India Approves 1.1 Billion Dollar Deep Tech Venture Capital Fund
India has approved a 1.1 billion dollar state backed venture capital programme designed to channel public money into startups through private investors. The move strengthens the government’s push to finance high risk sectors such as artificial intelligence, advanced manufacturing and other areas widely described as deep tech.
Cabinet Clears Long Awaited Fund
The 100 billion rupee fund, first outlined in the January 2025 budget speech, secured cabinet approval this week. Consequently, the government can now begin deploying capital through selected private investment firms.
The programme follows an earlier initiative launched in 2016, which also committed 100 billion rupees. That earlier fund backed 145 private investment vehicles. Together, they invested more than 255 billion rupees in over 1,370 startups, according to official data released on Saturday.
Officials have structured the new programme as a fund of funds. Under this model, the government does not invest directly in startups. Instead, it commits capital to private venture firms, which then select and support individual companies.
Focus On Deep Tech And Manufacturing
Unlike its predecessor, the new scheme will take a more targeted approach. It will prioritise deep tech and manufacturing startups, which often require larger sums of capital and longer development timelines.
In addition, the programme will support early stage founders and expand funding beyond India’s largest cities. Authorities also aim to strengthen the domestic venture capital ecosystem, particularly smaller investment funds.
At the announcement, IT minister Ashwini Vaishnaw highlighted the rapid expansion of India’s startup landscape. He pointed to figures showing that the number of startups has risen from fewer than 500 in 2016 to more than 200,000 today. Moreover, more than 49,000 startups registered in 2025 alone, marking the highest annual total on record.
Regulatory Changes Ease Pressure
The cabinet decision follows recent policy adjustments designed to support deep tech companies. New Delhi has doubled the period during which such firms qualify as startups to 20 years. Furthermore, it has raised the revenue threshold for startup specific tax, grant and regulatory benefits to 3 billion rupees, up from 1 billion rupees previously.
The approval comes just ahead of the government backed India AI Impact Summit. Global technology companies including OpenAI, Anthropic, Google, Meta, Microsoft and Nvidia are expected to attend. Indian conglomerates such as Reliance Industries and Tata Group will also participate.
Funding Slowdown Raises Stakes
Despite strong growth in startup numbers, private funding has become more difficult to secure. India’s startup ecosystem raised 10.5 billion dollars in 2025, down more than 17 percent from the previous year.
At the same time, investors reduced deal activity sharply. The number of funding rounds fell nearly 39 percent to 1,518 transactions, according to data from Tracxn.
Against this backdrop, the new fund aims to fill critical financing gaps. By directing capital towards deep tech and manufacturing, the government hopes to sustain momentum in sectors that demand patience, scale and sustained investment.