The government announced a new Fund of Funds Scheme (FFS) with Rs 10,000 crore corpus in the Union Budget 2025-26 to promote the growth of new entrepreneurs.
Previous scheme
A similar governmental scheme was launched in 2016 with a corpus of Rs 10,000 crore, the contributions spread over the 14th and 15th Finance Commission cycles. The scheme was started to accelerate venture capital investments operated by the Small Industries Development Bank of India (SIDBI), which provides capital to the Securities and Exchange Board of India (SEBI)-registered AIFs, which invest in startups.
Finance Minister Nirmala Sitharaman stated that the Alternate Investment Funds (AIFs) for startups have received approvals of more than Rs 91,000 crore.
These are backed by the Fund of Funds set up with a government contribution of Rs 10,000 crore, the Minister said.
”Now, a new Fund of Funds, with expanded scope and a fresh contribution of another Rs 10,000 crore will be set up,” Sitharaman added.
As of October 31, 2024, about Rs 20,572.14 crore has been invested by the FFS-supported AIFs in startups. The Modi government launched the Startup India initiative in 2016 to build a strong ecosystem for startups.
Startup India initiative
As per the Indian government’s eligibility conditions, entities are recognised as ’startups’ under the Startup India initiative. As of October 31, 2024, 1,52,139 entities have been recognised as startups across 55 industries.
These units are eligible to receive tax and non-tax incentives under the Startup India action plan.
Of these, over 46,000 entities are tech-based startups including deep-tech such as biotechnology, nanotechnology, Artificial Intelligence (AI), robotics, technology hardware, and Augmented Reality/Virtual Reality (AR/VR), etc.
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