India's deeptech sector recorded $610 million in funding during the first half of 2026, marking a 25% decrease compared to the same period last year. Despite the lower total value, the number of deals remained stable at 93 transactions, indicating consistent investor interest in early-stage startups within artificial intelligence, space, and defense sectors.
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The Indian deeptech sector saw total funding reach approximately $610 million in the first half of 2026. This represents a 25% decline from the $810 million recorded during the corresponding period in 2025. When compared to the second half of 2025, when the sector secured $2.18 billion, the drop is significantly steeper, highlighting a reduced number of large, high-value growth-stage funding rounds during the recent six-month period.
While the total monetary value has decreased, deal activity suggests that investors remain active in the space. The first half of 2026 saw 93 completed transactions, a figure that is higher than the 88 deals recorded in the first half of 2025 and comparable to the 99 deals seen in the latter half of 2025. This indicates that while startups are finding it harder to raise very large amounts of capital currently, venture capitalists are continuing to deploy funds into early-stage ventures.
Investors are specifically focusing on fields such as artificial intelligence, space technology, semiconductors, robotics, and defense. These sectors often require longer timelines for product development and commercial success compared to typical consumer-facing software businesses, which is a structural characteristic that investors must account for when managing their portfolios.
Government initiatives have played a critical role in supporting the ecosystem, which helps mitigate some of the funding uncertainty. Major programs like the Research, Development and Innovation Fund, with an allocation of Rs 1 lakh crore, and the IndiaAI Mission are designed to provide long-term structural support. Additionally, the SIDBI-backed Fund of Funds for Startups and specific incentives for semiconductor and defense manufacturing continue to provide a foundation for capital deployment.
For investors monitoring this sector, the primary challenge remains the long gestation period inherent in deeptech business models, where profitability and scale are often years away. The next important update to track will be whether the consistency in early-stage deal counts translates into follow-on growth-stage rounds in the coming quarters. Market watchers will also look for progress in the execution of government-backed R&D initiatives, as these programs are expected to influence the long-term viability and competitiveness of Indian deeptech startups on a global scale.