Deep tech: Where India stands, and what’s at stake

Today, there’s a very real fear that China’s “coercive and increasingly aggressive actions” toward Taiwan, as US President Joe Biden put it, would give the economic giant a terrifying edge. Because Taiwan is no longer a somewhat strategically significant strip of land. It is the heart of the world’s semiconductor industry.

What’s worrying is that India isn’t even a part of this conversation. We’ve known, since the early months of the pandemic, that the new battlegrounds between nations – allies, enemies and frenemies – would be technology, data and related resources (scientific advances, rare earth elements). In other words, deep tech and deep science.

If India doesn’t play its deep-tech cards right, this part of the world could become a stomping ground for superpowers, and India could end up as a place these superpowers go to test new technologies, acquire cheap manufacturing capabilities, all while sharing none of the core know-how.

“The US and China will not want to waste time and resources on physical conflicts. They would much rather focus on artificial intelligence (AI), deep tech, and other fundamental technologies. The problem is that countries such as India could end up becoming a testing ground for their lab experiments and proof-of-concepts,” says a veteran banker who advises the government of India on monetary policy.

When seen from this perspective, the news that Qualcomm is at work to set up semiconductor-manufacturing plants in India is not cause for celebration. Rather, it is a reminder that India does not yet have the wherewithal to produce such chips on its own at scale. The good news is that people in the establishment understand and acknowledge that there is urgent work to be done in this domain.

“Deep tech has acquired geostrategic significance,” says Pankaj Jain of Saka Ventures, a New York-based seed stage fund that invests in fintech, data/analytics, SaaS, blockchain and other startups.

“Given the overall geopolitical context, India is getting serious about deep tech, more now than even 10 years ago,” adds N Dayasindhu, CEO of the Bengaluru-based Itihaasa Research and Digital, a not-for-profit company that studies the evolution of technology and business domains.

Breaking it down

What is deep tech, deep science? Definitions are still evolving – a broad one states that it is technology based on tangible engineering innovation or scientific discoveries, not focused on end-user services but rather on problem-solving – but examples abound. Take the pharmaceutical industry. A new molecule is deep science. Take automobiles. Inventing new materials to create new kinds of brake linings, that’s deep tech.

“In India, we can manufacture well. But how many molecules have we created?” asks Dayasindhu. Over the past decade, there’s one he can think of, he adds, Saroglitazar by Cipla, for a drug to treat Type 2 diabetes. By comparison, in 2020 alone, China filed at least 20 drug patents.

When it comes to the Information Technology (IT) ecosystem, India transitioned from offering IT services to offering solutions that lie on the cloud and in the area of SaaS (Software as a Service). But why did India not start to work on the underlying technologies that power the cloud or SaaS? Why did that have to be created in other parts of the world? What will it take to build that kind of base in India?

“It’s difficult,” says Amit Ranjan, co-founder of the slide-creation and content-sharing platform SlideShare (which was acquired by LinkedIn in 2016). “In frontier tech or deep tech, we need domain experts and I even find myself wanting oftentimes.”

After Slideshare, Ranjan worked closely with Nandan Nilekani on the government’s Aadhaar Unique ID Project. That was also when he created DigiLocker. This is a space in the cloud that is meant to allow Indian citizens to store and access official documents, digitally signed and legally binding. The full impact of DigiLocker will be felt when it gets to be as ubiquitous as today’s UPI payments (which were once thought of as a pipe dream). This is how deep tech evolves. It takes time and morphs as it grows.

“What happened during Covid is a great example from recent times,” Ranjan says. “Everyone knew a vaccine and vaccine-delivery system would be needed. And then they were. For years, work had gone into laying the groundwork for such an mRNA vaccine.” That, incidentally, is an example of deep tech at its best. “When the pandemic broke out, all good investors began looking at the solutions that were being pitched for funding, and began trying to figure out where to invest.”

Most investors mix and match, Ranjan adds. What this means is most of them put some of their money into two or three moonshots. In technology investing circles, taking a moonshot means choosing to back a project without any expectation of profitability in the near-term or clear understanding of the risks, because it is seen as a vital and promising endeavour (space exploration, bioengineering, etc).

Sanjay Jain, a partner at the venture capital and private equity firm Bharat Innovation Fund, talks about the two pools of investible capital that the firm deals in. There is one to look at early-stage companies and another that is set aside to back startups in the Indian deep tech space, at work to build intellectual property. His colleagues who manage that fund have a tough job on hand, he says. It’s hard to evaluate the chances of an entity at work on something that doesn’t exist yet.

So, what makes the difference? What puts one country ahead of another, when it comes to deep tech and deep science (think medical discoveries, space exploration, technology), is mindset, both individual and institutional. How much of a premium do we place on research? How comfortable are we with failure? How much of a culture of deferred results do we accommodate?

Currently, India lacks the ecosystem and the markets, the investors with high-risk appetites.

We need to become a country that fully nurtures the ideas people. Those who have the sparks of inspiration, aren’t afraid to start from scratch, and have no problem dealing with ambiguity and with going anywhere the road takes them.

They must be nurtured through changes in education templates, greater grants for innovation, support from the government and private investors and equity firms. So that it is not up to the individuals alone to turn their brainwave into a world-changing technology.

K Chandrasekhar, founder and CEO of Forus Health, is one such ideas person, and his struggle outlines how far we have to go. After spending some time in the semiconductor industry, he looked around and decided to use technology to fix a different problem. About 80% of Indians who lose their eyesight don’t need to, he discovered. They just needed access to ophthalmologists. Further research revealed that India has just 20,000 ophthalmologists per million people; among the lowest in the world. What would it take to bridge the gap?

Thinking from first principles led to questions such as: Why not build equipment that can be carried to people, and does not require technicians? The outcome was rugged, portable AI-led devices that can treat children and adults. It took much time and effort to receive global regulatory approvals, including from the US and Japan.

This is where it begins to get interesting. While the company’s mission is to eradicate unnecessary blindness in India, Chandrasekhar is frank about the disadvantages of working in the deep tech space here. “The development ecosystem is not there. The markets are unwilling to pay. Growth is very slow. “We got lucky that Accel and International Data Group invested in us early, and stayed with us.”

Over time, the company decided it must go global and morphed into a technology platform as well, that provides end-to-end health care solutions on the basis of the data it collects from retinal scans paired with artificial intelligence that powers the back-end. “This is one of the advantages of working out of India. You have large numbers of people for a vast sample size,” Chandrasekhar says.

Things now stand at an inflection point where the most recent research has it that the eye is a biomarker and the retinal scans can be used to predict risks for conditions such as cardiovascular disease, Alzheimer’s disease, and stroke. As with so much deep tech and deep science, an idea paired with AI becomes something that can change the world.

Part of the ambiguity is not knowing how vast the goal might become, and it will be vital for India to create a supportive environment that allows for this kind of fuzziness.

Where are the ideas?

India’s vast population is already proving to be a boon to research efforts, paired with AI-led algorithms.

In the field of pharmaceutical research, experiments are on to test new drugs using data gleaned from biobanks. These biobanks consist of data gathered from across the country, not viewed by a human, but fed into AI models. “Research on cancer is happening in India in this manner,and over the next few years, it is possible the next generation of drugs will start to emerge out of India,” says Sanjay Jain of Bharat Innovation Fund.

The country’s vast population could help make it the AI model-making capital of the world, particularly in areas such as fintech and health care.

Because other governments and companies are turning insular about technology transfers, post-Covid, much has changed, says Ranjan of DigiLocker. The Indian government has wrapped its head around why deep tech matters and has set up a fund-of-funds to invest in companies that are funding the best-looking moonshots

Meanwhile, some fine minds are at work on pressing problems, says Ranjan. This includes making forays into space, reimagining health care, and figuring out how to deploy cryptography to make the internet a safer place.

With such ideas in the works, the nature of the companies that emerge out of India will change dramatically. Handled right, it’s even possible that the Americans and Chinese will come to think that they misread India’s prowess. Look for early successes as deep tech from India is deployed in parts of the Middle East, Africa and South-East Asia, particularly in the areas of health care and fintech solutions (such as UPI) for populations in remote areas.

The aim is to bring people who are part of the informal sector into the formal sector. The underlying infrastructure has already been crafted. Parts of the developed world are interested as well, because health care particularly is a domain where access remains problematic around the world. Now to watch it roll…