AI’s 12% Surge: The Data Behind India’s Deep Tech Acceleration

AI’s share of total venture capital funding in India has risen from 4.5 per cent in 2020 to 12.3 per cent in 2025, according to the AI & Deep Tech Investments Landscape 2026 report released by the India Deep Tech Alliance (IDTA).

That represents a near threefold increase in funding share in just five years, even as overall VC deployment remained broadly stable at around USD 10 billion annually in 2024 and 2025.

Kris Gopalakrishnan, Chairman, Axilor Ventures, said that India’s deep tech investment landscape has entered a period of sustained acceleration and growing global relevance. 

“Since 2016, cumulative capital deployed into deep tech has reached approximately USD 28 billion, representing close to a four-fold increase over the decade, with deep tech now constituting nearly 15 per cent of overall Private Equity and Venture Capital activity in the country. This expansion has been broad-based, spanning artificial intelligence, space technologies, semiconductors, energy systems, defence, and advanced manufacturing. What is particularly encouraging is the consistency of this momentum across cycles, reflecting a structural re-rating of deep tech from a niche allocation to a core component of India’s innovation and growth engine,” said Kris. 

$12 Billion and Counting

Over the past decade, Indian AI startups have attracted USD 12 billion across 966 deals involving 554 companies. Even after the global tech correction of 2023-24, funding rebounded sharply in 2025, with 188 AI deals worth USD 1.2 billion, marking a 58 per cent year-on-year increase in funding value.

Notably, deal count has continued to expand even during capital moderation phases. This divergence, higher transaction volume with selective capital deployment, indicates a widening experimentation layer supported by tighter growth-stage scrutiny.

Structural Re-rating: From 4% to 15%

Since 2016, India has recorded USD 27.9 billion across 2,178 deep tech deals involving 1,217 companies. Deep tech’s share of total PE-VC funding has increased from 4 per cent in 2016 to 15 per cent in 2025, nearly a fourfold increase in ecosystem weighting.

Even with global liquidity tightening, deep tech funding has remained above pre-2021 levels, suggesting structural rather than cyclical interest.

Deal activity further reinforces this trend, with a steady increase from 76 in 2016 to 285 in 2025. Early-stage deep tech deals have more than doubled over the past five years, signaling a thickening innovation funnel.

Stage Dynamics

AI investments by volume are dominated by early-stage companies. However, by value, capital is skewed toward late-stage ventures.

In 2025, early-stage AI accounted for the majority of deal count; But late-stage companies absorbed the largest share of funding value, often cross-border entities with global revenue benchmarks.

According to the data, early-stage deal volumes are expanding. Growth and late-stage companies command disproportionate funding value due to hardware integration, certification, and manufacturing scale requirements.

“As this ecosystem matures, the scale and structure of capital will become increasingly decisive. Deep tech companies require significantly larger pools of long-horizon capital to support scale-up, manufacturing readiness, regulatory navigation, and global market access,” said Kris. 

This structure explains why AI’s funding share can rise even when headline capital numbers fluctuate.

Exits: Reinforcing Investor Conviction

AI exit activity has remained active: Top AI exits reached USD 557 million Fractal Exit and USD 531 million Amagi exit. These exits involved institutional investors across global PE and venture firms, demonstrating cross-border liquidity pathways.

Even where IPO markets have been selective, secondary transactions and strategic acquisitions have preserved capital recycling.

Regulatory-state interventions have materially influenced capital flows. The INR 1 lakh crore Research Development and Innovation (RDI) Fund has addressed early-stage translational research gaps, reduced technical risk perception, and signaled sovereign commitment to long-gestation sectors.

Arun Kumar, Managing Partner at Celesta Capital; Chair, IDTA, and Sudhir Sethi, Founder and Chairman, Chiratae Ventures, said, “India stands at an inflection point in its economic and technological journey. The country possesses the scale, talent base, policy intent, and geopolitical relevance to be an impactful player in today’s AI-led technology and industry transformation. Semiconductors, artificial intelligence, advanced manufacturing, space technologies, bio-convergence, clean energy, and intelligent infrastructure are core determinants of economic resilience and global competitiveness.”