Key Highlights:
- India has cleared a $1.1 billion state-backed venture capital fund focused on deep tech and manufacturing.
- The fund will invest indirectly in startups through private venture firms.
- The move comes as private startup funding slows and AI competition intensifies.
India has approved a $1.1 billion government-backed venture capital program to finance startups working in artificial intelligence, advanced manufacturing, and other deep-tech sectors. The decision matters because private capital is tightening, while India wants to secure a long-term position in high-risk, high-impact technologies.
The cabinet clearance allows the government to deploy ₹100 billion through a fund-of-funds structure, routing public money into startups via private venture capital firms. The plan was first announced in the January 2025 budget speech and has now received final approval.
What is India’s new venture capital program?
The program is designed as a fund of funds. Instead of investing directly in startups, the government will commit capital to private venture funds. These funds will then back startups across sectors considered strategically important for India.
This approach mirrors a similar initiative launched in 2016. That earlier fund committed ₹100 billion to 145 private funds, which collectively invested over ₹255 billion in more than 1,370 startups, according to official data.
Why is India targeting deep tech now?
Deep-tech startups often need more capital and longer timelines than consumer internet companies. Areas like AI, robotics, semiconductors, and advanced manufacturing rarely deliver quick returns.
India’s new program narrows its focus compared to the 2016 version. It aims to support early-stage founders, expand funding beyond major startup hubs, and strengthen smaller domestic venture firms. The keyword India sits at the center of this push as policymakers seek technology self-reliance and global competitiveness.
How big is India’s startup ecosystem today?
At the announcement, IT minister Ashwini Vaishnaw highlighted rapid growth in startup registrations. Government data shows India has expanded from fewer than 500 startups in 2016 to more than 200,000 today.
In 2025 alone, over 49,000 startups were registered, marking the highest annual addition on record.
What policy changes support deep-tech startups?
The cabinet approval follows regulatory easing for deep-tech firms. India has doubled the startup classification period from 10 to 20 years. It also raised the revenue ceiling for startup-specific benefits to ₹3 billion.
These changes reduce pressure on capital-intensive companies that take longer to scale.
Why does this matter amid global AI competition?
The approval comes ahead of the government-backed India AI Impact Summit. Global players such as OpenAI, Anthropic, Google, Meta, Microsoft, and Nvidia are set to participate alongside Indian giants like Reliance Industries and Tata Group.
At the same time, startup funding in India fell to $10.5 billion in 2025, with deal volume dropping sharply. In that context, public capital could play a stabilizing role as India positions itself as a long-term deep-tech hub.
