India's DPIIT Adds Deep Tech Startup Category and FoF 2.0

India Rewrites Its Startup Recognition Framework

The Department for Promotion of Industry and Internal Trade issued a new notification on 6 February 2026, replacing the 2019 startup recognition framework in its entirety. The 2026 notification makes three substantive changes that alter the eligibility, duration, and financial scope of DPIIT-recognised startup status — and together, they represent the most significant revision to India's startup policy architecture since the original Startup India launch a decade ago.

For standard recognised startups, the annual turnover ceiling has been raised from Rs 100 crore to Rs 200 crore. Companies that had crossed the old threshold and consequently lost access to startup-linked benefits may now qualify for re-recognition. Companies approaching the old ceiling have a longer runway before the label — and the tax exemptions, procurement preferences, and regulatory reliefs that come with it — expires.

The New Deep Tech Startup Category

The most consequential change in the 2026 notification is the formal creation of a separate Deep Tech Startup category. This is a first in Indian startup policy: until the February notification, India had no official classification that distinguished companies doing fundamental technology development — in areas such as semiconductor design, advanced materials, quantum computing, synthetic biology, aerospace, defence technology, or frontier AI — from consumer application businesses.

Under the new framework, Deep Tech Startups can have annual turnover of up to Rs 300 crore and remain within the recognised category, compared with Rs 200 crore for standard startups. More significantly, the recognition period for Deep Tech Startups extends to twenty years from incorporation, versus ten years for standard startups.

The twenty-year window acknowledges something that investors and founders in deep technology have long argued: commercialisation timelines for companies doing genuine R&D are structurally longer than those of application-layer businesses. A semiconductor design firm, a climate technology company, or an AI inference hardware startup operates on development cycles where the gap between a working prototype and a commercially scalable product is measured in years, not quarters. Keeping these companies within the recognised startup category throughout that lifecycle preserves their access to Section 80-IAC income tax exemptions, Section 56(2)(viib) investment-related tax treatment, and government procurement preferences for the full duration of their development.

Who Now Qualifies: Cooperatives Added

The 2019 notification recognised only private limited companies, partnership firms, and limited liability partnerships. The 2026 notification adds Multi-State Cooperative Societies and State Cooperative Societies to the list of eligible entity types. This matters for India's rural technology sector: cooperatives are the dominant organisational form for agritech, dairy technology, and rural financial inclusion initiatives, and their exclusion from startup recognition had limited their access to government support schemes.

The Rs 10,000 Crore Fund of Funds 2.0

The startup recognition framework does not operate in isolation. In February 2026, the Union Cabinet approved the Startup India Fund of Funds 2.0 with a corpus of Rs 10,000 crore — equal in size to the original Fund of Funds that has backed more than 900 startups through over 130 SEBI-registered Alternative Investment Funds since its 2016 launch. The scheme was notified in the Gazette of India on 13 April 2026.

In July 2026, DPIIT published the operational guidelines for the FoF 2.0, with SIDBI confirmed as the initial implementation agency. The guidelines specify a two-stage process for AIF selection: an initial screening and due diligence round conducted by the implementation agency, followed by a final selection made by a Venture Capital Investment Committee, or VCIC, constituted from experienced ecosystem participants. Selected AIFs then deploy the committed capital into startups, with priority given to deep tech, technology-driven innovative manufacturing, and early-growth stage companies.

The fund does not invest directly in startups. By routing the government corpus through SEBI-registered AIFs, the FoF 2.0 structure allows institutional private capital from AIF limited partners to be blended with the government commitment, multiplying the total capital available to target sectors beyond the Rs 10,000 crore headline figure.

What the Two Reforms Mean Together for India's Tech Ecosystem

The redefined eligibility framework and the FoF 2.0 operationalisation are designed to work in tandem. A deep tech company qualifying under the 2026 notification can remain a recognised startup for twenty years, preserving access to tax benefits and procurement preferences across multiple funding rounds. FoF 2.0 increases the probability that the AIFs it approaches for growth capital have themselves received government commitment capital, making them more willing to back long-cycle, capital-intensive R&D projects that the private venture market alone would not fund at the required scale.

For India's technology product and software engineering companies, the reforms also signal a deliberate shift in government priorities: away from supporting purely application-layer consumer businesses and toward building durable technology capacity in sectors that determine long-term industrial competitiveness.

The Bottom Line

DPIIT's February 2026 notification replaced India's 2019 startup recognition framework, raising the standard startup turnover ceiling from Rs 100 crore to Rs 200 crore and creating a Deep Tech Startup category with a Rs 300 crore ceiling and a twenty-year recognition period. Multi-State and State Cooperative Societies are now eligible for recognition for the first time. The Rs 10,000 crore Startup India Fund of Funds 2.0, approved by Cabinet in February 2026 and gazetted in April, had its operational guidelines published by DPIIT in July 2026, with SIDBI confirmed as initial implementation agency and a two-stage VCIC-gated AIF selection process. Together, the two reforms represent the most substantial reconfiguration of India's startup support architecture since Startup India launched in 2016.