India has expanded its support network for startups, but the harder part begins once a prototype is ready. To ease this, under the MSME innovation scheme, incubation centres can receive financial assistance of up to Rs 15 lakh. Tamil Nadu has 243 host institutes under the scheme. At the national level, MeitY Startup Hub works with more than 135 incubators with focus on grassroots innovation and entrepreneurship in Tier-2 and Tier-3 cities.
The next challenge is to build deeper technologies that solve complex problems across aerospace, agriculture, climate, defence, healthcare and mobility. This requires stronger IP creation, greater R&D investment and a global product mindset.
Where the Journey Gets Difficult
For deep-tech startups, securing the first five to ten paying customers can be a major hurdle. Enterprises may hesitate to adopt products from unproven vendors, while lengthy procurement cycles and the time required to build trust can delay commercialisation. This creates a gap between a working technology and business execution. Government procurement can provide an important route, with the 30 per cent procurement provision for MSMEs and relaxation of certain experience requirements helping newer enterprises participate. The funding environment adds to the pressure. Investors are increasingly looking for sustainable unit economics, clearer routes to profitability and lower cash burn. For deep-tech ventures with longer development cycles, this transition can be particularly difficult.
Capital alone cannot address these challenges. Access to advanced laboratories, testing facilities, manufacturing capabilities and reliable supply chains are necessary. Talent is another gap. India has a large engineering workforce, but there is a lag in areas such as semiconductor design, AI and ML robotics and climate-tech engineering. This is where the startup story meets the industrial story. There is a need for more established companies to come forward and partner with startups for their needs.
Sector-specific regulations and compliance requirements with frequent policy changes increase burden and add to the operating costs of small teams. Exit opportunities are another concern, with a limited M&A market and domestic appetite for high-tech IPOs. CIIC’s fifth Mega Demo Day reflects an ecosystem where ideas, incubators, funding and investors are increasingly coming together. The next challenge is to make those connections work beyond the event.
