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India is set to invigorate its startup ecosystem with a transformative $1.1 billion venture capital initiative, targeting high-risk sectors such as advanced manufacturing and deep tech. This strategic move underscores the nation’s commitment to fostering innovation and scaling up domestic entrepreneurship.
Originally announced in earlier budget discussions, this ₹100 billion program recently gained official cabinet approval, marking a significant step in government efforts to propel startup funding. A previous version of this initiative, initiated in 2016, successfully allocated ₹100 billion to 145 funds, resulting in over ₹255 billion (approximately $2.8 billion) invested across more than 1,370 startups, highlighting a strong foundation of government support.
This latest venture capital program operates as a fund of funds, a strategy where government resources are funneled to private investment firms rather than directly to startups. Its refined focus will zero in on deep-tech and manufacturing sectors that often require substantial investment and longer timelines, while also prioritizing early-stage founders and expanding investments beyond urban hubs, which aims to bolster smaller funds within India’s venture capital landscape.
Highlighting the momentum of India’s startup scene, IT Minister Ashwini Vaishnaw reported a surge in the number of registered startups from fewer than 500 in 2016 to over 200,000 currently, with a record-breaking 49,000 new registrations in 2025 alone.
This program is also complemented by recent regulatory reforms aimed at alleviating the challenges faced by deep-tech firms, extending the startup classification period to 20 years and increasing the revenue cap for startup-related benefits to ₹3 billion (about $33 million), up from ₹1 billion.
As India establishes itself as a focal point for technological innovation, global tech entities are increasingly drawn to its expansive market of over a billion online users. However, with the tightening of private capital availability—India’s startup ecosystem attracting only $10.5 billion in 2025, a decrease of over 17%—investors are becoming more discerning, as reflected in the sharp drop in funding rounds to 1,518 transactions, a 39% decline year-on-year.
Vaishnaw emphasized the program’s adaptability, noting extensive consultations with relevant stakeholders to ensure its success and effectiveness.
### Hustle Verdict
Our take is that this bold initiative has the potential to reinvigorate India’s startup ecosystem, particularly in deeper tech areas where innovation is crucial yet financially intensive. We believe that entrepreneurs should strategically position their ventures to align with this government support, leveraging available funding to propel their growth. The bottom line is, rather than merely reacting to market trends, startups should proactively embrace this funding ecosystem to create scalable solutions that resonate within India’s expanding digital landscape.
