India’s deep-tech ecosystem has changed significantly in recent years. Startups working in defence, healthcare, space, agriculture and engineering are getting more funding, better access to research support and a growing pool of skilled engineers. More ideas are also making the jump from laboratories to working prototypes. But building the technology is only one part of the journey. For many founders, the bigger challenge begins when they have to convince someone to actually buy it.
When A Working Product Is Still Not Enough
The problem can be seen in the experience of Sanju Royan, founder of Madras Defence Company.
His startup spent around 18 months going through technical evaluation against two global companies and successfully cleared that stage. The potential contract was worth between $50 million and $65 million.
But the startup then faced a financial requirement that made it difficult to continue.
It had to demonstrate that it already had enough money to take on a contract of that size before winning the contract.
For a large established company, that may not be unusual. For a startup, it creates a difficult situation.
The company needs the contract to generate the money, but it needs the money to qualify for the contract.
Royan eventually decided that the financial risk was too high and withdrew.
India Has Become Better At Building Deep-Tech
This problem comes at an interesting point in India’s technology journey.
The country has spent years trying to strengthen research, engineering and private-sector innovation.
In July 2025, the Union Cabinet approved a Research, Development and Innovation scheme with a corpus of Rs 1 lakh crore. The programme aims to support private-sector research and development through long-term, low- or zero-interest financing.
Venture capital has also expanded, while more engineers are experimenting with startups and technology projects earlier in their careers.
The result is an ecosystem that can take more ideas from research to prototypes.
But a prototype still needs a market.
The First Customer Is Often The Hardest One
A deep-tech startup cannot always depend on a large consumer market.
Its products may require businesses, hospitals, defence organisations or government departments to test and adopt technologies that do not have a long track record.
That makes the first customer particularly important.
Amit Agrahari, a volunteer with technology-policy think tank iSPIRT, describes this as an adoption problem.
In deep tech, he argues, there is often no easy fallback if customers do not buy. A company can spend years developing a product, but without market access, that investment can struggle to translate into a sustainable business.
Companies Often Want A Free Proof Of Concept
One challenge founders repeatedly encounter is the expectation that early trials should be free.
Prateep Basu, who runs satellite-data company SatSure, says Indian enterprises can treat a proof of concept as an opportunity for the startup rather than a service that should be paid for.
For a young company, however, every pilot has a cost.
It needs engineers, infrastructure, time and money to demonstrate that its product works.
If a company repeatedly has to absorb those costs without converting trials into paid contracts, it can quickly run out of resources.
Everyone Likes The Product, But Who Signs The Deal?
Healthcare technology company 5C Network offers another example.
The company connects medical scans with radiologists who can interpret them remotely. It eventually expanded to more than 2,000 hospitals and diagnostic centres.
But getting there required overcoming a complicated purchasing process.
A doctor may support a product. Then IT needs to evaluate it. Cybersecurity may need to approve it. Procurement needs to onboard the company. Finance needs to agree to the commercial terms.
The result can be several people supporting an innovation without anyone actually taking responsibility for deploying it.
As Sivasailam puts it, “Everyone likes innovation, but nobody owns the deployment.”
The Trust Gap
There is also a question of risk.
Established companies come with years of operating history. A new startup does not.
That can make an established foreign supplier easier for a procurement team to justify, particularly when the product is being used in areas such as healthcare or critical infrastructure.
The startup then faces questions about previous deployments, financial strength and experience.
For a company that is only a few years old, some of those requirements can be almost impossible to satisfy.
This creates a difficult cycle: a startup needs customers to build a track record, but customers often want a track record before they buy.
Government Procurement Has Improved, But Gaps Remain
The government has made changes that have opened more opportunities for startups.
The Government e-Marketplace, or GeM, has created a direct procurement channel for government buyers. According to the source report, it handled around Rs 5 lakh crore in orders during 2025-26.
Defence has also introduced programmes such as iDEX to help startups develop technologies for the armed forces.
But there is still a gap between developing a product and actually buying it.
The report cites 548 iDEX development contracts, of which 45 had resulted in purchase orders worth Rs 2,326 crore.
That difference illustrates the challenge facing deep-tech startups: development funding does not automatically become commercial demand.
Why Startups Are Looking Abroad
Some founders are now considering overseas markets earlier in their journey.
The logic is simple. If a foreign customer is willing to become the first buyer, that customer can provide the revenue and track record needed to approach larger Indian buyers later.
For a deep-tech startup, landing one credible customer can change its entire position.
It can demonstrate that the technology works outside a controlled trial. It can provide revenue, references and confidence for investors.
In some cases, that means an Indian startup may establish itself internationally before trying to sell at home.
The First-Buyer Problem
India’s deep-tech challenge is therefore not simply about funding.
Funding can help a startup build the technology. Research support can help develop the prototype. Engineers can make the product work.
But someone still needs to take the first commercial risk.
That could be a government department, a hospital, a large corporation or an industrial buyer.
The first customer gives a startup something that funding alone cannot provide: proof that someone is willing to pay for the technology.
That proof can then help attract more customers and investors.
From Prototypes To Real Businesses
India’s deep-tech ambitions will ultimately depend on what happens after the prototype stage.
The country has been building the infrastructure needed to support innovation. The next challenge is making it easier for new technology companies to enter real markets.
That means reducing unnecessary barriers, making pilot projects commercially viable and creating procurement systems that allow newer companies to compete on technology rather than only on years of history.
For startups, the goal is not simply to build something impressive.
It is to find someone willing to say yes for the first time.
And that first customer could be the difference between an interesting prototype and a technology company that actually scales.