At that time, MeitY was stepping into the spotlight with semiconductors, artificial intelligence and data privacy becoming national priorities. We asked him then, how he viewed his new portfolio as India embarked on its digital transformation. He had replied, “I expect it to be a very challenging assignment with a steep learning curve. I am not a technologist by training. I have to go there, learn the space quickly and make sure that the government’s objectives in that area are achieved.”
Two years later, we interview him again now. This time for a story on startups. His earlier remark comes vividly to my mind. In many ways, Krishnan himself embodies the spirit of a startup: entering new spaces, learning fast, figuring things out and performing at his best. Perhaps that is exactly what makes him the ideal choice to craft policies for India’s startups, an administrator who thinks like an entrepreneur.
Beyond Metros
India’s startup ecosystem has grown rapidly over the past decade. Today, there are over 32,000 deep tech startups, with approximately 2000 being added every year. Around half of these are located in Tier 2 and Tier 3 cities which reflects the decentralisation of innovation. Yet, challenges do persist. Indian private capital has historically leaned toward risk-free ventures like service companies as they have a high profit margin of around 25 per cent and fixed customer base. On the other hand, product-oriented startups involve higher risk but potentially higher rewards. “If you get into a product, your profits could potentially be much higher, but the risks are also much higher. Risk capital has always been at a premium in India, and deep tech investments require somebody to take that risk,” points out Krishnan. To address such shortfalls, the government has brought the Research, Development and Innovation (RDI) scheme. It is a massive government initiative with a corpus of USD 1 lakh crore over six years, designed to boost R&D by incentivising the private sector, specifically targeting strategic and sunrise sectors critical to India’s technological and economic security.
The focus is also widespread and not just limited to cities. “We are trying to push startup activity into tier 2 and tier 3 cities through programmes like MeitY Startup Hub 2.0 and GENESIS. The Software Technology Parks of India (STPI) currently operates across 62 locations nationwide. Except for about eight centers, most of these are based in tier-2 and tier-3 cities. Through STPI, we have initiated two key programmes to strengthen the startup ecosystem in these areas and the North Eastern region,” highlights Krishnan.
First, around 23 Centres of Excellence (CoEs) focused on various emerging technology domains have been established. Many of these CoEs are located in tier-2 and tier-3 cities, emphasising on promoting innovation beyond the metros. Additionally, in the North Eastern Region, collaborating with state governments across all eight states, Digital Growth hubs have been set up to support entrepreneurship and technology-led development. “Our broader aim is to ensure a strong push toward enabling growth wide across. One of the key challenges for tier-2 and tier-3 regions is achieving critical mass both in terms of talent and ecosystem depth as it is necessary for sustained momentum and investor interest,” points out Krishnan. Venture capitalists and private equity players look for such clusters before committing funds. Secondly MEITY is ensuring that such capital is channelised into these areas.
Making risk capital available
In parallel, under the India Semiconductor Mission 2.0, startups in the semiconductor design space are being encouraged. “For instance, under the Design Linked Incentive (DLI) scheme, 24 startups are already being supported. The revised version of the semiconductor mission will strengthen this further,” points Krishnan. By leveraging R&D and innovation (RDI) frameworks, it is ensured that startups gain better access to risk capital and scaling opportunities. Semiconductors are foundational to any nation’s technological sovereignty, and MEITY wants startups to play a strong role here. The semiconductor mission 2.0, currently under internal review, will integrate design, research and commercialisation to build a robust domestic semiconductor ecosystem.
The triple helix
The next phase of India’s technological progress depends not just on the scale of investment, but on how effectively knowledge creators and market enablers work together. Krishnan also underscored the growing importance of collaboration between universities, research institutions and industry which enables sustainable innovation. “This is the whole purpose of initiatives like the Anusandhan National Research Foundation (ANRF). These frameworks are meant to bring the best of academia, government and industry onto a single platform where the focus is on applied research to commercialise an idea,” he highlights. To this end, MeitY has been realigning its research budget to complement the objectives of ANRF. Unlike traditional grant-based research funding, MeitY’s approach is application-driven, focusing on areas where research outcomes can lead to tangible products, intellectual property, or scalable solutions. This model bridges the knowledge gap by encouraging researchers to think about practical outcomes, and the market gap by exposing industry to new ideas emerging from research institutions.
TN needs to focus on scaling up within
Krishnan’s familiarity with Tamil Nadu’s industrial DNA perhaps gives him a unique perspective on the state’s ecosystem. The state is long known for its manufacturing excellence and strong education base. “Tamil Nadu is a state that should naturally see much more startup activity,” Krishnan observes. While there has been visible progress in recent years, the next big step would be to see more startups scaling up from within the state. “We would like to see not just new startups emerging but also more of them growing to the next level. Today, a few tend to move to other cities once they expand. That will change only when the entire ecosystem of investors, incubators, mentors and large enterprises comes together,” Krishnan explains. Describing it as a chicken-and-egg situation, he pointed out that venture capitalists are more likely to invest where there is already a vibrant concentration of startups, while startups, in turn, are drawn to places where funding and support networks exist. “But I think we are beginning to break out of that cycle now,” Krishnan adds optimism.
Mentorship, access and relevance
Startups today face quite a different set of challenges. Krishnan identifies them as three major ones: mentorship to help assess the viability of startup ideas and commercialise them, linking to the correct customer base and to be relevant even after scaling up. Despite these challenges, Krishnan points out that the ecosystem is moving in the right direction, “many of these issues are gradually being addressed and we are seeing a significant rise in the number of startups”
Innovations take time to mature and steady funding is crucial during this period. Krishnan emphasises that is where the government has come with funding schemes that offer patient capital to support startups over longer time horizons, allowing them to develop, refine and scale breakthrough technologies
