India has revised its startup framework, increasing turnover limits, extending eligibility for deep-tech firms, and including cooperative societies in the Startup India programme. India has overhauled its startup recognition framework, widening access to policy benefits by raising turnover thresholds, extending eligibility timelines for deep-technology firms and bringing cooperative societies into the ambit of the Startup India programme.
Under new norms notified by the Department for Promotion of Industry and Internal Trade, a startup will now be defined as an entity up to 10 years from incorporation with turnover not exceeding Rs 200 crore in any financial year. For firms recognised as deep tech startups, the eligibility window has been extended to 20 years, with the turnover cap raised to Rs 300 crore.
“The objective is to enable greater support for emerging deep-tech ventures, long-term R&D-driven enterprises & empowering cooperatives to be active participants in India’s rapidly growing entrepreneurial landscape,” commerce and industry minister Piyush Goyal said in a post on X.
“These reforms aim to take India’s startup journey into its next phase of growth & further strengthen the country’s position as a global innovation hub,” Goyal said.
The government, however, has also imposed certain restrictions to ensure benefits of a recognised startup flow to genuine entities. “The government of India has now notified a revised framework and eligibility criteria for recognising entities as startups, with the objective of strengthening the country’s innovation ecosystem,” the department said, adding that the changes are aimed at supporting deep-technology ventures, long-term R&D-driven enterprises and innovation-led cooperatives.
India has recognised more than 200,000 startups since the programme’s launch in 2016, making it one of the world’s largest startup ecosystems. Recognised firms are eligible for benefits including access to government funding schemes, tax exemptions and regulatory relief.
The overhaul reflects a shift in India’s startup landscape toward longer innovation cycles, higher capital intensity and delayed commercialisation, particularly in deep tech, manufacturing and R&D-heavy sectors, the department said, noting that many such firms outgrow existing thresholds while still in development.
The formal recognition of deep tech startups signals a strategic shift, said Sandeepp Jhunjhunwala, M&A tax partner at Nangia Global Advisors. “The inclusion of the deep startups category showcases that India is prioritising deep tech to move from a nation of technology adoption to one of technology innovation,” he said
\While the list of non-permissible asset investments for startups remains largely unchanged, the notification introduces a new restriction covering “any asset or activity of a speculative or non-productive nature, as may be notified by the government,” Jhunjhunwala said. Despite the ecosystem crossing 200,000 DPIIT-recognised startups, only about 2% currently receive income tax exemptions under Section 80- IAC, he said.
The revised framework also brings multi-state and stateregistered cooperative societies within the definition of eligible startups, a move the government said could help drive innovation in agriculture, rural development and allied sectors. The changes follow consultations with industry stakeholders and multiple ministries, and are intended to reinforce India’s ambition to position itself as a global hub for high-technology and knowledge-intensive entrepreneurship, the department said.
Any entity formed by splitting up or reconstruction of an existing business shall not be considered as a startup. As per the notification, a deep tech startup has to work on producing a solution based on new knowledge or advancement within a scientific or engineering discipline, which is yet to be developed or is in the process of being developed.
It must have a high percentage of expenditure on research and development as a percentage of revenues or funding and own or be in the process of creating a significant novel intellectual property. Further, the deep tech startup, during its period of recognition, will be disallowed from investing in assets or activities other than that integral to its core business operations.
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