On Saturday, India unveiled a new $1.15 billion Fund of Funds aimed at startups, marking a significant commitment to tech innovation and clean energy in the world’s fifth largest economy. This comes in conjunction with an array of regulatory reforms and a bold nuclear energy program.
The plans were unveiled by Finance Minister Nirmala Sitharaman, as part of the federal budget for 2025-26. The fund is a continuation of previous startup funding programs, that have already invested over $1 billion via alternate investment funds. The updated fund is anticipated to offer a broader scope, although the specific areas of focus were not outlined in the budget presentation.
Sitharaman also detailed plans for a High-Level Committee for Regulatory Reforms. This committee is set to review all non-financial sector regulations, certifications, licenses and permissions within a year. The aim is to foster a trust-based economic governance and minimize compliance burdens for startups and tech companies.
The government in New Delhi is also considering the establishment of a separate Deep Tech Fund of Funds. This would support next-generation startups working on advanced technologies, contributing to India’s ambition to strengthen its position in emerging tech sectors.
These measures coincide with India’s startup ecosystem becoming a significant contributor to job creation and a source of national pride. With an economy projected to grow between 6.3% and 6.8% in the coming year, the government is banking on innovation and entrepreneurship to help achieve its long-term goal of 8% growth, which is crucial for generating sufficient jobs for the country’s youthful population.
Indian startups have managed to attract over $100 billion in the past decade from investors like Norges, SoftBank, Sequoia, Accel, Tiger Global, General Catalyst, and General Atlantic. With over 100 unicorn startups, India is fast becoming a vital growth market for Silicon Valley giants.
Sanjeev Bikhchandani, a prominent investor and early backer of Zomato and Policybazaar, stated, “The first fund initiated a few years ago provided a huge boost to the Indian venture capital industry, leading to the setup of dozens of Indian VC funds which provided risk capital to hundreds of startups. Domestic venture capital is crucial for India.”
The government also declared a $2.3 billion Nuclear Energy Mission aimed at developing at least five indigenous small modular reactors by 2033. This initiative is part of India’s target to achieve 100 gigawatts of nuclear energy capacity by 2047, with planned amendments to the Atomic Energy Act to enable private sector participation.
Sitharaman, in her budget speech, stated, “We are committed to ensuring that our regulations keep pace with technological innovations and global policy developments.” She also announced plans to decriminalize more than 100 provisions across various laws through a new Jan Vishwas Bill 2.0.
The government has extended tax benefits for startups by five years, with companies incorporated before April 2030 eligible for certain deductions. For startups in 27 sectors deemed crucial for India’s self-reliance goals, the government has reduced guarantee fees to 1% while doubling their credit guarantee limit to $230,000.
A new scheme aimed at 500,000 first-time entrepreneurs, especially women and individuals from scheduled castes and tribes, will offer term loans up to $24,000 over the next five years. The program draws on lessons from the existing Stand-Up India scheme, with the aim of broadening the reach of the startup ecosystem.
In order to encourage innovation in electronics manufacturing, a key area for tech startups, the government introduced a presumptive taxation scheme for non-residents involved in setting up manufacturing facilities. The budget also proposes “BharatTradeNet,” a unified platform for trade documentation and financing solutions, which could prove beneficial for fintech startups.
