Budget 2025: Rs. 10,000 crore Fund of Funds for startups announced

Government’s Startup Support Strategy

$1.15 Billion Fund of Funds for Startups

During the federal budget presentation for 2025-26, Finance Minister Nirmala Sitharaman introduced a new $1.15 billion Fund of Funds to strengthen startup financing. This initiative builds on previous funding programs that have already allocated over $1 billion through alternative investment funds.

Broader Scope of the New Fund

Unlike earlier initiatives, the newly launched fund has an expanded scope to support a wider range of startups. However, the budget did not disclose specific focus areas or industries that will benefit from the initiative.

Regulatory Reforms for Startups and Technology Firms

High-Level Committee for Regulatory Reforms

To promote “trust-based economic governance” and ease compliance burdens, the government will establish a High-Level Committee. This committee will evaluate regulations, certifications, licenses, and permissions in the non-financial sector over the next year, with a focus on supporting startups and technology firms.

Deep Tech Fund of Funds for Advanced Startups

The government is considering the creation of a specialized Deep Tech Fund of Funds. This initiative aims to propel startups working in advanced technologies such as artificial intelligence, quantum computing, and biotechnology, strengthening India’s position in emerging technological fields.

India’s Startup Ecosystem and Economic Growth

Growing Role of Startups in Employment and Innovation

India’s startup ecosystem has become a key driver of job creation and economic development. With the economy expected to grow between 6.3% and 6.8% in the coming year, the government is relying on innovation and entrepreneurship to push toward an 8% growth rate, crucial for generating employment for the country’s youthful workforce.

India’s Position as a Global Startup Hub

Over the past decade, Indian startups have secured more than $100 billion in investments from global venture capital firms like SoftBank, Sequoia, Accel, and Tiger Global. With over 100 unicorns, India has become one of the most attractive markets for Silicon Valley investors.

Nuclear Energy Mission for Sustainable Growth

$2.3 Billion Nuclear Energy Initiative

Alongside startup-focused reforms, the government unveiled a $2.3 billion Nuclear Energy Mission. This initiative aims to develop at least five indigenous small modular reactors by 2033, reinforcing India’s commitment to sustainable energy and self-reliance in nuclear technology.

Reaching 100 GW Nuclear Capacity by 2047

As part of India’s long-term energy strategy, the country aims to achieve 100 gigawatts of nuclear energy capacity by 2047. To facilitate this goal, the government plans to amend the Atomic Energy Act, allowing private sector participation in nuclear energy projects.

Legal and Financial Reforms for Startups

Decriminalization of Over 100 Legal Provisions

To create a more business-friendly regulatory environment, the government will introduce the Jan Vishwas Bill 2.0. This bill will decriminalize over 100 legal provisions across various laws, ensuring that regulations evolve alongside technological advancements and global policy shifts.

Five-Year Extension of Tax Incentives for Startups

The government has extended tax incentives for startups by five years, allowing companies incorporated before April 2030 to benefit from specific tax deductions. This move is expected to encourage more entrepreneurs to establish startups in India.

Enhanced Credit Guarantee Scheme for Startups

Startups in 27 essential sectors crucial for India’s self-sufficiency will receive additional financial support. The government has reduced guarantee fees to 1% and doubled the credit guarantee limit to $230,000, making it easier for startups to access capital.

Promoting Entrepreneurship and Inclusivity

Financial Support for 500,000 First-Time Entrepreneurs

A new initiative aims to support 500,000 first-time entrepreneurs, with a special focus on women and individuals from scheduled castes and tribes. Under this program, eligible entrepreneurs can receive term loans of up to $24,000 over the next five years, expanding the reach of the startup ecosystem.

Boosting Innovation in Electronics and Trade

Presumptive Taxation Scheme for Electronics Startups

To promote innovation in electronics manufacturing, the government has introduced a presumptive taxation scheme for non-residents establishing manufacturing operations in India. This is expected to reduce tax compliance burdens and attract foreign investment in the sector.

BharatTradeNet for Fintech and Trade Solutions

The budget also proposes “BharatTradeNet,” a unified platform for trade documentation and financing solutions. This initiative is likely to benefit fintech startups and businesses engaged in international trade, streamlining processes and enhancing efficiency.