India’s startup ecosystem continues to attract significant attention from venture capital (VC) investors, driving the country’s economic growth, innovation and massive digital adoption potential.

According to GlobalData, startups in India secured a total of $9.2 billion in VC funding from 984 deals between January and October 2024, up 44.4 percent from 2023. According to McKinsey & Company, the Indian startup ecosystem contributed 10-15 percent to the country’s gross domestic product (GDP) growth between FY16 and FY23.

A recent Goldman Sachs report also said that the Indian economy will remain relatively insulated from global shocks expected in 2025 and that its GDP growth will remain strong in the long term. The country’s economy is expected to grow by an average of 6.5 percent over the next five years, the report said.

“India’s structural long-term growth story remains intact due to favorable demographics and stable governance,” said Santanu Sengupta, chief India economist at Goldman Sachs Research.

As traditional sectors become saturated, VCs are looking to shift their focus to emerging industries that are poised to define the country’s next phase of growth. Here are five sectors that are likely to attract the most interest from VCs in India in the next few years:

Climate technology and sustainability

Driven by India’s ambitious sustainability goals, climatetech has emerged as one of the most promising sectors in recent years. Government initiatives such as the National Electric Mobility Mission and Production-Linked Incentive (PLI) programs encourage innovation and investment and aim to achieve net zero carbon emissions by 2070.

According to the India Brand Equity Foundation (IBEF), the renewable energy market in India alone is expected to reach $250 billion by 2030.

VC firms particularly focused on climate and sustainability-focused investments have also invested heavily in climate-friendly mobility startups such as BluSmart, which raised $49 million in 2024.

Ankur Bansal, Managing Director, Blacksoil, said: “India’s investment hotspots in 2025 are DeepTech and Climate Tech, both poised for significant growth. With supportive policies, Climate Tech will accelerate, especially in the adoption of clean technologies.” Blacksoil is part of the 2023 financing round for BluSmart.

Health technology and medical technology

The healthtech sector in India has witnessed exponential growth in the last few years, accelerated by the pandemic and the country’s huge demand for scalable healthcare solutions given the market size. Remote consultation, wearables, artificial intelligence (AI)-enabled diagnostics and digital health platforms are driving the sector.

The government’s Ayushman Bharat Digital Mission (ABDM) lays the foundation for digital healthcare. According to RedSeer, the total market size is expected to reach $50 billion by 2033.

Startups like HealthifyMe and Even Healthcare raised $20 million and $30 million respectively in 2024, with healthcare-focused VCs like Khosla Ventures represented in both funding rounds.

Agritech and foodtech

India remains a predominantly agricultural country with agriculture accounting for 40 percent of total employment in India. To date, startups have capitalized on market size by using technology to improve productivity, supply chain efficiency and food safety.

Increasing technology adoption and internet penetration in rural areas, combined with government initiatives such as the Agri Infra Fund, are helping to boost growth. According to Bain and Company, the Indian agritech market is expected to reach $24 billion by 2025.

In 2024, Arya.ag, an agricultural technology startup focused on post-harvest services, secured $29 million in funding from Blue Earth Capital, suggesting that the wave of funding will continue next year.

Fintech 2.0

Fintech in India has been a VC favorite for several years now, and the emergence of “Fintech 2.0” has undoubtedly taken the sector far into the future, with startups now focusing on embedded finance, open banking, wealth management and financial inclusion.

The Unified Payments Interface (UPI) revolution has been the key driver of India’s digital infrastructure and provided a solid foundation for innovation in financial services in terms of money transfers and credit availability.

IAccording to Boston Consulting Group (BCG), India’s fintech market is expected to reach $200 billion by 2030. One of the largest deals in the fintech space was recently completed by Svatantra Microfin, raising $240 million in the first half of 2024. Other examples such as Zerodha, Razorpay and Jupiter have attracted significant VC interest in the past, suggesting the trend will continue until 2025.

Deep tech and AI

Deeptech, which includes advanced technologies such as AI, machine learning, robotics and quantum computing, has gained significant traction globally and the startup ecosystem in India is leveraging these technologies to serve various sectors.

According to a study by Nasscom, India’s AI market potential is expected to reach $7.8 billion by 2025, indicating huge potential within the country for the use of deep tech in sectors such as healthcare, space, agriculture and even finance.

Government-backed programs such as the National AI Strategy and the influx of investment in semiconductor manufacturing are driving growth. Eruditus, an edtech company, recently secured $150 million in Series F funding, while Whatfix, a digital adoption provider, secured $125 million in Series E funding led by Warburg Pincus secured what suggests strong interest in AI-powered solutions in India.

“Deeptech, powered by AI and advanced technologies, continues to revolutionize industries around the world. Despite a recent slowdown in funding, we expect investment in deeptech to pick up. “In addition, scaling is becoming increasingly feasible as market opportunities in these two sectors grow rapidly,” said Blacksoil’s Bansal.

With strong government support, increasing digital adoption and robust innovation, India is well positioned to attract billions of dollars in VC funding in these sectors in the coming years.

The country’s startup ecosystem is evolving rapidly, with emerging sectors set to dominate interest in VC investments. These sectors not only solve some of India’s most pressing problems but also provide growth opportunities for investors. With strong government support, increasing digital adoption and robust innovation, India is well positioned to attract billions of dollars in VC funding in these sectors in the coming years.