India has approved a $1.1 billion state-backed venture capital program designed to channel government funds into startups through private investors. This initiative reinforces the country’s commitment to financing high-risk sectors like artificial intelligence, advanced manufacturing, and other areas known collectively as deep tech.
The program, first outlined in the January 2025 budget speech, recently received cabinet approval, allowing the government to proceed with deployment. This follows a previous version launched in 2016, which committed an equivalent amount to 145 private funds. Those funds have invested over $2.8 billion in more than 1,370 startups according to official data.
Structured as a fund of funds, the program allows the government to back startups indirectly by investing in private investment firms. It takes a more targeted approach than its predecessor, focusing on deep-tech and manufacturing startups that generally need longer timelines and larger capital infusions. The program also aims to support early-stage founders, expand investment beyond major cities, and strengthen India’s domestic venture capital industry, with an emphasis on smaller funds.
At the announcement, IT Minister Ashwini Vaishnaw highlighted the dramatic growth of India’s startup landscape. Presentation slides indicated the number of startups has surged from fewer than 500 in 2016 to more than 200,000 today, with over 49,000 registered in 2025 alone—the highest annual total on record.
This cabinet approval follows recent changes to India’s startup rules designed to ease pressure on deep-tech companies. The government doubled the period for which such firms are classified as startups to 20 years and raised the revenue threshold for startup-specific benefits to approximately $33 million.
The timing of the approval precedes the government-backed India AI Impact Summit, where global AI companies including OpenAI, Anthropic, Google, Meta, Microsoft, and Nvidia are set to participate alongside major Indian corporates. As the world’s most populous country with over a billion internet users, India has become an increasingly attractive market for global tech expansion.
This public funding push arrives as private capital becomes harder to secure. India’s startup ecosystem raised $10.5 billion in 2025, a decline of just over 17% from the year before. However, investors grew more selective, with the number of funding rounds falling nearly 39%.
Minister Vaishnaw stated the new venture capital program would remain flexible, noting that extensive consultations have taken place with all stakeholders.