New Delhi The aim of the 2025-26 Union Budget to provide a decisive push for startups in the country was clear on Saturday when finance minister Nirmala Sitharaman outlined several measures to help bolster and expand the startup ecosystem.
The key announcement was that of another FFS, or Fund of Funds for startups, with a fresh government contribution of ₹10,000 crore. The government expects this to benefit the 161,225 startups recognised by the Department for Promotion of Industry and Internal Trade, or DPIIT.
“The Alternate Investment Funds (AIFs) for startups have received commitments of more than ₹91,000 crore. These are supported by the Fund of Funds set up with a government contribution of ₹10,000 crore. Now, a new Fund of Funds, with expanded scope and a fresh contribution of another Rs10,000 crore, will be set up,” Sitharaman said during her speech in Parliament.
With its renewal, the ₹10,000 crore Fund of Funds (FoF) and focus on deep-tech funding are expected to give early-stage ventures access to much-needed capital, and boost hopes for the next wave of innovation in key sectors including electronics and EV battery tech.
“The announcement on deep tech fund should be viewed through the DeepSeek lens of what can be done with relatively small amounts of capital when provided to agile and creative teams,” said Bruce Keith, co-founder and CEO of InvestorAi, an investment startup.
The FFS scheme was launched in 2016 with a corpus of ₹10,000 crore. The aim at the time was to provide a boost to the Indian startup ecosystem, as well as open access to domestic capital.
“A ₹10,000 crore infusion will provide much-needed capital to fuel innovation and entrepreneurship mindset in the startup ecosystem,” Amit Khatri, co-founder of Indian tech company Noise, told HT.
The scheme has not directly invested in startups so far, and instead has served as a source of capital for Alternative Investment Funds (AIFs) that invest in startups.
“We believe the increased financial support from the government, alongside efforts to reduce capital constraints and collaboration with industry will further accelerate growth of Indian startups,” said Archana Jahagirdar, founder and managing partner at Rukam Capital, a venture capital firm.
The government also moved today to improve credit availability with a guarantee cover for startups enhanced from ₹10 crore to ₹20 crore, with guarantee free being moderated for 1% of total loan across 27 focus sectors critical to the Atmanirbhar Bharat (Self-reliant India) plan.
Yamini Bhat, CEO and Co-founder of Vymo, a fintech services firm, believes improved capital availability will especially help startups in B2B SaaS, enterprise tech, and fintech sectors. “This is a shot in the arm for startup innovation and will strengthen India’s position as a global hub for startups,” she said.
A Deep Tech Fund of Funds will also be explored, with an intent by the government to catalyse the next generation startups as a part of this initiative.
“As we witness rapid expansion of India’s Deep Tech ecosystem with over 4500 startups, these initiatives will be instrumental in attracting global investment, and positioning as a hub for frontier tech, from the consumption and services focus India is known for,” said Somshubhro Pal Choudhury, Partner at Bharat Innovation Fund, a venture capital firm.
On the aspect of ease of doing business in the sector, the Union Budget 2025 detailed a proposal to extend benefits provided under Section 80-IAC to startups for another period of five years. The benefit of this will be available to eligible startups incorporated before April 2030.