Deep Tech, AI, and Cooperatives: Is India Set to Expand the Definition of Startups?

New Delhi: The government is reportedly considering expanding the definition of startups in this year’s Union Budget, with a particular focus on deep technology and artificial intelligence (AI). A senior government official said the move could also include cooperatives, aiming to boost innovation and create more employment opportunities across the country.

Currently, India has over 200,000 registered startups. Under the Department for Promotion of Industry and Internal Trade (DPIIT), only entities registered as private limited companies, partnership firms, or limited liability partnerships are recognized as startups. These entities must be less than 10 years old at the time of application, and their turnover in the previous financial year should be below ₹100 crore.

Encouraging Innovation
The government hopes this change will incentivize more companies to take risks and innovate in deep tech and AI. Registered startups under DPIIT already receive a range of benefits, including tax incentives, easier compliance procedures, and support for funding and intellectual property rights. Expanding the definition could enable even more businesses to access these benefits.

Indian AI Founders Eyeing the US Market
Over 100 Indian AI startup founders are moving to, or planning to move to, the United States. They are drawn by easier access to customers, capital, and cutting-edge AI technology. Companies like Composio, Meetstream.ai, Smallest.ai, Beatoven.ai, and GetCrux have already shifted operations to the US in recent years.

For AI startups, the US provides the largest customer base, world-class talent, and investors willing to fund high-risk, innovative ideas. As AI becomes increasingly critical, many founders prefer to establish their companies in America to leverage these advantages.

The potential expansion of India’s startup definition in the budget could encourage similar innovation domestically, helping startups grow without having to relocate abroad.