By Apalka Bareja and Ritvik Kashyap
Introduction
India’s startup definition has long been tied to two basic limits: the age of the business and its annual turnover. The test was easy to apply, but it did not always reflect the reality of ventures whose growth does not follow a conventional timeline. Deep tech businesses may spend years on scientific research, product testing and technology development before earning meaningful revenue. Cooperative enterprises may also build innovative and scalable solutions, even though their ownership structure differs from that of a company or an LLP. As India’s startup ecosystem became more diverse, the earlier framework began to leave some genuine innovators outside its scope.
Through Notification G.S.R. 108(E), dated 4 February 2026, the Department for Promotion of Industry and Internal Trade (“DPIIT”) replaced the 2019 framework and introduced a wider system of startup recognition. The new rules raise the turnover ceiling for regular startups, formally recognise “Deep Tech Startups” and allow cooperative societies to seek recognition. The changes go beyond expanding eligibility: they acknowledge that different forms of innovation may require different timelines, funding patterns and organisational structures. At the same time, recognition remains linked to genuine innovation, commercial potential and compliance with the conditions set out in the notification.[1]
Why the Earlier Definition Needed an Update
Under the 2019 framework, a startup could be a private limited company, a registered partnership firm or a limited liability partnership (“LLP”). It had to be within ten years of incorporation or registration, and its turnover could not exceed INR 100 crore in any financial year. It also had to work towards innovation or improvement of products, processes or services, or operate a scalable model with strong potential for employment or wealth creation.[2]
The framework did not separately recognise deep tech ventures, even though such businesses may require long development periods, large research budgets and substantial infrastructure before commercialisation. Cooperative societies were also outside the recognised entity types, even where they were pursuing innovation-led activity.
A Wider Definition for Regular Startups
The 2026 notification keeps the ten-year age limit for an ordinary startup but increases the turnover ceiling from INR 100 crore to INR 200 crore. The limit applies to every financial year since incorporation or registration. An entity therefore ceases to qualify after completing ten years or if its turnover has crossed INR 200 crore in any previous financial year.[3]
The innovation and scalability test remains, and an entity formed by splitting up or reconstructing an existing business is still excluded. The reform gives genuine startups more space to grow; it does not convert every young business into a recognised startup.
Deep Tech Gets a Longer Runway
A new “Deep Tech Startup” category may remain recognised for up to twenty years from incorporation or registration, with a turnover ceiling of INR 300 crore. The longer window reflects the time and capital often required to move a scientific or engineering solution from research to commercial use.
The label is not based simply on using advanced technology. The notification requires a solution based on new scientific or engineering knowledge, comparatively high R&D expenditure, significant novel intellectual property that is owned or being created, steps towards commercialisation, and long timelines, high capital needs or substantial technical uncertainty.
The notification does not fix a numerical test for expressions such as a “high percentage” of R&D expenditure. DPIIT will assess the category through further frameworks and guidelines and the material submitted by the applicant. Deep tech ventures should therefore maintain clear records of research spending, technical progress, intellectual property and commercialisation plans.
Cooperative Societies Enter the Startup Framework
The definition now includes Multi-State Cooperative Societies registered under the Multi-State Cooperative Societies Act, 2002, and cooperative societies registered under State or Union Territory laws. They may apply if they satisfy the same innovation, age, turnover and originality requirements applicable to other startups.
This could open the framework to member-owned enterprises working in agriculture, rural industry, producer networks and community-based innovation. Registration as a cooperative is not enough by itself: the entity must apply through the DPIIT portal and explain how its business meets the required innovation or scalability test.
Recognition Is Not the Same as a Tax Exemption
DPIIT recognition may help an entity access benefits under the Startup India framework, but every incentive has its own conditions. The wider definition should therefore not be read as an automatic grant of tax relief or any other benefit.
This distinction is especially important for cooperatives and partnership firms. Under the notification, certification under section 80-IAC of the Income-tax Act may be sought only by a recognised startup that is a private limited company or an LLP and meets the statutory conditions. A cooperative may now be recognised as a startup, but recognition alone does not make it eligible for the section 80-IAC exemption.
Wider Eligibility, but Clearer Guardrails
Recognised startups, including Deep Tech Startups, are expected to use their funds mainly for core business, innovation, research, scaling and operational needs. The notification restricts unrelated investments in categories such as land and buildings, loans, securities, luxury assets and speculative activities, while preserving exceptions where the asset or investment is genuinely part of the business or its ordinary operations.
For section 80-IAC certification, the Inter-Ministerial Board may revoke a certificate obtained through false information, and the certificate will be treated as though it was never granted. Applicants should therefore monitor turnover, maintain evidence supporting their recognition category and review eligibility separately for each benefit. The Government has presented the reform as a way to support long-term capital, high-technology ventures and cooperative-led innovation.
Conclusion
India’s new startup definition does more than change a turnover figure. It gives growing startups more room, recognises that deep tech may need a longer runway and accepts innovation through cooperative structures. The notification brings the framework closer to how different ventures are developed and organised, while giving research-led and member-owned enterprises a clearer route into Startup India.
The wider doorway, however, comes with clear limits. Deep tech status must be supported by research, intellectual property and a credible path to commercialisation; cooperative recognition does not automatically unlock every tax benefit; and funds must remain linked to genuine business activity. Founders must preserve evidence, monitor turnover and examine each incentive separately. The reform is more inclusive, but it still demands clear guidance and consistent compliance.
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[1] Available at https://www.dpiit.gov.in/static/uploads/2026/02/119e52e2a36f652215a32c3ccc5f9c66.pdf.
[2] Department for Promotion of Industry and Internal Trade, Notification G.S.R. 127(E), 19 February 2019, available at https://www.startupindia.gov.in/content/dam/invest-india/Templates/public/198117.pdf.
[3] Available at https://www.dpiit.gov.in/static/uploads/2026/02/119e52e2a36f652215a32c3ccc5f9c66.pdf.