On Saturday, India revealed a new $1.15 billion Fund of Funds dedicated to startups, alongside comprehensive regulatory reforms and an ambitious nuclear energy initiative, as New Delhi aims to enhance technological innovation and promote clean energy in its status as the fifth-largest economy globally.
While presenting the federal budget for 2025-26, Finance Minister Nirmala Sitharaman noted that this fund expands upon previous startup funding initiatives that have already allocated over $1 billion through alternative investment funds. The new fund will feature an “expanded scope” compared to earlier efforts, although specific focus areas were not specified in the budget document.
She also announced the establishment of a High-Level Committee for Regulatory Reforms, which will assess all regulations, certifications, licenses, and permissions in the non-financial sector over the next year. This initiative aims to enhance “trust-based economic governance” while simplifying compliance for startups and technology firms, as stated by Sitharaman.
In addition, New Delhi is considering the formation of a dedicated Deep Tech Fund of Funds to support next-generation startups focusing on cutting-edge technologies, reinforcing India’s ambitions in burgeoning tech industries.
These initiatives come as India’s startup ecosystem gains momentum as a significant job creator and a source of national pride, with the broader economy anticipated to grow between 6.3% and 6.8% in the upcoming year. The government is relying on innovation and entrepreneurship to reach its long-term goal of achieving 8% growth, which is essential to generate sufficient employment opportunities for its youthful demographic.
Over the past decade, Indian startups have drawn in more than $100 billion from various investors such as Norges, SoftBank, Sequoia, Accel, Tiger Global, General Catalyst, and General Atlantic. With over 100 unicorn startups, India is solidifying its position as a prominent emerging market for Silicon Valley tech giants.
“The initial fund initiated a few years ago significantly boosted the Indian venture capital ecosystem,” remarked Sanjeev Bikhchandani, a prominent investor and early supporter of companies like Zomato and Policybazaar. “Numerous Indian VC funds sprang up to provide risk capital to hundreds of startups. India truly needs domestic venture capital.”
Additionally, the government has launched a $2.3 billion Nuclear Energy Mission aimed at developing at least five domestically produced small modular reactors by the year 2033. This initiative aligns with India’s target of achieving 100 gigawatts of nuclear energy capacity by 2047, accompanied by proposals to amend the Atomic Energy Act to facilitate private sector involvement.
“We are committed to ensuring that our regulations evolve in tandem with technological advancements and global policy trends,” Sitharaman stated during her budget presentation, revealing plans to decriminalize over 100 provisions across various laws through a new Jan Vishwas Bill 2.0.
Moreover, the government has extended tax incentives for startups by an additional five years, allowing companies incorporated before April 2030 to access specific deductions. For startups engaged in 27 sectors critical to India’s self-reliance objectives, the government has lowered guarantee fees to 1% and doubled their credit guarantee cap to $230,000.
A new program aimed at 500,000 first-time entrepreneurs, with an emphasis on women and individuals from scheduled castes and tribes, will offer term loans up to $24,000 over the next five years. This initiative builds upon insights from the existing Stand-Up India scheme, according to the minister, with the goal of expanding the reach of the startup ecosystem.
To foster innovation within the electronics manufacturing sector – a vital area for tech startups – the government introduced a presumed taxation scheme for non-residents establishing manufacturing operations. Furthermore, the budget proposes the “BharatTradeNet,” a unified platform designed for trade documentation and financing solutions that could greatly benefit fintech startups.
Compiled by Techarena.au.
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