India Pledges $1 Billion for Startups

India Unveils New Funding and Reforms to Fuel Tech Growth

India revealed a new $1.15 billion Fund of Funds for startups this past Saturday. This announcement coincided with the introduction of extensive regulatory reforms and an ambitious program focused on nuclear energy. These initiatives are designed to stimulate technological innovation and promote clean energy within the nation’s economy, which ranks as the fifth-largest globally.

Startup Funding and Regulatory Streamlining

Finance Minister Nirmala Sitharaman, during the presentation of the federal budget for 2025-26, stated that this new fund complements existing startup funding initiatives. Previous programs have already successfully allocated over $1 billion through alternate investment funds. The current fund will feature a broader scope, although specific areas of concentration were not detailed in the budget proposal.

A High-Level Committee for Regulatory Reforms is also being established. This committee will conduct a comprehensive review of all non-financial sector regulations, certifications, licenses, and permissions over the next year. The goal is to foster “trust-based economic governance” and reduce the compliance challenges faced by startups and technology companies.

Deep Tech and Economic Growth

Plans are underway to explore the creation of a dedicated Deep Tech Fund of Funds. This fund will be instrumental in supporting next-generation startups focused on cutting-edge technologies. This represents a wider effort to strengthen India’s standing in emerging technology sectors.

India’s startup ecosystem is increasingly recognized as a significant job creator and a source of national pride. The country’s overall economy is projected to experience growth between 6.3% and 6.8% in the coming year. The government believes that innovation and entrepreneurship are vital to achieving its long-term objective of 8% growth, which is necessary to provide sufficient employment opportunities for its expanding youth population.

Investment and Venture Capital

Over the past decade, Indian startups have attracted more than $100 billion in investment from firms like Norges, SoftBank, Sequoia, Accel, Tiger Global, General Catalyst, and General Atlantic. With over 100 unicorn startups, India has solidified its position as a key growth market for Silicon Valley companies.

Sanjeev Bikhchandani, an early investor in companies such as Zomato and Policybazaar, emphasized the impact of the initial fund. He noted that it significantly boosted the Indian venture capital industry, leading to the establishment of numerous Indian VC funds that provided crucial risk capital to hundreds of startups. He underscored the continuing need for domestic venture capital within India.

Nuclear Energy and Decriminalization

A $2.3 billion Nuclear Energy Mission was also announced, with the aim of developing at least five indigenous small modular reactors by 2033. This program supports India’s ambition to reach 100 gigawatts of nuclear energy capacity by 2047. Amendments to the Atomic Energy Act are planned to facilitate private sector involvement.

“We are determined to ensure that our regulations keep up with technological innovations and global policy developments,” Sitharaman stated during her budget address. She also announced plans to decriminalize over 100 provisions across various laws through a new Jan Vishwas Bill 2.0.

Tax Benefits and Entrepreneurship Support

Tax benefits for startups have been extended for an additional five years. Companies incorporated before April 2030 will continue to be eligible for specific deductions. Furthermore, guarantee fees have been reduced to 1% for startups operating in 27 sectors considered critical to India’s self-reliance goals, and their credit guarantee limit has been doubled to $230,000.

A new scheme will target 500,000 first-time entrepreneurs, with a particular focus on women and individuals from scheduled castes and tribes. This program will offer term loans of up to $24,000 over the next five years. It builds upon the lessons learned from the existing Stand-Up India scheme, aiming to broaden the reach of the startup ecosystem.

Manufacturing and Trade Facilitation

To encourage innovation in electronics manufacturing, a key area for tech startups, a presumptive taxation scheme has been introduced for non-residents establishing manufacturing facilities. The budget also proposes the creation of “BharatTradeNet,” a unified platform for trade documentation and financing solutions, which could benefit fintech startups.