The Indian government has announced a Rs 10,000 crore Fund of Funds initiative in Budget 2025 to boost the startup ecosystem. The announcement comes as the Indian startup sector shows resilience and growth, with at least 30 startups raising $248.87 million in funding last week.
Budget 2025 revamps #MSME sector with increased investment and turnover limits
Union Finance Minister @nsitharaman announced a credit boost for MSMEs or Micro, Small and Medium Enterprises, to generate employment, especially for young people.@minmsme #Budget2025 pic.twitter.com/dth2iLKPp2
— DD News (@DDNewslive) February 3, 2025
The Fund of Funds for Startups (FFS) is led by the Department for Promotion of Industry and Internal Trade (DPIIT) and facilitated by the Small Industries Development Bank of India (SIDBI).
It spans the 14th and 15th Finance Commission cycles. The focus on startups is expected to encourage more domestic investment and accelerate the growth of Indian startups.
Tune in to our Exclusive Union Budget 2025 Panel, where industry experts analyze how Budget 2025 will impact the future of MSMEs. Watch @ritzdotcom speak to Sunil Subramaniam, Vinod Kumar Wuthoo, Rajiv Chawla, Nilachal Mishra, and Chandan Chowdhury as they analyze key budget…
— ET NOW (@ETNOWlive) February 5, 2025
This aligns with the objectives of the Startup India movement, which began on January 16, 2016, to create a thriving startup ecosystem in the country.
COMING UP @ 6 PM | Startup Central
We decode the Union Budget 2025 for start ups with Padmaja Ruparel of India Angel Network @SumitaKareer @padmajaian @ianetwork pic.twitter.com/Ddhub5monN
— ET NOW (@ETNOWlive) February 4, 2025
The TOI Business Desk, a team of journalists, is committed to delivering the latest and most relevant business news, offering insights and updates to help navigate the complexities of the business world. This newest fund is part of a decade-long commitment to fostering innovation and entrepreneurship, reflecting India’s growing might as a global startup hub. India has also unveiled a new $1.15 billion Fund of Funds for startups, regulatory reforms, and a nuclear energy program to boost tech innovation and clean energy.
Budget 2025: Startups cheer five-year extension for tax incentiveshttps://t.co/mTRtgA8568
via NaMo App pic.twitter.com/n4ezXVvCBE
— Office of Kiren Rijiju (@RijijuOffice) February 3, 2025
Finance Minister Nirmala Sitharaman stated that the new fund builds on earlier startup funding programs that have already deployed more than $1 billion from alternate investment funds. Compared to previous initiatives, the fund will have an “expanded scope.” Sitharaman outlined plans for a High-Level Committee for Regulatory Reforms to review all non-financial sector regulations, certifications, licenses, and permissions within a year.
This aims to strengthen “trust-based economic governance” and ease compliance burdens for startups and technology companies.
Government’s Startup Fund boost
New Delhi is exploring a separate Deep Tech Fund of Funds to catalyze next-generation startups working on advanced technologies as part of a broader push to strengthen India’s position in emerging tech sectors.
These measures come as India’s startup ecosystem continues to be a significant job creator. The broader economy is projected to grow between 6.3% and 6.8% in the coming year. Indian startups have attracted over $100 billion in the past decade from investors, including Norges, SoftBank, Sequoia, Accel, Tiger Global, General Catalyst, and General Atlantic.
Home to over 100 unicorn startups, India is cementing its place as a critical growth market for Silicon Valley giants. The government announced a $2.3 billion Nuclear Energy Mission to develop at least five indigenous small modular reactors by 2033. The program is part of India’s goal to achieve 100 gigawatts of nuclear energy capacity by 2047, and amendments to the Atomic Energy Act are planned to enable private sector participation.
The government extended startup tax benefits by five years, allowing companies incorporated before April 2030 to claim certain deductions. For startups in 27 sectors deemed crucial for India’s self-reliance goals, the government reduced guarantee fees to 1% while doubling their credit guarantee limit to $230,000. A new scheme targeting 500,000 first-time entrepreneurs, particularly women and those from scheduled castes and tribes, will provide term loans up to $24,000 over the next five years.
This program builds on lessons from the existing Stand-Up India scheme, aiming to broaden the startup ecosystem’s reach. To boost innovation in electronics manufacturing, a crucial focus area for tech startups, the government introduced a presumptive taxation scheme for non-residents establishing manufacturing facilities. The budget also proposes “BharatTradeNet,” a unified platform for trade documentation and financing solutions that could benefit fintech startups.