The report presents the state of the sector, the challenges faced by start-ups and the actions required to strengthen hardware-led growth.
According to the report, India’s engineering hardware market is expected to cross USD 130 billion by 2025 with continued annual growth of about 9.5 per cent.
The study is based on inputs from more than 120 start-ups across clean-tech, defence, electronics and advanced manufacturing.
The report states that India’s hardware landscape is expanding in areas such as space-tech, defence manufacturing and AI-based hardware.
Space-tech has grown from one start-up in 2014 to almost 266 in 2025. The India AI Mission is also supporting new hardware development, including the first indigenous AI GPUs, with a prototype planned for release in 2025 and full-scale production targeted for 2029.
The whitepaper highlights a slowdown in the wider start-up funding environment. Total funding dropped from USD 42 billion in 2021 to USD 10 billion in 2023, with a slight recovery to USD 12 dollars in 2024. The number of new unicorns fell from 45 in 2021 to 2 in 2023. More than 28,000 start-ups closed between 2021 and 2024.
The report outlines several challenges for engineering hardware start-ups. These include limited access to digital design tools, high licensing costs, shortage of specialised talent and restricted access to testing centres.
Start-ups also report gaps in infrastructure, difficulties in forming corporate partnerships and high operational costs.
To address these issues, the report lists five focus areas. These include wider access to digital design tools, shared testing and fabrication facilities, creation of Centres of Excellence, early-stage funding based on digital validation and skill development through university partnerships.
The report states that engineering hardware can support India’s plans for Viksit Bharat if policy support, physical infrastructure, digital systems, capital access and workforce development progress together.
