasscom event on Thursday. 

 

Nasscom President Rajesh Nambiar also said that while startup funding at the seed level remains a challenge, the industry is closer than ever to solve the problem. With so much of computing power and graphics processing unit (GPU), it is imperative for the hardware segment to evolve for modern software to work on it. 

That is true to some extent. Total deep-tech funding climbed up to $1.6 billion for 2025, up from $1.1 billion in 2023. However, the number of funding rounds fell to 274 from 350 in the same time, indicating investors were more focused on their bets. 

To boost the ecosystem, the central government has also approved the establishment of Startup India Fund of Funds 2.0 with a total corpus of ₹10,000 crore for the purpose of mobilising venture capital for the startup ecosystem of the country. 

And there is also the India Deep Tech Alliance (IDTA), a consortium of venture capital funds and big corporates such as Nvidia and Qualcomm, which will look to invest about $10-15 million in startups across space, semiconductor, AI and defence. 

A crucial part of developing the ecosystem is closer collaboration between industry and academia, where India still lags compared to the US and China. Ramgopal Rao, vice chancellor of BITS Pilani, pointed out the country ranks 86 in that collaboration list. 

“The academia identifies its own problems and solves them by writing papers. But many of these solutions are good till a proof of concept stage, beyond which scaling is a problem. What needs to be done is to create translation centres between these two, where the industry identifies the problem and finds people in the academia who are working in those areas to solve it.”