India has greenlit a significant $1.1 billion state-supported venture capital initiative, designed to funnel government funds into emerging companies via private investment firms. This move intensifies the nation's commitment to bolstering high-risk, high-reward sectors, including artificial intelligence, advanced manufacturing, and other domains collectively known as deep tech.
This ₹100 billion fund, initially proposed in the January 2025 budget speech by India's finance minister, secured cabinet approval this week, over a year after its initial announcement. This clearance paves the way for the government to commence its deployment. A precursor to this program, launched in 2016, saw ₹100 billion allocated to 145 private funds, which subsequently injected over ₹255 billion (approximately $2.8 billion) into more than 1,370 startups, as per official data released on Saturday.
Structured as a 'fund of funds,' a prevalent venture capital framework where governments indirectly support startups by committing capital to private investment firms, this new program adopts a more focused strategy than its 2016 predecessor. Its primary objectives, as stated by the Indian government, include concentrating on deep-tech and manufacturing startups—sectors known for demanding longer development timelines and substantial capital—while also nurturing early-stage founders, broadening investment reach beyond metropolitan centers, and fortifying India's indigenous venture capital landscape, especially smaller funds.
During the announcement on Saturday, IT minister Ashwini Vaishnaw underscored the remarkable growth of India's startup ecosystem. Referencing figures from a presentation slide, he noted an astonishing increase from fewer than 500 startups in 2016 to over 200,000 currently. The presentation also 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, specifically designed to alleviate burdens on deep-tech enterprises. New Delhi extended the duration for which these firms are classified as startups to 20 years and significantly increased the revenue eligibility threshold for startup-specific tax, grant, and regulatory advantages to ₹3 billion, or approximately $33 million, a substantial rise from the prior ₹1 billion limit.
Coinciding with this approval is the imminent government-backed India AI Impact Summit, an event poised to host leading global AI entities like OpenAI, Anthropic, Google, Meta, Microsoft, and Nvidia, alongside prominent Indian conglomerates such as Reliance Industries and Tata Group. India, recognized as the world's most populous nation and one of its largest internet markets with over a billion online users, has progressively emerged as a compelling frontier for international technology firms seeking to broaden their user outreach.
Concurrently, the landscape for securing private capital has grown more challenging. In 2025, India's startup ecosystem attracted $10.5 billion, representing a decline of just over 17% compared to the previous year. This occurred as investors adopted a more discerning approach, leading to a sharp reduction in the overall number of deals. Data from Tracxn indicates that the volume of funding rounds plummeted by nearly 39% to 1,518 transactions.
Minister Vaishnaw affirmed the new venture capital program's commitment to flexibility, noting that "extensive consultations have taken place with all stakeholders" to ensure its adaptability.
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