Mint Explainer | Will the Centre’s new startup recognition rules really help businesses?

What has changed in the startup recognition rules?

The government last week revised the Startup Recognition Framework under the Startup India Action Plan to make it more inclusive for businesses focused on scaling and innovation.

Turnover limit increased for startups ₹100 crore ₹200 crore to help growing companies maintain recognition and benefits for officially recognized startups.

The new framework also introduced a new deep tech startup subcategory for companies working on advanced technologies. These initiatives can now be recognized for up to 20 years from their establishment, instead of the 10-year timeline, and their turnover ₹300 crore. This move acknowledges the often inherently longer product development timelines and higher capital needs.

Are the changes limited to startups?

No. The revised rules expand startup recognition eligibility to cooperative societies or voluntary, member-owned associations, both multi-state and state-level cooperatives, if they meet other applicable startup criteria.

Traditionally organized around shared ownership and community services, cooperatives can now expand the scope of the Startup India initiative by taking advantage of startup incentives.

According to a notification from the ministry of commerce and industry, the basic idea behind the move is to promote innovation-driven growth at the grassroots level through community-led businesses, agriculture, allied sectors and rural industries. Cooperative societies generally focus on service rather than profit and promote sustainable and equitable economic growth.

Why did the government make these changes?

The revised notification reflects a deliberate shift in the government’s perspective on startup growth and innovation. Previously, startups were largely defined by focusing on the internet and consumer technology companies with shorter product cycles.

India’s startup ecosystem has flourished with a growing number of research-intensive and capital-intensive ventures in areas such as advanced materials, artificial intelligence (AI), biotechnology, space and robotics. These businesses take more time to set up and require major investment and regulatory support.

Tracxn data shows that funding to Indian deep tech startups increased from $843 million in 2024 to around $1.15 billion in 2025. By creating a special category of deep tech, the government has recognized that such companies face longer gestation periods and need more runway to benefit from government incentives.

How will it really benefit startups?

Benefits enjoyed by officially recognized startups often include tax exemptions, privileged access to government programs, faster regulatory clearances and greater visibility in public procurement channels.

Key government programs for well-known startups include Technology Incubation and Development of Entrepreneurs (TIDE 2.0), Funds of Funds for Startups (FFs), Credit Guarantee Scheme for Startups (CGSS), Technology Development Fund (TDF) and Startup Intellectual Property Protection (SIPP).

Close or intersecting initiatives ₹100 crore income Even as Mark continued to build core products and markets, they often found themselves prematurely left out of the ecosystem. The higher limit gives them policy continuity as they transition from early-stage growth to full commercial scale.

Does it affect how startups get funding?

The policy changes gave founders a longer path to advance without losing access to government incentives; This will make it easier to attract patient capital such as long-term venture funds, strategic institutional investors and government-backed research and development (R&D) grants, investors say.

Alignment between policy support for deep tech startups and longer business timelines reduces regulatory uncertainty. Investors see this as a signal of a more mature and credible enterprise policy environment that could encourage larger check sizes, longer holding periods and increased participation by global funds focused on research-based innovation.