DPIIT Overhauls Startup Recognition Norms: Higher Thresholds, Wider Coverage and Strategic Support for Deep Tech

Introduction

The Department for Promotion of Industry and Internal Trade (“DPIIT”) has issued a Gazette Notification dated 4 February 2026 (“2026 Notification”), which replaces and supersedes the earlier startup recognition framework notified on 19 February 2019 (“2019 Notification”). The issuance of the 2026 Notification marks a significant evolution in India’s startup policy architecture, as it responds to the changing nature of innovation, enterprise growth patterns, and capital intensity across sectors. Most notably, the revised framework introduces, for the first time, a distinct and formal recognition for ‘Deep Tech Startups’, signalling a clear policy shift towards supporting research-driven, science-led and technology-intensive ventures.

Expansion of the Startup Definition

One of the foundational changes introduced under the 2026 Notification is the expansion of the definition of a ‘startup’. Under the 2019 Notification, startup recognition was limited to private limited companies, partnership firms and limited liability partnerships. The revised framework now expressly includes ‘Multi-State Cooperative Societies’ registered with the Central Registrar of Cooperative Societies, as well as ‘Cooperative Societies’ registered under the respective State or Union Territory Cooperative Societies Acts.

This expansion reflects a deliberate move towards a more inclusive understanding of innovation, recognising that scalable and technology-enabled solutions increasingly emerge from cooperative and community-based structures, particularly in sectors such as agriculture, rural industries, food processing and allied services. By extending startup recognition to cooperative entities, the 2026 Notification integrates grassroots and institutional innovation more closely into India’s broader startup ecosystem.

Enhanced Turnover Thresholds

The 2026 Notification also revises the financial eligibility thresholds applicable to startup recognition. Under the earlier regime, a startup was required to maintain an annual turnover not exceeding INR 100 crore (~USD 11.20 million). This ceiling has now been increased to INR 200 crore (~USD 22.22 million) for regular startups.

The upward revision acknowledges the reality that modern startups, particularly those operating in capital-intensive or infrastructure-heavy sectors, often achieve higher revenue levels during scaling phases without necessarily reaching technological or operational maturity. Consequently, the enhanced turnover limit allows such enterprises to continue benefiting from startup recognition during critical growth stages, rather than being excluded prematurely due to revenue expansion alone.

Formal Introduction of Deep Tech Startups

A central feature of the 2026 Notification is the formal introduction of a separate category for Deep Tech Startups, which was absent under the 2019 framework. Deep Tech enterprises are fundamentally distinct from conventional digital or service-oriented startups, as they are typically anchored in advanced scientific research, engineering innovation and the development of proprietary technologies.

Recognising these structural differences, the revised framework extends the maximum recognition period for Deep Tech Startups from 10 (ten) years to 20 (twenty) years from the date of incorporation or registration. In addition, the turnover threshold for such entities has been enhanced to INR 300 crore (~USD 33.33 million). This differentiated treatment reflects the longer development cycles, higher research expenditure and delayed commercialisation timelines that characterise deep technology ventures.

The 2026 Notification further provides clarity on the parameters for classification as a Deep Tech Startup. Such entities are expected to develop solutions based on new scientific or engineering knowledge, demonstrate significant investment in research and development, and create or own novel intellectual property supported by identifiable commercialisation plans. By articulating these criteria, the framework brings regulatory certainty while formally positioning deep tech as a priority segment within India’s startup landscape.

Procedural Framework and Compliance Continuity

From a procedural standpoint, the recognition process continues to be administered through the DPIIT online portal, thereby ensuring continuity with the earlier regime. However, applicants seeking classification as Deep Tech Startups are required to submit additional documentation and disclosures demonstrating compliance with the prescribed deep tech criteria. While this introduces a higher level of scrutiny, it also provides clarity regarding eligibility expectations and evaluation standards.

The mechanism for obtaining tax-related certification under Section 80-IAC of the Income-tax Act, 1961 continues under the 2026 Notification, including the involvement of the Inter-Ministerial Board. In addition, restrictions on prohibited investments, such as investments in residential property, luxury assets or speculative instruments, remain applicable. However, under the revised framework, these restrictions are framed as conditions applicable throughout the entire period of startup recognition, thereby linking compliance obligations directly to recognised status rather than to a fixed time horizon.

The 2026 Notification also introduces a ‘Relaxations and Modifications’ clause, empowering the Government to relax or modify conditions for specific classes of startups. This provision enables policy flexibility and allows the framework to adapt to sector-specific developments and emerging technological priorities without frequent legislative intervention.

Policy Implications and Impact

Taken together, the changes introduced under the 2026 Notification reflect a strategic recalibration of India’s startup policy, moving beyond a narrow focus on early-stage digital enterprises towards a more nuanced and inclusive innovation framework. By expanding the scope of eligible entities, enhancing financial thresholds, and carving out a dedicated regulatory pathway for Deep Tech Startups, the revised regime acknowledges the realities of long-gestation research, high-risk innovation and capital-intensive enterprise building.

The framework is expected to expand access to startup benefits for research-driven enterprises, enable cooperative institutions to participate meaningfully in innovation-led growth, and strengthen India’s position as a global hub for deep technology, advanced manufacturing and knowledge-intensive entrepreneurship.