Nasscom Calls for a ₹10k Cr Push for DeepTech Startups: Reports

India’s start-up ecosystem is buzzing with potential, and at its highly driven by DeepTech Startups. Recognizing this, the National Association of Software and Services Companies (Nasscom) has put forth an ambitious call to action: the creation of a ₹10,000 crore DeepTech fund to propel early-stage innovation and solidify India’s position as a global leader in cutting-edge technologies, claims the reports.

But that’s not all. Nasscom’s comprehensive recommendations for the Union Budget 2025-26 span beyond just funding, envisioning a future where India’s IT and tech industries thrive under simplified regulations and strategic financial support.

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Budget Expectations

India stands at the crossroads of a tech revolution. With a growing pool of start-ups working in areas like artificial intelligence, space technology, biotechnology, and quantum computing, the country is poised to redefine global innovation benchmarks. Yet, the challenge lies in securing adequate funding and creating an environment conducive to growth.

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Nasscom’s proposal for a ₹10,000 crore DeepTech fund aims to bridge this gap. Designed to address the unique needs of early-stage DeepTech ventures, the fund underscores the importance of fostering innovation in areas that are both commercially viable and strategically critical for national development.

Breaking Down the ₹10,000 Crore DeepTech Fund

The proposed DeepTech fund is not just a financial tool—it’s a strategic framework tailored to nurture two key segments within the DeepTech ecosystem:

1. Commercial Breakthroughs for Global Competitiveness
   This segment focuses on high-growth markets with immense potential, such as electric vehicle (EV) batteries, space technology, selective AI, and biotech. The goal? To empower Indian start-ups to compete on a global stage, rivaling counterparts in the US and China. Here, equity-based funding will take precedence over grants, with success measured by market penetration and revenue milestones.

2. Strategic Innovations for National Needs
   The second segment zeroes in on critical technologies that address India’s strategic interests, including defence, agricultural biotech, climate technology, and quantum computing. While these sectors may not promise immediate commercial returns, they hold the key to building expertise in areas vital to national security and sustainability.

Nasscom has proposed a matching investment strategy to de-risk private capital. By encouraging private co-investment in “daughter funds,” the government can amplify the impact of the DeepTech fund, ensuring a steady flow of capital into this high-potential sector.

Beyond DeepTech: Reforms for the IT-BPM Sector

The DeepTech fund is part of Nasscom’s larger vision for India’s tech industry. To attract Global Capability Centers (GCCs) and streamline operations for multinational enterprises (MNEs) in the IT-BPM sector, Nasscom has urged the government to:

• Simplify tax deducted at source (TDS) provisions.
• Address tax-related issues for non-resident companies.
• Resolve challenges related to the equalisation levy impacting e-commerce players.
• Improve litigation management to create a business-friendly environment.

These measures aim to ease doing business and position India as a preferred destination for global IT operations.

Read More: India's DeepTech: Cash-Strapped Genius or Next Big Thing?

The SEZ Conundrum: A Call for Asset-Light Flexibility

One of the standout recommendations addresses the challenges faced by IT companies operating within Special Economic Zones (SEZs). Under current regulations, a portion of profits must be allocated to the SEZ Re-investment Reserve and used exclusively for acquiring plant and machinery.

This poses a problem for IT companies, which typically operate asset-light models with minimal investment in physical infrastructure. Nasscom has suggested broadening the scope of eligible expenditures under Section 10AA of the IT Act, enabling IT companies to make better use of income tax benefits during their 11th to 15th years of operation.

Nasscom’s recommendations reflect the pulse of India’s tech ecosystem—a dynamic blend of ambition, innovation, and resilience. As the government deliberates on the Union Budget 2025-26, these proposals serve as a roadmap to unlocking the true potential of India’s DeepTech and IT sectors.

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For DeepTech start-ups, the proposed fund could be a game-changer, providing the much-needed impetus to scale and innovate. And for India as a whole, it’s a step closer to becoming a global technology powerhouse.

As the tech world watches closely, one thing is clear: India’s DeepTech story is just beginning, and the next chapter promises to be nothing short of transformative.

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