New Delhi, India — April 26, 2026
Government Clears ₹10,000 Crore Boost for Startup Ecosystem
In a major push to strengthen India’s startup ecosystem, the central government has approved the second tranche of its Fund-of-Funds (FoF) scheme worth ₹10,000 crore.
The guidelines for implementing the scheme were issued by the Ministry of Commerce and Industry, outlining a structured framework aimed at improving capital flow, ensuring transparency, and enhancing investment efficiency across the startup landscape.
Indirect Investment Model via SEBI-Registered Funds
Unlike direct funding programs, the FoF scheme will channel investments through venture capital structures. Specifically, it will operate via Alternative Investment Funds (AIFs) registered with the Securities and Exchange Board of India under Category I and Category II.
Only startups recognized by the Department for Promotion of Industry and Internal Trade will be eligible to receive funding under this initiative, ensuring that capital is directed toward verified and compliant ventures.
Focus on Transparency, Governance, and Wider Reach
The government expects the revamped framework to bring greater discipline to startup investments while also crowding in private capital.
New governance and monitoring mechanisms have been introduced to:
- Improve funding efficiency
- Expand access across sectors and growth stages
- Increase reach to startups in diverse geographic regions
The Small Industries Development Bank of India will act as the primary implementing agency, managing fund selection, deployment, and oversight.
An additional agency is also expected to be onboarded to expand the program’s reach and bring in deeper technical expertise.
Funds Split Across Key Innovation Segments
To address gaps within the startup ecosystem, the ₹10,000 crore corpus will be strategically divided into four major categories:
- Deep technology (DeepTech)
- Micro venture capital funds
- Technology-driven manufacturing
- Sector-agnostic funds
This diversified allocation aims to ensure balanced growth and targeted support for emerging and underserved sectors.
Expert Committee to Vet Investment Proposals
A rigorous multi-layer evaluation process has been put in place before fund allocation. Initial screening and due diligence will be conducted by the implementing agency, followed by final evaluation from a Venture Capital Investment Committee.
The committee includes prominent industry leaders such as Vallabh Bhansali, Ashok Jhunjhunwala, Renu Swarup, Chintan Vaishnav, and Rajesh Gopinathan.
The panel will assess proposals based on team expertise, investment strategy, and long-term viability, ensuring that funds are deployed responsibly and effectively.
Strengthening India’s Startup Growth Story
The approval of the second FoF tranche signals the government’s continued commitment to nurturing innovation and entrepreneurship.
By strengthening institutional frameworks and ensuring accountability, the initiative is expected to unlock new opportunities for startups while reinforcing India’s position as a global innovation hub.
