The government may broaden the definition of startups. Official
India Set to Expand Startup Definition, New Rules to Include Cooperatives and Deep-Tech Firms
In a significant move aimed at energizing India’s entrepreneurial ecosystem, the government is likely to expand the official definition of what qualifies as a startup, a senior official confirmed on Wednesday.
The proposed changes are expected to specifically include deep-tech ventures and cooperatives under the startup umbrella, while also allowing existing startups greater flexibility to pivot to deep-tech fields without losing their benefits.
What’s Changing in the Definition?
Currently, to be recognized as a startup by the Department for Promotion of Industry and Internal Trade (DPIIT), an entity must be:
No older than 10 years from the date of incorporation.
Incorporated as a private limited company, a registered partnership firm, or a limited liability partnership (LLP).
Have an annual turnover not exceeding ₹100 crore in any financial year.
The expanded definition will bring in two major additions:
Inclusion of Cooperatives: This marks a structural shift, allowing cooperative societies to be recognized as startups and avail associated incentives.
Focus on Deep-Tech: Startups working on high-research, technology-intensive solutions in fields like artificial intelligence, biotechnology, aerospace, and quantum computing will be explicitly recognized.
Pivot Permission: Recognized startups will be allowed to shift their core business model to deep-tech—a move seen as encouraging innovation and adaptation.
Why This Move Matters
Over 2 lakh entities are currently registered as startups under the Startup India initiative. These firms enjoy crucial benefits, including income tax exemptions, easier compliance norms, and access to government funding pools.
By broadening the definition, the government aims to:
Boost innovation in cutting-edge, research-heavy sectors.
Democratize entrepreneurship by including the cooperative model, often community-driven and impactful in rural sectors.
Signal global investors that India is serious about fostering next-generation technology enterprises.
An official familiar with the plan stated, “The idea is to keep the startup ecosystem dynamic and inclusive. Deep-tech is the future, and cooperatives are a vital part of our economic fabric. This change will align our policies with ground realities.”
Context: Push for a Deeper Tech Ecosystem
The decision follows several recent measures to promote deep-tech startups, which require long development cycles and significant R&D investment but have high potential for global impact.
Finance Minister Nirmala Sitharaman has earlier emphasized the need to fund research and innovation in sunrise sectors. This definitional change is seen as a regulatory follow-through to make it easier for such firms to get recognized, funded, and scaled.
Industry Reaction
While the formal notification is awaited, startup founders and industry bodies have welcomed the step. “Including deep-tech explicitly will bring much-needed focus and policy support to a capital-intensive sector,” said a founder of a Bengaluru-based AI startup. “Allowing pivots is also a pragmatic move—innovation isn’t always linear.”
What’s Next?
The DPIIT is expected to release a detailed notification outlining the revised criteria soon. Once implemented, more entities across tech and cooperative sectors are likely to seek startup recognition, potentially accelerating innovation and job creation in new domains.
The move underscores the government’s intent to make India’s startup ecosystem more inclusive, innovative, and internationally competitive.
