India has cleared a $1.1 billion state venture capital program that will funnel state money to startups through private investors, doubling down on its effort to fund high-risk sectors such as artificial intelligence, advanced manufacturing and other areas widely referred to by industry as deep technology.
The ₹100 billion fund, first outlined in the January 2025 budget speech by India’s finance minister, won cabinet approval this week (more than a year after the speech), allowing the government to move ahead with the rollout. A previous iteration of the program, launched in 2016, committed ₹100 billion to 145 private equity funds that have invested more than ₹255 billion (about $2.8 billion) in more than 1,370 startups, according to official figures was released on Saturday.
The program is structured as a fund of funds, a joint venture capital model in which governments support start-ups indirectly by committing capital to private investment firms. It is designed to take a more targeted approach than its 2016 counterpart, focusing on deep-tech and manufacturing startups that typically require longer time horizons and larger amounts of capital, while also supporting early-stage founders, expanding investment beyond major cities and strengthening India’s domestic venture capital industry, particularly smaller funds, according to the Indian government.
In Saturday’s announcement, IT Minister Ashwini Vaishnaw highlighted the scale of India’s startup expansion, pointing to figures in a presentation showing the number of startups has grown from fewer than 500 in 2016 to more than 200,000 today. The slide said more than 49,000 startups were registered in 2025 alone, the highest annual total on record.
The cabinet’s approval follows recent changes to India’s startup rules aimed at easing pressure on deep-tech companies. New Delhi doubled the period during which such companies are classified as startups to 20 years and raised the revenue limit for special tax, grant and regulatory benefits for a startup to ₹3 billion, or about $33 million, from ₹1 billion previously.
The approval comes just ahead of the government-backed India AI Impact Summit, where global AI companies including OpenAI, Anthropic, Google, Meta, Microsoft and Nvidia are set to participate alongside Indian companies such as Reliance Industries and the Tata Group. India, the world’s most populous country and one of the largest Internet markets with more than a billion online users, has become an increasingly attractive arena for global technology companies looking to expand their user base.
At the same time, private capital has become more difficult to secure. India’s startup ecosystem raised $10.5 billion in 2025, down a little more than 17% from the previous year, even as investors became more selective and sharply reduced the number of deals. The number of funding rounds fell nearly 39% to 1,518 transactions, according to Tracxn data.
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Vaishnaw said the new venture capital program would remain flexible, adding that “extensive consultations have taken place with all stakeholders.”
