India has approved a $1.1 billion government-supported venture capital initiative, designed to direct public funds into nascent companies through private investment firms. This move reinforces the nation’s commitment to funding high-potential, high-risk sectors like artificial intelligence, advanced manufacturing, and other domains collectively known as deep tech.
Initially mentioned in India’s finance minister’s budget speech in January 2025, the ₹100 billion fund recently secured cabinet approval this week, over a year after its announcement, paving the way for its implementation. A predecessor program, established in 2016, allocated ₹100 billion to 145 private funds, which subsequently deployed over ₹255 billion (approximately $2.8 billion) into more than 1,370 startups, as per official figures released on Saturday.
This initiative adopts a ‘fund of funds’ structure, a prevalent venture capital method where governments support startups indirectly by committing capital to private investment firms. The current program is intended to be more focused than its 2016 predecessor, prioritizing deep-tech and manufacturing startups, which often demand extended development periods and substantial funding. Additionally, it aims to support early-stage entrepreneurs, broaden investment reach beyond metropolitan areas, and bolster India’s indigenous venture capital ecosystem, especially smaller funds, according to the Indian government.
During the announcement on Saturday, IT Minister Ashwini Vaishnaw underscored the significant growth of India’s startup sector. He referenced presentation data showing an increase from fewer than 500 startups in 2016 to over 200,000 presently. The figures further revealed that more than 49,000 startups were registered in 2025 alone, marking the highest annual total ever recorded.
This cabinet approval comes on the heels of recent revisions to India’s startup regulations, designed to alleviate challenges for deep-tech enterprises. The government in New Delhi extended the duration for which these companies qualify as startups to 20 years and increased the revenue cap for enjoying startup-specific tax, grant, and regulatory advantages to ₹3 billion (approximately $33 million), a significant rise from the previous ₹1 billion.
This approval precedes the upcoming government-supported India AI Impact Summit, an event where leading global AI companies like OpenAI, Anthropic, Google, Meta, Microsoft, and Nvidia are expected to participate alongside major Indian corporations such as Reliance Industries and Tata Group. As the world’s most populous nation and one of its largest internet markets, boasting over a billion online users, India has emerged as an increasingly appealing hub for global technology firms seeking to broaden their user reach.
Simultaneously, securing private capital has become more challenging. India’s startup sector attracted $10.5 billion in funding in 2025, marking a decline of just over 17% from the previous year. This occurred as investors adopted a more selective approach and significantly decreased the volume of deals. The total number of funding rounds decreased by nearly 39%, settling at 1,518 transactions, as per Tracxn data.
Minister Vaishnaw emphasized the inherent flexibility of the new venture capital program, noting that “extensive consultations have taken place with all stakeholders.”