India’s Hardware Startup Boom Faces Roadblocks Despite $296 Billion Potential
A nationwide survey of hardware founders warns that India’s next wave of deep-tech growth hinges on fixing shortages in testing labs, skilled engineering talent, and early-stage capital.
Topics
News
- DeepSeek Pushes Open-Source Math AI to Olympiad Heights
- Telecom Firms Flag Gaps in DPDP Rules, Seek Sector-Specific Guidance
- SAP Taps TCS to Overhaul Internal IT and Cloud Stack
- Deepwatch Sets Up Bengaluru GCC to Power AI-Driven Cybersecurity Push
- Reliance, L&T Make $13.5 Billion Push Into AI Data Centers
- India’s Hardware Startup Boom Faces Roadblocks Despite $296 Billion Potential
India’s hardware-startup boom risks stalling unless gaps in testing infrastructure, early-stage funding and engineering talent are addressed, a new report by CII, KPMG and Synopsys warned, even as it forecasts the sector could reach $296 billion by 2034.
The study, titled Engineering Hardware Industry Startup Ecosystem Report, and released at the ICONN Summit 2025, is being positioned as one of the most detailed assessments yet of India’s engineering hardware ecosystem.
Drawing on inputs from more than 100 startups across cleantech, defense, electronics and advanced manufacturing, it maps market size, investment trends, talent bottlenecks and the maturity of technology adoption across the sector.
Founders identified three constraints as the most persistent barriers to scaling. More than half of respondents said access to specialized infrastructure remains limited, with a shortage of testing facilities, fabrication labs, prototyping centres and equipment needed for hardware development.
The report calls for coordinated investment from industry, government and research institutions to expand such facilities across regions.
Funding remains a second pressure point. While the broader investment environment for deep-tech has improved, early-stage hardware startups continue to face difficulty raising capital.
Roughly 73% of surveyed companies cited lack of access to seed and pre-Series A funding as a major obstacle. The report recommends a mix of dedicated hardware-focused funds, government-backed investment vehicles and investor-startup matchmaking platforms to close the financing gap.
The third constraint is talent. About 67% of respondents reported shortages of engineers with hands-on skills in design, manufacturing and systems integration.
The report urges universities, companies and government bodies to expand technical training pipelines, including workshops, mixed-reality learning and stronger industry-academia collaboration.
The authors outline tailored recommendations for startups, investors and policymakers. Startups are encouraged to build long-term differentiation through technology partnerships, strengthen digital capabilities and embed sustainability into product design.
Policymakers are advised to enhance IP protection, clarify regulations and expand incentives supporting hardware research and manufacturing, while investors are urged to adopt longer-horizon capital models suited to deep-tech cycles.
The report frames engineering hardware as a central pillar of India’s ambition to become “Viksit Bharat,” or developed India, by 2047, arguing that innovation in sectors such as semiconductors, defense systems, electric mobility and industrial automation will shape the country’s next phase of growth. It positions collaboration between corporates, institutions and government as essential to strengthening the ecosystem.
C.K. Ranganathan, Co-Chairman of the CII National Startup Council, said the roadmap outlines how India can “unlock growth and competitiveness across the hardware ecosystem,” adding that a coordinated effort will be needed to translate early momentum into long-term capability.
