India’s Deep-Tech Disruptors

ON AVERAGE, EVERY FIVE MINUTES, a drone made by Navi Mumbai-based ideaForge Technology takes off for surveillance and mapping. The deep-tech company is the first private firm to indigenously develop and make vertical take-off and landing unmanned aerial vehicle (UAV) in the country.

Two other firms — Agnikul Cosmos and L2M Rail — are pushing the frontiers of deep-tech to reinvent mobility. Agnikul has built the world’s first single-piece 3D-printed rocket engine fully conceived and made in India, reducing the time to build an engine from years to a few weeks. It can potentially crash time and cost of rocket launches. L2M uses sensors and connected devices to provide real-time updates about the condition of railway infrastructure to prevent accidents.

Drones, mobility are just one aspect of the rapid strides new and old Indian firms are making in deep-tech. The companies working to solve seemingly intractable problems for the world include Uravu Labs (making water from air), 5C Network (using AI in medical radiology) and Newtrace (working on halving green hydrogen costs through a new electrolyser). Their work has far-reaching implications for India’s deep-tech ambitions.

Deep-tech is technology based on scientific or engineering breakthroughs that has commercialisation potential, says International Finance Corporation. Deep-tech companies are R&D-intensive and multi-disciplinary. India’s draft National Deep Tech Start-up Policy (NDTSP) 2023 defines deep-tech as “a solution along an unexplored pathway based on new knowledge within a scientific or engineering discipline or combination of knowledge from multiple disciplines.”

Since the time ideaForge pioneered new business models based on UAVs, India has come a long way and now has dozens of drone makers and service providers. The massive drone-making capability India has built in just over a decade shows that deep-tech start-ups can create global business models that are either non-existent or in nascent stages.

The template that has aided growth of drones — supportive academia/policies, keen investors and entrepreneurs daring to think out of box — is available in every other deep-tech sector. But is it comparable with other nations? How prepared are Indian start-ups to make the best of what’s on offer?

The Opportunity

With about 50% market share in India, ideaForge is now tapping the global opportunity, looking to enter Australia, Middle East and Africa as India’s new foreign trade policy encourages export of Special Chemicals, Organisms, Materials, Equipment and Technologies, including drones. The 17-year-old company became the first home-grown deep-tech company to list in July 2023, says Priyanka Chopra, Managing Partner, Seed Investing, IIMA Ventures (formerly IIMA CIIE), IIM-Ahmedabad’s start-up incubator, and one of ideaForge’s earliest backers.

Drones are becoming ubiquitous. Government used them to deliver Covid vaccines in remote locations; Survey of India is using them to map villages; farmers to spray pesticides; and defence forces for aerial reconnaissance, surveillance, target designation, artillery fire correction and damage assessment. India already has an airspace map for civilian drone operations. Government has also launched a Production-Linked Incentive Scheme to encourage drone manufacturing and exports. Global consultancy EY expects $4.2 billion drone manufacturing potential by 2025 and $23 billion by 2030. This is just one example of the transformative power of deep-tech innovations that are mushrooming across the country.

Two sectors where Indian deep-tech start-ups can replicate UAV’s success quickly are space and health. 3D printing, AI/ML and climate technologies are opening possibilities in deep-tech, which is being leveraged by hundreds of start-ups. A recent Nasscom-Zinnov report says Indian deep-tech start-ups account for 14% cumulative funding over last five years. AI & data alone can add $450-500 billion to India’s economy, says Nasscom. Over 20% Indian deep-tech start-ups operate in this space.

And it’s a global race, not only between companies, but also countries. Global consultancy BCG says U.S. and China got about 81% private investment in deep-tech companies between 2015 and 2018, $32.8 billion and $14.6 billion, respectively. All major economies have strategies to leverage deep-tech innovations. India’s draft NDTSP 2023 says global deep-tech ecosystem is witnessing significant growth on the back of government initiatives and organisations to nurture innovation. “UK’s Catapult, Belgium’s WSL (Wallonia Brussels Start-up Launchpad), Germany’s EXIST Program and Canada’s Innovation Superclusters Initiative highlight the importance of collaboration, funding and entrepreneurship education,” says the draft NDTSP. The policy expects India to build a deep-tech ecosystem, foster innovation, attract talent and facilitate investment “to elevate its standing as a deep-tech leader and foster economic expansion and technological progress.”

Depending on categorisation, the number of deep-tech start-ups in India is estimated from a couple of hundred to over 10,000. The Nasscom-Zinnov report says India has more than 500 “inventive” deep-tech start-ups while draft NDTSP 2023 puts the number of DPIIT-recognised deep-tech start-ups (as of May 2023) at 10,298. Dozens of business models can emerge in sectors as diverse as healthcare, mobility, infrastructure, space, AI and robotics. “Inventive” deep-tech start-ups, rather than start-ups leveraging deep-tech, will be the real change makers, though both have a place in the draft NDTSP’s vision.

These start-ups are growing fast. Nasscom, in a report, “India’s deep-tech start-ups — the next big opportunity,” says the number of deep-tech start-ups grew at 40%-plus CAGR over 2017-20. The report shows a dozen companies each in AI and Big Data (Netradyne, AntWorks, Wysa), Internet of Things (I0T) (BeatO, Dozee, Doxper), Blockchain (Zebi, Aurigraph, Elemential), Drones & 3D Printing (Huviair, 3Dexter, Skykrafts Aerospace) and AR/VR (Merxius, QuaQua, BuildNext). The draft NDTSP says there are 3,175 government-recognised start-ups in technology hardware (including 3D Printing, Semiconductor Manufacturing). AI-powered (NLP, ML, etc.) start-ups come next (1,650). While 1,479 are working in AI, 1,027 are offering products or services in security, including cyber security. Enterprise software (887), analytics, including big data analysis (664), robotics (515) and AR/VR (510) are some other sub-sectors where start-ups are active. A closer look at deep-tech sectors shows how entrepreneurs, research institutions, government and investors are making a difference. And how are researchers and investors looking at the opportunity?

The Billion-Dollar Promise

“Deep-tech for us is differentiated intellectual property-driven innovation built on fundamental scientific breakthroughs that have the potential to create a paradigm shift in industries. Products that result from these innovations can unlock multiple billion-dollar markets,” says Chopra. Her IIMA Ventures has funded over 40 deep-tech start-ups since 2007 and hopes to invest in another 30-35 in next 18 months.

C.S. Murali, chairman of Entrepreneurship Cell at Foundation for Science, Innovation and Development (FSID), Indian Institute of Science (IISc), Bengaluru, says deep-tech has technology at its core. “I would like to bring in another term, deep science. Our focus is on start-ups which are building technologies, not merely using technologies. At IISc, more than 90% tech start-ups (incubated) are deep science,” he says.

IIT Madras is one of the top deep-tech start-up ecosystems in India; initiatives it mentored bagged over 300 patents in FY24. “We will try for one patent a day. We are looking to launch 100 start-ups in 2024 and are seeing a lot of interesting technologies through Avishkar Hyperloop, ePlane, Agnikul Cosmos and Mindgrove Technologies, all of which are IIT-Madras-incubated. These will deliver products of national importance,” says IIT Madras director V. Kamakoti.

Agnikul’s earliest success was Agnilet, the world’s first single-piece 3D-printed engine conceived and manufactured in India which was successfully tested in early 2021. The company’s factory, inaugurated in 2022, has built India’s first private small satellite rocket, Agnibaan, capable of carrying up to 100-kg payload to low earth orbits up to 700 kms. The maiden flight is expected this year. One of the investors in Agnikul is Speciale Invest. Vishesh Rajaram, the fund’s managing partner, says it makes sense to invest in such a product or solution as it is likely to remain relevant for long. Rajaram says the differentiating factor in Agnikul was not 3D-printing technology but the way it was being used. “They reduced time to build a rocket to weeks. The earlier period was years. Two, they made customised rockets. It was solving a deep engineering problem with innovation of another ancillary technology, 3D printing. It created a huge impact by doing something which is very hard.” In October 2023, the start-up announced Series-B fund-raising of $26.7 million, taking the total capital raised to $40 million.

Platform Tech

The first successes in Indian start-up space came from e-commerce players developing models that work in Indian context. But that is old story. Deep-tech start-ups are not replicating global models. They are offering new models to the world.

‘Like a baby’s brain, an intelligence stack that instinctively sees any object in any environment, with no training’ — that’s how Gokul N.A., co-founder of Bengaluru-based CynLr, describes the company’s technology that enables robots to hold any object without training. In the world of automation, where robots have to be customised to do specific tasks, CynLr’s intelligent robotic arm can be repurposed for multiple uses, eliminating the need for separate production lines for different products. The invention could revolutionise automation in settings as diverse as a life sciences laboratory, a warehouse, a construction site and even a white goods factory, sharply bringing down manufacturing costs. “The robotic arm market was $48 billion in 2019. Of this, $16 billion was for robotic arms. Customisation accounted for the remaining $32 billion. Our technology is eliminating the need for customisation. The same system will be usable for the next task,” says Gokul. CynLr has begun pilots with GM, Detroit. “The road to India is through U.S. (market). This year, we will explore as many applications as possible, as we are sector-agnostic,” he says.

Astrome Technologies is another deep-tech start-up building a platform technology for the world. It is speeding up deployment of 5G and backhaul telecom infrastructure through its patented millimeter-wave E-band radios and satellite communication products. Its proprietary product ‘GigaMesh’ is the world’s first multi-beam E-band radio that can communicate from one tower to multiple towers simultaneously while delivering multi gbps throughput to each of the towers. The company has won its first contract for a pilot from Karnataka government. It hopes to soon bag Central government tender for all-India rural connectivity and is confident of taking broadband internet to remote areas at a fraction of current cost. “The company did gram panchayat-to-village connectivity in 13 villages in Karnataka by building the entire software and hardware stack (GigaMesh). The technology brings operating expenses of the (telecom) operator near zero as we replace fibre broadband with wireless for last-mile connectivity. We expect central government contracts for BharatNet project and are tapping private networks in oil & gas, manufacturing and defence industries. Defence forces are also interested in this technology for connecting borders,” says Kumaran Venkatesh, president, Astrome.

Sustainability Push

Sustainable and climate friendly technologies are global favourites. India has a clutch of deep-tech start-ups disrupting these with an eye on global markets. Bengaluru-based Newtrace claims to have developed a cost-effective and clean electrolysis system that can replace fossil fuel-powered hydrogen generation with green hydrogen at a low cost. “Green hydrogen comes from electrolysers which split water into oxygen and hydrogen by electricity. But conventional electrolysers are expensive as they use a lot of rare earth metals and critical components made by only two companies in the world. If the industry is making hydrogen from fossil fuels for $2 a kg, the cost from current technology (for green hydrogen) is $6 a kg,” says co-founder and CEO Prasanta Sarkar. Newtrace has developed an entire stack without using any rare earth metal or critical component. The process does not cause loss of efficiency and makes 99.99% pure hydrogen. The company makes green hydrogen at $3 a kg and hopes to soon touch $2 a kg. The two-and-a-half year old company is among the earliest in the world to deploy this technology on a pilot basis after signing a contract with BPCL. The other competitors trying to make membrane-less electrolysers, Bill Gates-backed H2Pro and U.K.-based Supercritical, are yet to reach that stage, says Sarkar. If India wants to make its five million tonnes annual hydrogen production green, it will need $50 billion worth of electrolyser equipment. That is the market opportunity. The company has so far raised $6.65 million from venture capital funds Peak XV Partners and Aavishkaar Capital, among others.

Similarly, Uravu Labs, also Bengaluru-based, has a 100% renewable solution to meet massive water demands of fast-growing data centres, distilleries, beverage majors and other water intensive industries. It uses low-cost liquid desiccants to make water from air. The company has so far raised $4.3 million from a clutch of funds, including Angel Network, Anicut Capital, Speciale Invest and Rocketship.vc. Co-founder Swapnil Shrivastav says existing air-to-water solutions use condensation-based cooling similar to the expensive air-conditioning technology, whose efficiency changes according to geography. Uravu says its solution more or less works in all climates. It uses heat, which allows it to use renewable energy, including solar, biomass and even waste heat from industrial/manufacturing sites and data centres. “A one-MW data centre will consume about 80,000 litres water for cooling in a day. More than 100 GW capacity is coming up in next five-seven years. They produce a lot of heat from which we want to power our device and give them cool water in return. Reuse can reduce fresh water consumption by 95%,” he says. “It 100% renewable. There is no water wastage as we don’t use reverse osmosis,” says Shrivastav. The company has started supplying bottled drinking water to premium customers—some 40 five-star hotels, fine-dining restaurants and micro breweries — with 3,000 litres production capacity. It aims to serve bigger industrial clients.

Meanwhile, The ePlane Company, headquartered at IIT Madras campus, is developing a compact electric plane. Founder & CEO Satya Chakravarthy says the flying electric taxi will change urban mobility. The two-seater plane will cover 40-70 kms on single charge. It can take off and land vertically like a helicopter or a drone but has the safety and finesse of an airplane. A Frost & Sullivan study commissioned by ePlane in 2023 says global market for compact aircraft will be about $1.25 trillion by 2040 of which $200 billion will be in India. “In next few months, we will look at commercialising cargo versions,” he says. ePlane has raised $6.57 million over four rounds from 33 investors, including Micelio, Martin Aerotech, Redstart Labs and CIIE.

Smart Solutions

Advances in computing, automation, AI and IoT are triggering transformative innovations in products and services. Connected homes, cars and hospitals are no longer science fiction. These are providing solutions to some age-old problems. For instance, could anyone have imagined 15 years ago that industrial IoT, wireless sensors and AI-based analytics can reduce train accidents? Sreenivasa Rao Ganapa, founder and MD, L2M Rail, did. In last five years, his company has developed products aimed at railway safety, efficiency and passenger comfort. These can provide real-time information to the driver of a moving train about condition of track, wheels, wagons and coaches, and even trigger maintenance and repair requests without manual inspection. “Our solutions enable 24x7 monitoring of assets and generation of data that are stored on the Cloud. We have deployed algorithms to support preventive maintenance, condition-based monitoring and decision-making,” says Ganapa. The company has raised close to ₹10 crore ($12 million) from HNIs along with an initial support from IISc. “So far, we have not gone to private equity or venture funds. Each of our products can touch $100 million in four-five years. We will go for an IPO once our revenue touches $400 million,” says Ganapa. The company’s technology is being tested by Indian railways and private freight rail operators. “We want to transform Indian railways first. We want to develop 10 technologies in next 10 years,” he says.

Simyog Technology is another example of a deep-tech start-up working on connected devices. It focuses on providing Electromagnetic Interference (EMI) and Electromagnetic Compatibility (EMC) simulation software for testing products at early design stage. The initial focus is automotive sector as modern cars, especially electric vehicles, are packed with electronic components. “EMI/EMC tests in physical laboratories are a $6 billion industry globally. You take hardware to a physical laboratory when you have the prototype. This is very late in the design cycle. If the test fails, and it fails 50-90% of the time, a lot of time is wasted. We provide value through a virtual laboratory where you can upload your design files and, like a laboratory, we will check if it is going to pass or not. In other words, we provide a laboratory without hardware,” says Dipanjan Gope, co-founder and CEO, Simyog. The company started out of a collaboration between Bosch and IISc in 2017; its first product was unveiled in 2020. The tools have applications in aerospace, medical device, communication, industrial and consumer electronic sectors as all their products have to pass the EMI/EMC test. “The market for EMC simulation is $3 billion. Our customers are worldwide, so our products have to be world-class,” he adds. Simyog’s client list includes four of the top 20 global semiconductor companies, four of the top 20 Tier-1 automotive suppliers and a large OEM, says Gope. Simyog has got $26.3 million funding from Ideaspring Capital, Mela Ventures and 1Crowd, among others.

AI has also spawned a number of start-ups in healthcare. One such company is Bengaluru-based 5C Network, a radiology interpretation platform. Another is Lucknow-based Dectrocel Healthcare & Research. “We are building multi-model intelligence on top of medical imaging to make radiology more precise, preventive and predictive. The company has created a large real-world data-set with which it has created models. It has the largest library of AI models approved by Central Drugs Standard Control Organisation,” says Kalyan Sivasailam, co-founder & CEO, 5C Network. The company claims to be connected to a little over 2,300 hospitals and diagnostic centres in India. “Our systems are connected to approximately one in five CT and MRI machines in the country and reporting a little over 1,50,000 cases per month,” says Sivasailam.

Compared to 5C, Dectrocel is at a starting phase. It has developed an AI tool for analysing chest X-rays and is trying to identify 18 critical respiratory conditions which include lung cancer and TB. “The first modality for investigation of a respiratory condition is chest X-ray. We are trying to embed AI software screening as a protocol,” says Dr. Saumya Shukla, co-founder & CEO, Dectrocel. According to her, the algorithm is trained on about one million scans and its accuracy is in line with World Health Organization’s recommendations.

The Future

In the Interim Budget FY25, finance minister Nirmala Sitharaman unveiled a plan to launch a scheme to strengthen deep-tech technologies for defence and expedite “atmanirbharta.” It was in sync with government’s vision for deep-tech laid out in draft NDTSP.

With premium institutions like IITs, IIMs and NITs, CSIR laboratories and standalone centres of excellence like IISc taking the lead, there has been a flood of deep-tech start-ups. IISc’s deep-tech wing FSID alone has incubated 95 start-ups. Some of them are Bellatrix Aerospace (advanced space mobility technologies), SpaceFields (next-gen dual-use rocket propulsion systems for commercial spaceflights), Digantara (data-led infrastructure for precise orbital insights), General Aeronautics (medium category drones for agriculture), Fourie (GenAI content localisation), Theranautilus (nanorobotics for healthcare), AGNIT Semiconductors (gallium nitride-based semiconductor that is more efficient than the silicon one), MagHeals (targeted heat energy therapy for cancer), PathShodh Labs (handheld device to measure diabetes bio-markers) and Azooka Life Sciences (specialty fluorophore products and molecular sample collection kits for genomics and diagnostic labs). Most are in early stages of commercialisation.

With the new government set to take charge, all eyes will be on finalisation of NDTSP and budgetary support to critical technologies and solutions. What is in abundance is the entrepreneurial spirit of India’s highly qualified youth. That has the potential to drive the deep-tech revolution.