NEW DELHI: India’s Union Cabinet has approved a new state-backed venture capital initiative, clearing the Startup India Fund of Funds 2.0 with a corpus of ₹10,000 crore (about $1.1 billion) to mobilize venture capital for the country’s startup ecosystem, the government said in a statement issued Feb. 14.
The program, launched under the Startup India initiative, sets out a segmented funding approach aimed at supporting deep tech, tech-driven innovative manufacturing startups, and early-growth stage startups. The Cabinet note said the fund is intended to mobilize long-term domestic capital and strengthen the venture capital ecosystem while supporting innovation-led entrepreneurship across the country.
Officials said the plan also seeks to broaden investment beyond major metropolitan centers and strengthen India’s domestic venture capital base, particularly smaller funds. The Cabinet statement described the scheme as targeting high-risk capital gaps and directing capital toward priority areas tied to self-reliance and economic growth, alongside efforts to expand the availability of early-stage funding.
The approval adds to a decade of Startup India policy measures that have tracked rapid growth in recognized companies. The government said the startup ecosystem has expanded from fewer than 500 startups in 2016 to more than 200,000 Department for Promotion of Industry and Internal Trade (DPIIT) recognized startups, and said 2025 recorded the highest annual startup registrations.
Building on the first fund-of-funds
The Fund of Funds 2.0 follows the earlier Fund of Funds for Startups, launched in 2016 to address funding gaps and help catalyze a domestic venture capital market. Under that first phase, the government said the entire ₹10,000 crore corpus was committed to 145 Alternative Investment Funds, which together invested more than ₹25,500 crore in over 1,370 startups across sectors including agriculture, artificial intelligence, robotics, automotive, clean technology, e-commerce, education, fintech, healthcare, manufacturing, space technology, and biotechnology.
The Cabinet note said the first fund-of-funds played a role in nurturing first-time founders and crowding in private capital, helping build a foundation for India’s venture capital ecosystem. The new fund retains the core concept of using government capital to expand the pool of risk funding available to startups through the venture capital market, while shifting to a more targeted structure focused on deep tech, manufacturing-linked innovation, and early-growth stage companies.
Deep tech rules updated this month
The Cabinet approval comes shortly after the government revised the Startup India recognition framework, including a new dedicated category for “Deep Tech Startups.” In a Feb. 5 statement, officials said the turnover limit for startup recognition was raised to ₹200 crore, while deep tech startups were given an expanded eligibility window of up to 20 years from incorporation and a turnover limit of ₹300 crore.
Together, the policy changes place deep tech and innovation-led manufacturing at the center of India’s state-backed startup financing and recognition architecture. The fund-of-funds approval sets the financial envelope at ₹10,000 crore, and the Cabinet statement frames the program around mobilizing venture capital and extending reach across regions and fund sizes, anchored in the Startup India platform and DPIIT’s startup recognition system. – By Content Syndication Services.