Government Unveils ₹10,000 Crore Fund to Propel Startup Ecosystem in Budget 2025

In a significant move to bolster India’s burgeoning startup ecosystem, Finance Minister Nirmala Sitharaman announced the establishment of a new ₹10,000 crore Fund of Funds for Startups (FFS) during the Union Budget 2025 presentation. This initiative underscores the government’s commitment to fostering innovation and entrepreneurship across the nation.

A Renewed Commitment to Startups

The newly announced fund builds upon the foundation laid by the initial FFS scheme launched in 2016. Administered by the Department for Promotion of Industry and Internal Trade (DPIIT) and operated through the Small Industries Development Bank of India (SIDBI), the original scheme played a pivotal role in providing capital to startups at various stages—early, seed, and growth. It also aimed to reduce dependence on foreign capital by encouraging domestic investments.

Since its inception, the FFS has committed over ₹9,100 crore, significantly contributing to the growth of the startup landscape in India. The latest infusion of ₹10,000 crore is expected to further accelerate this momentum, providing emerging entrepreneurs with the necessary financial support to scale their ventures.

Catalyzing Domestic Investment

Finance Minister Sitharaman emphasized that the new fund is designed not only to support emerging entrepreneurs but also to catalyze domestic capital infusion. “This initiative has encouraged homegrown venture capital funds, making India a stronger player in the global startup ecosystem,” she stated. By fostering domestic investment, the government aims to create a self-sustaining startup environment less reliant on foreign funding.

Aligning with the Startup India Action Plan

The renewed fund aligns seamlessly with the Startup India action plan, first unveiled on January 16, 2016. This comprehensive strategy was designed to promote innovation, support sustainable economic growth, and generate large-scale employment opportunities. Over the past decade, the initiative has significantly contributed to India’s startup boom, with a sharp increase in domestic funding and innovation-driven enterprises.

Industry Reactions

The announcement has been met with enthusiasm from industry leaders and stakeholders. Kailash Katkar, Founder and MD of Quick Heal Technologies, remarked, “The Union Budget 2025-2026 is a bold step toward making India a global leader in digital transformation and AI-driven innovation. The government’s strong push for AI Centres of Excellence, digital infrastructure, and skill development demonstrates a clear commitment to embracing the future.”

Prashant Sachan, Founder and CEO of AppsForBharat, added, “The renewed ₹10,000 crore commitment for AIFs supporting Indian startups, along with a strong emphasis on upskilling and AI integration in education, marks a significant step toward positioning India as a global innovation hub.”

Looking Ahead

By extending financial support and reducing capital constraints, the government aims to accelerate the growth of Indian startups, further strengthening the country’s position as a global innovation hub. The infusion of ₹10,000 crore into the Fund of Funds for Startups is expected to provide the necessary impetus for entrepreneurs to innovate, scale, and contribute significantly to the nation’s economic growth.

As the startup ecosystem continues to evolve, such initiatives are crucial in ensuring that India remains at the forefront of global innovation, fostering an environment where entrepreneurship can thrive.