Cabinet Approves ₹10,000 Crore Startup India Fund of Funds 2.0 for Deep-Tech

In a significant move to bolster India's burgeoning startup landscape, the Union Cabinet, chaired by Prime Minister Narendra Modi, has given its approval for the establishment of the 'Startup India Fund of Funds 2.0' (Startup India FoF 2.0) with a substantial corpus of ₹10,000 crore. This landmark decision, announced by Union Minister Ashwini Vaishnaw on Saturday, February 14, 2026, marks the second phase of the highly successful 'Fund of Funds for Startups' (FFS) scheme, initially launched in 2016. The primary objective of this new fund is to mobilize venture capital for the country's dynamic startup ecosystem, with a keen focus on nurturing deep-tech entities, technology-driven innovative manufacturing startups, and enterprises in their early-growth stages. The scheme is meticulously designed to accelerate the next phase of India's startup journey by encouraging the inflow of long-term domestic capital, fortifying the existing venture capital ecosystem, and fostering innovation-led entrepreneurship across diverse sectors of the economy. The first iteration of the Fund of Funds for Startups (FFS 1.0), constituted in 2016 with an initial corpus of ₹10,000 crore, played a pivotal role in providing essential seed capital and enabling startups to undertake calculated entrepreneurial risks. Its successful utilization paved the way for this second phase, which was initially sanctioned in the Union Budget for 2025-26. Under FFS 1.0, the entire corpus of ₹10,000 crore was committed to 145 Alternative Investment Funds (AIFs) registered with the Securities and Exchange Board of India (SEBI). These supported AIFs, in turn, invested over ₹25,500 crore in more than 1,370 startups across various sectors, including agriculture, artificial intelligence, robotics, automotive, clean tech, consumer services, e-commerce, education, fintech, healthcare, manufacturing, space technology, and biotechnology. This demonstrates a significant multiplier effect, as AIFs are mandated to invest at least twice the amount committed under the FFS in startups. Startup India FoF 2.0 builds on this strong foundation, aiming to elevate Indian innovation to unprecedented levels. The new fund will adopt a targeted and segmented funding approach. It will prioritize breakthroughs in high-tech areas that often require patient, long-term capital due to their intensive research and development cycles. This emphasis on deep-tech is crucial, as these innovations, often rooted in advanced scientific and technological breakthroughs, possess the potential to address some of India's most pressing societal challenges. The government has also recently broadened the definition of deep tech and extended eligibility for government support to 20 years for recognized deep-tech startups, reflecting a strategic shift towards fostering long-term R&D-driven enterprises. Furthermore, the fund aims to empower early-growth stage founders, providing a crucial safety net to reduce early-stage failures often caused by a lack of adequate funding. Operational flexibility is a key feature of FFS 2.0, including provisions for a higher government contribution to Alternative Investment Funds (AIFs) that specifically invest in deep-tech and high-tech manufacturing startups. The Small Industries Development Bank of India (SIDBI) will continue to manage the FFS, channeling capital to SEBI-registered AIFs, which subsequently invest in promising Indian startups. The Department for Promotion of Industry and Internal Trade (DPIIT), Government of India, remains the monitoring agency for the scheme. Since the launch of the Startup India initiative in 2016, India's startup ecosystem has undergone a remarkable transformation. The number of entities recognized as startups by DPIIT has surged from fewer than 500 to over two lakh today. The year 2025 alone recorded the highest-ever annual startup registrations, underscoring the vibrant entrepreneurial spirit in the country. This rapid expansion positions India as one of the world's leading startup nations. By supporting startups that develop globally competitive technologies, products, and solutions, the Startup India Fund of Funds 2.0 is expected to contribute significantly to strengthening India's economic resilience, boosting its manufacturing capabilities, generating high-quality jobs, and firmly establishing India as a global innovation hub. This initiative aligns with the national vision of 'Viksit Bharat @ 2047', demonstrating the government's continued commitment to empowering entrepreneurs, fostering a culture of innovation, and unlocking the full potential of India's dynamic startup ecosystem. The fund is also intended to promote investment beyond major metropolitan hubs, ensuring that innovation can thrive across all parts of the country.

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