Contributors:

Ms. Shreya Dalal, Associate Partner
Mr. Divyang Salvi, Associate

The Department for Promotion of Industry and Internal Trade (“DPIIT”) has issued a Gazette Notification dated 4 February 2026 (“2026 Notification”), replacing the startup recognition framework notified in 2019. The 2026 Notification marks a significant policy shift by formally recognising and defining “Deep Tech Startups” for the first time, while expanding eligibility thresholds and strengthening the regulatory framework for innovation-driven enterprises in India.

Introduction:

The 2026 Notification supersedes the DPIIT notification dated 19 February 2019 and reflects the Government’s intent to align India’s startup policy with research-intensive and technology-led businesses. By introducing a separate category for Deep Tech Startups, it recognises the longer development cycles, higher capital requirements and significant R&D intensity associated with advanced and emerging technology sectors.

Key Reforms Introduced under the 2026 Notification:

A key reform under the 2026 Notification is the extension of the recognition period for Deep Tech Startups to twenty years from incorporation, while the ten-year cap continues for regular startups. This extended eligibility acknowledges the longer development and commercialisation cycles typically associated with deep technology ventures. The 2026 Notification also revises turnover thresholds, increasing the ceiling from INR 100 crore to INR 200 crore for regular startups and to INR 300 crore for Deep Tech Startups, ensuring that scaling innovation-driven entities do not lose recognition prematurely.

Further, the 2026 Notification formally defines “Deep Tech Startups” for the first time as entities engaged in novel scientific or engineering innovation with significant R&D expenditure and ownership of meaningful intellectual property supported by a clear commercialisation plan. The scope of eligible entities has also been expanded to include Multi-State Cooperative Societies and State Cooperative Societies, reflecting a more inclusive approach to innovation-led enterprises.

Regulatory and Compliance Aspects:

Startup recognition will continue to be administered through the DPIIT online portal, with Deep Tech applicants are required to submit additional documentation to demonstrate compliance with prescribed eligibility criteria. While this entails enhanced scrutiny, it provides greater clarity and certainty on qualification standards. The Inter-Ministerial Board mechanism for tax-related certification under Section 80-IAC of the Income-tax Act, 1961 continues under the 2026 Notification, with added flexibility in the Board’s composition, subject to approval of the Secretary, DPIIT. Restrictions on prohibited investments are retained and apply throughout the period of startup recognition. The 2026 Notification also introduces an enabling “Relaxations and Modifications” clause, allowing the Government to relax or modify conditions for specific classes of startups, thereby ensuring policy flexibility for emerging sectors.

MHCO Comment:

The 2026 Notification is a forward-looking reform that formally integrates Deep Tech into India’s startup policy framework. Extended recognition timelines, higher turnover thresholds and a clear definition of Deep Tech Startups are expected to enhance investor confidence and promote R&D-driven entrepreneurship. However, effective implementation will require alignment with foreign investment regulations, particularly for startup LLPs and funding instruments. Overall, the notification strengthens India’s innovation ecosystem and underscores a clear policy commitment to technology-led growth.

This update was released on 20 Feb 2026.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or contact@mhcolaw.com for any assistance.

Legal Update Team
MANSUKHLAL HIRALAL & COMPANY
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