The recent launch of the draft National Deeptech Policy is well-timed considering global tailwinds and our strengths as a country. Globally, there is a realignment of value chains as well as a need to rebuild critical infrastructure for the digital age. Most physical industries are ripe for transformation.
Back home, we have a vast talent pool (nurtured by educational institutions, more than 1,600 global capability centres (GCCs) and R&D centres of multinational corporations, and India Inc.), as well as a large and growing market.
India is also the fastest-growing large economy and a prime investment destination. Given this, it is time to make meaningful and patient bets to develop a sustainable and competitive deeptech startup ecosystem in India.
Choosing the right focus areas
Rather than boiling the ocean, resources should be targeted to a few focus areas in alignment with global trends, local talent, existing infrastructure, and market opportunities. Based on this discerning approach, four domains could prove crucial:
Intelligent Mobility: The rapid adoption of EVs globally, the move towards autonomous driving and emphasis on sustainability together present a large opportunity. As per the International Energy Agency (IEA), by 2030, EVs are projected to represent more than 60% of vehicles sold globally, and will require a completely different technology stack, supply chain, power grid etc.
Semiconductors: Building a semiconductor design ecosystem is critical for supply chain resilience, hardware security, trade balance and global competitiveness in advanced electronics. We have a large pool of VLSI (very large scale integration) design engineers, and significant policy support including $10 billion in fiscal stimulus and the formation of India Semiconductor Mission (ISM).
Cybersecurity: Given the increasing convergence of information technology and operational technology, the move towards edge computing, evolving data privacy landscape, and new attack vectors, the field of cybersecurity is undergoing a transformation. This presents a significant opportunity. The Internet of Things (IoT) security market alone is estimated to be over $40 billion, growing at a CAGR of 22%.
Digital Health and Life Sciences: The increasing adoption of artificial intelligence, abundance of data, and advances in microfluidics, robotics, and sensor technology present a fertile ground for innovation in digital health and medical devices. Similarly, strides in computing and biological engineering have unlocked significant potential in advanced therapies, and synthetic biology.
Concentration of resources for critical mass
Having chosen our focus areas, a capital-efficient approach would be to establish dedicated Centres of Excellence (CoEs) for each. Consolidating resources within an ecosystem will help to build critical mass and incubate the best ideas. This can be done by aggregating:
Shared infrastructure and resources: Making shared infrastructure available for startups will help reduce operational costs. This should include office and lab spaces, critical equipment, tools, as well as access to mentors.
Funding: Pre-seed funding can be made available to annual cohorts while embracing the Fail Cheap, Fail Fast philosophy. This will create meaningful deal flow for growth capital.
Talent: CoEs should become The Place To Be for startup founders, joiners etc.
Regulations and incentives: Providing regulatory sandboxes and testbeds can help, too. CEOs can also help shape regulations for emerging tech and help startups avail grants, incentives etc.
Industry linkages, market access: Bringing industry leaders (particularly profit and loss, and M&A leaders) together with entrepreneurs.
Nurturing India's deeptech startup ecosystem promises to be a transformative journey, but it demands patience, perseverance, and focus. We must do more of less and prepare for a long march while celebrating small wins and successes on the way.
Raghav Gupta is Vice President at venture capital firm Endiya Partners. Views are personal.
