At COP26 to the United Nations Framework Convention on Climate Change (UNFCCC) held at Glasgow last year, India made 5 bold commitments (also referred to as Panchamrit) as part of its climate action strategy. It includes reduction of the carbon intensity of the economy by 40% over 2005 levels by 2030, meeting 50% of Indian energy demand by renewable means by 2030 and a net zero commitment by 2070. Not only that, India espoused minimalism by giving the mantra of LIFE – Lifestyle for Environment. With the growing global consciousness and progressive approach of Indian policymakers towards climate action, India must tap the boundless potential that Deep Tech has to offer in achieving Indian climate goals. Now that climate change is leading to particularly increased vulnerability for India, we need to shed the ‘choice’ tag for sustainability and rather make it a baseline for our economic growth and development.
What’s Deep Tech (DT)?
In simple terms, Deep Tech is a start-up based application of scientific and engineering breakthroughs that scientists develop in their course of academic research to solve a real-world problem. It is a commercial manifestation of the research thesis undertaken by the students, researchers and scientists. DT has a problem-centric approach that uses innovation and dynamic engineering technology developed through lab work to disrupt the existing product offerings and business processes. It is distinguished from general tech in the sense that it is built over academic learning to solve fundamental problems, play at the convergence of multiple advanced technologies, offers physical products and not just software-based solutions and is based on a vast, interconnected ecosystem of universities, research labs and incubators.
DT and Sustainability
Net Zero and sustainable development are gaining global momentum as advanced economies of the world race to achieve the Sustainable Development Goals due in 2030 and mitigate Green House Gas emissions. This has resulted in increased government focus on scientific research in alternate solutions that are greener and cleaner in nature. Green fellowships, scholarships and grants are being instituted in Universities and research institutes around the world to accelerate research in the field of climate and sustainability.
DT has the potential to transform mobility which alone contributes almost a quarter of total carbon emissions by innovation in EV batteries and zero emissions green hydrogen-based transport solutions. Agriculture is another sector that needs to be decarbonised by harnessing the power of biotechnology. DT is being pushed for rectifying dismally low energy efficiency in power and white goods segments. The motion-sensing based smart solutions proposed by DT not only offer convenience to the consumers but also advance energy efficiency in their daily life. The renewable energy sector has seen a drastic decline in the cost of production due to continuous technological refinement offered by DT innovations over the last decade and will only continue to become affordable as countries around the world continue to increase renewable in their energy mix. DT is also being leveraged to resolve water stress, increase crop yields, manufacture biodegradable packaging and textiles and in developing carbon negative concrete and building materials.
Where Does India Stand in DT?
DT as a sector has seen tremendous growth over the last few years in India. NASSCOM India envisages a 40% Compounded Annual Growth Rate (CAGR) for DT startups over the period of 2020-2024. In the 2021 Indian Tech Startup Funding Report published by Inc4Plus, there are 2,769 active DT startups in India and the total funding raised by DT amounted to $451 mn in 2021. Not only that, the report reveals that the DT sector emerged as one of the highest growing sectors with a CAGR of 35% between 2018-2021 in terms of deal count (the number of funding deals settled). While private investors are opening up to growth stage and late stage DT ventures, early stage on-campus enterprises can partner with various startup incubators and accelerators like Innovation and Incubation Program of FITT, IIT Delhi, C-CAMP of Dept. of Biotechnology, Centre for Innovation Incubation and Entrepreneurship (CIIE) of IIM Ahmedabad, NMDC Innovation and Incubation Centre (NICE) and various other such initiatives. It helps them get that kick which is required to enter the sector and also benefit from the mentorship programmes and immense networking potential.
The government is playing an enabling role with schemes like Startup India, Clean Energy Research Initiative (Department of Science and Technology), Atal Innovation Mission (NITI Aayog), and Sustainable Finance Scheme (SIDBI). Climate Finance Leadership Initiative (CFLI) India initiative was launched in 2021 in collaboration with the UK to drive home green finance through private, bilateral and multilateral partnerships. NITI Aayog has also launched AIM-PRIME: a strategic initiative to train and guide DT researchers for market application. Even the private sector is not lagging. NASSCOM has launched Deep Tech Club for its DT mentoring programme. ‘India DeepTech’ is one pan industry alliance with the objective to promote and fund DT in India.
Challenges to Green DT
While e-commerce and fin-tech ventures dominate the Indian startup ecosystem, India is seeing several pro-climate startups leveraging deep tech to decarbonise business processes and supply chains and provide solutions for air pollution, water scarcity, agricultural emissions, plastics and biofuels etc.
Many startups in various stages of development are being conceived and built to revolutionise green tech in India and bring sustainability and climate action to the centre of our economic discourse.
DT is growing but not without its own set of challenges. As highlighted by the Inc4Plus report, DT accounts for just 6.9% of total active startups in India and doesn’t stand in the top 10 sectors when it comes to raising funds. The report also revealed that not a single DT startup has turned unicorn. The problem for green DT becomes more acute since most of the funding is generated by Artificial Intelligence and Machine Learning based DT startups. This is partly due to the long gestation period of the under-development technology which may still not come up as per the expectations. Also the fact that Indian boards are more finance driven than science and tech, scientists may find it difficult to explain their breakthroughs to investors who are core finance professionals. The focus of companies to see environment and sustainability through the prism of mere compliance with ESG norms is another hurdle in letting them collaborate with emerging DT startups.
Despite the challenges, the sector will grow since there is a behavioural change in the outlook of government and the consumers towards sustainability. The establishment of green only venture funds like Infuse Ventures and the recent announcement of CIIE to set up a separate climate tech fund with a corpus of $100 mn provides the necessary encouragement for young technopreneurs to dive deep into green and clean technology since climate and sustainability in business processes and products are no longer an alternative, but an imperative.