India doubles down on state-backed venture capital, approving $1.1B fund

India has cleared a $1.1 billion state-backed enterprise capital program that may channel authorities cash into startups by means of non-public buyers, doubling down on its effort to finance high-risk areas reminiscent of synthetic intelligence, superior manufacturing and different sectors broadly referred to by the business as deep tech.

First outlined within the January 2025 finances speech by India’s finance minister, the ₹100 billion fund gained cupboard approval this week (greater than a yr after the speech), permitting the federal government to maneuver forward with deployment. A earlier iteration of this system, launched in 2016, dedicated ₹100 billion to 145 non-public funds which have invested greater than ₹255 billion (about $2.8 billion) in over 1,370 startups, based on official knowledge launched on Saturday.

This system is structured as a fund of funds, a typical enterprise capital mannequin during which governments again startups not directly by committing capital to personal funding companies. It’s designed to take a extra focused method than its 2016 counterpart, specializing in deep-tech and manufacturing startups that sometimes require longer time horizons and bigger quantities of capital, whereas additionally backing early-stage founders, increasing funding past main cities and strengthening India’s home enterprise capital business, notably smaller funds, per the Indian authorities.

On the announcement on Saturday, IT minister Ashwini Vaishnaw highlighted the size of India’s startup growth, pointing to figures proven on a presentation slide indicating the variety of startups has grown from fewer than 500 in 2016 to greater than 200,000 at this time. The slide mentioned greater than 49,000 startups have been registered in 2025 alone, the very best annual whole on report.

The cupboard approval follows latest adjustments to India’s startup guidelines geared toward easing stress on deep-tech firms. New Delhi doubled the interval for which such companies are labeled as startups to twenty years and raised the income threshold for startup-specific tax, grant and regulatory advantages to ₹3 billion, or about $33 million, up from ₹1 billion beforehand.

The approval comes simply forward of the government-backed India AI Affect Summit, the place international AI firms together with OpenAI, Anthropic, Google, Meta, Microsoft, and Nvidia are set to take part alongside Indian corporates reminiscent of Reliance Industries and Tata Group. India, the world’s most populous nation and considered one of its largest web markets with greater than a billion on-line customers, has change into an more and more engaging enviornment for international tech firms seeking to increase their person base.

On the identical time, non-public capital has change into more durable to safe. India’s startup ecosystem raised $10.5 billion in 2025, down simply over 17% from a yr earlier, whilst buyers grew extra selective and sharply decreased the variety of offers. The variety of funding rounds fell almost 39% to 1,518 transactions, based on knowledge from Tracxn.

Vaishnaw mentioned the brand new enterprise capital program would stay versatile, including that “in depth consultations have taken place with all stakeholders.”