New Delhi: Driven by Covid-related supply-chain disruptions and rising protectionism among major economies, India’s push to strengthen domestic manufacturing appears to be paying off.
India’s manufacturing startups have seen a surge in investor interest and a sharp rise in revenue as the country steps up efforts to boost domestic manufacturing, with funding jumping from $164 million in 2020 when the pandemic arrived to $1.92 billion so far in 2026, according to data platform Venture Intelligence. At the same time, startups such as Pulse, a medical equipment maker, and Scimplify, a specialty chemicals manufacturer and end-to-end supply chain platform, are seeing rising demand from the domestic market.
The total number of deals has also increased from 31 in 2020 to 127 in 2026, according to Venture Intelligence.
“Covid made people realise that having a hedge on the supply side makes a lot of sense. This, in turn, created demand for alternative global supply chains, with India gradually emerging as a reasonably good Plan B. As the domestic market and demand expanded, people also began realising that companies could achieve significant scale before looking to expand globally,” said Abhishek Srivastava, managing partner at early-stage venture capital (VC) firm Kae Capital.
Kae Capital has made several bets on manufacturing, including one of its earliest investments in Zetwerk, a business-to-business (B2B) manufacturing platform that is preparing to go public.
From a macro perspective, escalating trade tensions and tariffs have reinforced the need to diversify supply chains and strengthen domestic manufacturing. While the US-China trade war began in 2018 with tariffs targeting Chinese imports, the Trump administration’s 2025 reciprocal tariff policy expanded the use of tariffs to other trading partners, including India, prompting businesses to reassess global sourcing strategies.
Investors once shied away from asset-heavy businesses because their high failure rates left little salvage value if the ventures failed.
“Little value was attributed to intellectual property (IP). The value was attributed only to capital. The beauty today, at least in what we are looking at, is that it is IP-led manufacturing. If you do not have proprietary IP, I will not invest in you. Frankly, this model gives you the best of both worlds,” said Vikas Choudhury, founder and managing partner of growth-stage VC firm Playbook Partners.
Choudhury argues that IP-led manufacturing combines the moats of capital and technology, making it difficult for competitors to replicate a company’s products overnight and giving it a lead of at least 12 to 24 months. Playbook Partners has invested in companies such as spacetech unicorn Skyroot.
At the same time, the government has stepped up its manufacturing push through policies such as the production-linked incentive (PLI) scheme and the electronics components manufacturing scheme (ECMS). Introduced in 2020, the PLI scheme offers incentives linked to incremental production across 14 sectors, including electronics, automobiles and pharmaceuticals, to attract investments and expand domestic manufacturing.
“Now, given the kind of demand we are seeing from investors, I could even do 8 to 10 deals in manufacturing in a quarter compared to 3 to 4 in a quarter earlier,” said Sumeet Seraf, founder and managing partner at Equity360, a boutique investment banking platform.
Demand rush
Manufacturing startups are benefiting from rising demand across sectors. Bengaluru-based Scimplify, which develops and manufactures advanced materials and speciality chemicals, including rare-earth oxides and specialised metal compounds, is seeing increased demand from aerospace and defence, solar energy, semiconductors, batteries and electric vehicles (EVs).
According to ministry of corporate affairs (MCA) filings sourced through Tracxn, Scimplify’s revenue surged more than 11-fold from ₹18.3 crore in FY24 to ₹204.3 crore in FY25. The company claims to have grown 8X since then.
Apart from geopolitical factors, the startup attributes the rising demand to the progress India has made in developing new technologies over the past decade. Many of these technologies were at Technology Readiness Levels (TRLs) 4–5, meaning they had been tested in laboratories but were not yet ready for commercial use. Today, some are reaching TRL 9, the stage at which they are proven to work in real-world conditions and are ready for commercial deployment. As these technologies mature, more customers are approaching Scimplify for the specialised materials and chemicals they require, said its co-founder Sachin Santhosh.
“The product categories we were working on in advanced materials have grown more than 10x over the last six months. At the same time, from a revenue perspective, we’ve almost doubled in the last six months. Over the next six months, we expect to grow almost 2x from the current level as well,” said Santhosh.
Similarly, nine-month-old medical equipment startup Pulse offers low- to medium-complexity equipment and associated consumables across critical care, renal care, cardiac care, aesthetics and rehabilitation. It works with manufacturers and small and medium enterprises (SMEs) through contract manufacturing agreements, while developing its own designs and products through an R&D facility in Visakhapatnam.
“In percentage terms, our business was very small during the first two months. Since then, we’ve grown by around 700%. We’ve also been growing by at least 30–40% month on month. In the next month or two, if we look at our annualised revenue run rate, we expect to cross around ₹100 crore,” said Anshul Sharma, co-founder of Pulse. Amid rising demand, the company is seeking Series A funding to strengthen its R&D capabilities and accelerate growth.