Jai Mallick, MD of our India operation, tells us why deeptech innovation in the nation is booming, and outlines the considerable advantages facing early movers into the market ...
India is a land of incredible opportunities – opportunities stitched together by diversity, ambition and potential.
Growing up in modern day India gave me first-hand experience of the nation’s need for development, love for business and desire for collaboration. With a number of enabling conditions now in place, these foundational characteristics are shaping a rapidly evolving deeptech and enabling tech ecosystem that will define the future of India, and the world.
But here’s the kicker: even though I call it ‘home’, the country never ceases to surprise me. In many areas, India is already outpacing advanced nations through its ingenuity – frugal innovation in spacetech, for example.
But at the same time, India can access low-hanging fruit to strengthen its technological capabilities – R&D expenditure as a percentage of GDP is currently around 0.7% but expected to grow five-fold over the coming decades to surpass China’s current 2%+ and the US at 3%+, and towards South Korea’s 5%.
Backed by a stable, forward-looking government addressing the few remaining ecosystem limitations with speed and conviction, India is now ready for international partners to enter, collaborate and scale. But navigating this evolving environment can be tough for those new to the market.
So, let’s understand India – why it’s becoming such an attractive market for deeptech innovation and where the hottest opportunities lie …
Seizing the deeptech moment
India stands on the threshold of a once-in-a-generation opportunity to reinvent itself as an international tech powerhouse. Far from its previous image as a cost-effective offshoring destination, it’s now fast becoming a hub for technology innovation, development and manufacturing.
This has been decades in the making – from the liberalisation of the Indian economy in the ‘90s to the shift towards manufacturing and services, reforming of India’s capital markets and the government-led enablement of a globally-competitive innovation ecosystem.
India’s rise is further driven by a formidable alignment across five enabling pillars: unprecedented market scale, improved technology infrastructure, bold and targeted deeptech policy, an enduring STEM talent pipeline and an increasingly sophisticated capital environment.
These factors make India a prime launchpad for deeptech ventures across the world seeking international scale, innovation and sustainable growth.
Let’s briefly zoom in on each of these enablers to see how they play a role – and how the whole is greater than the sum of its parts.
Market at global scale
As the world’s most populous country, India is on track to grow its $4 trillion economy – already the world’s fourth largest – by a factor of eight by 2047. A large part of this is thanks to its expanding, technology-enabled middle class and its 900 million+ digital consumers.
This proving ground is a dream come true for advanced technology companies. And, with a median age of just under 29 years, this vast customer base has decades of growth potential built in.
Improved technology infrastructure
India’s legendary entrepreneurial spirit is being recalibrated to support cutting-edge technology – as are the country’s infrastructure facilities and incentives for innovation, digital services, manufacturing and investment. And the pace at which this is happening is impressive, thanks largely to flagship, cross-sector government programmes.
For example:
- The Startup India scheme is fuelling a 160,000-strong startup ecosystem, including over 3,500 deeptech companies tackling everything from AI and quantum to medtech and climatetech
- Digital India is powering explosive digital growth – expanding internet access to over 900 million users, driving real-time digital transactions and transforming government and citizen services
- Make in India is repositioning the nation as a global manufacturing powerhouse, adding significant capacity in electronics, EVs, semiconductors and cleantech. Manufacturing spend on digital technologies is also making India the leader in AI, IoT and robotics, as well as in advanced materials, composites, and cleantech
- The Production Linked Incentive (PLI) scheme is driving more than $26 billion of investment in 14 key sectors, creating high-value jobs and positioning India as a supply chain linchpin
Targeted deeptech policy
Historically seen as a barrier to innovation, policy in India is now being applied as a lever to accelerate deeptech development. Through coordinated frameworks, incentives and targeted missions, forward-thinking policies are unlocking research, partnerships and capital, enabling global competitiveness and driving next-generation technology development across strategic sectors.
Amongst them:
- India’s National Deeptech Startup Policy is shaping a supportive ecosystem, addressing startups' challenges in funding, IP, infrastructure and talent
- A $11 billion RDI (Research, Development and Innovation) Scheme provides grants and incentives for breakthrough research, connecting academia, industry and government for tech transfer
- The forward-thinking Deeptech Fund of Funds channels patient capital to deeptech ventures, bridging financing gaps for long-term innovation and scale
- Sector-focused initiatives like the IndiaAI Mission, National Quantum Mission, India Semiconductor Mission and National Green Hydrogen Mission are funding and fostering cross-border collaborations and the development of next-gen, high-growth, strategic technology areas
World-leading STEM talent
India is well known for its unmatched STEM talent base. With 1.5 million engineering students graduating every year and more than a third of the world’s STEM graduates hailing from India, global companies will find sustained quality and breadth of talent, across disciplines, for years to come.
What’s less obvious is that this talent pool is distributed evenly across the country, with diverse high-tech workforces in tier I and tier II cities available to hit the ground running.
And with vast experience in fields including AI, IoT, advanced manufacturing and medtech, India’s workforce is not just effective in service delivery but primed for strategic innovation, as international enterprises shift their global R&D, product creation and platform ownership to Indian teams and centres.
Finance and capital, from seed to scale
India’s funding landscape matches its innovation ambition.
Venture capital and private equity investment are robust, with a surge of global, sovereign and domestic funds now targeting deeptech scaleups. The country’s sovereign Deeptech Fund of Funds will further accelerate access to risk capital, supporting everything from early research to commercial growth.
The financial ecosystem, including government-backed credit, startup-friendly regulations and rising corporate and LP (limited partner) engagement, makes India one of the world’s most attractive and liquid innovation investment environments.
Importantly, India is also open for international businesses with complementary technologies, applications, best practices and aspirations to come in and collaborate towards the country’s growth objectives.
Where the opportunities lie
There are six sectors where the prospects for international companies are particularly hot.
- Aerospace & Defence: India’s aerospace and defence sectors are key growth engines. They have recently been liberalised and there’s an abundance of opportunities for international firms – large and small – to co-invest, co-innovate and co-produce alongside Indian champions and supportive government ecosystems. India’s maturing spacetech industry is a shining example of the country’s inherent deeptech prowess.
- Electronics, IT & quantum computing: The world’s preeminent IT services hub, India has also been rapidly progressing up the electronics value chain and is a market with huge potential in fields including smartphones (it’s the world’s second largest phone maker), IoT technologies, data centres, AI and quantum computing.
- Advanced manufacturing: The Make in India initiative has accelerated the nation's shift from a service-led economy to a global production and industrial tech hub, creating up to 90 million jobs. India’s PLI scheme has attracted advanced manufacturing in everything from electronics and telecoms equipment to semiconductors and pharmaceuticals and is incentivising investment into new-age Industry 4.0 applications.
- Automotive & electric mobility: The country is the third-largest automotive market, one of the fastest-growing EV markets and has a strong focus on solutions development for connected and autonomous vehicles, creating a fertile environment for software, electronic component and mobility platform providers to pilot projects, scale up and export from India.
- Cleantech: Having reached 50% of its installed electricity capacity from non-fossil fuel sources, India is delivering on its Paris Agreement commitment five years ahead of schedule and speeding towards a 500 GW non-fossil fuel energy target by 2030. But not all the pieces of the net-zero puzzle are in place, opening substantial opportunities for innovators in energy, agriculture, waste-to-value, technology-led food production and water tech.
- Medtech & life sciences: Producing a broad array of high-quality medical devices, India’s medtech market is expected to reach $30-50 billion by 2030 and, astonishingly, the life sciences sector is projected to surpass $2.7 trillion by 2033. International firms can benefit from plugging into advanced R&D clusters for collaboration.
Stay tuned for more detailed profiles of these six opportunity sectors coming soon.
Why act now?
So, there’s never been a better time to consider India as the next stop on your global expansion roadmap.
The nation is at a critical inflection point as a deeptech and innovation launchpad, with government policy, global capital and talent all aligned for international trade, technology transfer and collaboration.
Admittedly, competition from your global peers is intensifying, but early movers can still secure partnership advantages, regulatory incentives and momentum that later entrants won’t enjoy.
All this said, breaking into India and succeeding in the market is no walk in the park. Efficiency, commitment and a nuanced understanding of the business culture are essential – as I will explore separately in the near future.
In the meantime, I hope to see you in India soon. A beautifully diverse world of opportunity is waiting …
To discuss how we could support you in India, please contact Jai at jai.mallick@intralinkgroup.com.