India Announces $1.15 Billion Fund for Startups: A Boost to Innovation and Clean Energy

In an effort to boost innovation and clean energy in the world’s fifth-largest economy, India has pledged a new $1.15 billion Fund of Funds for startups, which aims to help drive the country’s burgeoning startup ecosystem. This announcement was made on Saturday by Finance Minister Nirmala Sitharaman as part of the 2025-26 federal budget. Alongside this, the Indian government revealed new regulatory reforms and an ambitious nuclear energy program.

Let’s break down the key points of this announcement and its potential impact on India’s economy.

$1.15 Billion Fund to Boost Startups

The new $1.15 billion fund aims to build on previous initiatives that have already deployed over $1 billion from alternate investment funds. This initiative reflects India’s commitment to fostering innovation and supporting tech startups across various sectors, although specific focus areas for the new fund were not disclosed in the budget.

Sitharaman emphasized the importance of this funding in accelerating entrepreneurship, particularly in the high-growth technology and clean energy sectors, helping India take a stronger position in emerging tech.

Why This Fund Matters for India’s Startups

India’s startup ecosystem has witnessed impressive growth in recent years, becoming a major job creator and a key component of the country’s economy. With more than 100 unicorns in the country, India is home to one of the fastest-growing startup markets, attracting significant global investment.

Sanjeev Bikhchandani, a high-profile investor and early backer of successful startups like Zomato and Policybazaar, highlighted the significance of this fund. He believes that domestic venture capital is crucial to India’s continued success in nurturing startup ecosystems.

The Indian government’s focus on increasing domestic funding for startups is essential as it reduces reliance on foreign investment, allowing local ventures to grow independently.

Strengthening the Tech and Clean Energy Sectors

India’s new Fund of Funds initiative also complements the government’s broader clean energy ambitions. The announcement of a $2.3 billion Nuclear Energy Mission aims to develop at least five indigenous small modular reactors by 2033. With the goal of achieving 100 gigawatts of nuclear energy capacity by 2047, this program also includes plans to amend the Atomic Energy Act to allow greater participation from the private sector.

The push towards nuclear energy will be pivotal for India to meet its clean energy goals while providing a sustainable solution to the country’s growing power demand.

A New Era of Regulatory Reforms

To further foster innovation, the Indian government will establish a High-Level Committee for Regulatory Reforms, which will review all non-financial sector regulations, licenses, and permissions within a year. This initiative aims to ease the compliance burden for startups and tech companies, ensuring smoother operations.

Sitharaman also introduced a new Jan Vishwas Bill 2.0, which aims to decriminalize over 100 provisions across various laws, making it easier for businesses to comply with regulations.

Special Focus on Women and First-Time Entrepreneurs

The government’s new budget also includes measures to support first-time entrepreneurs, particularly women and those from scheduled castes and tribes. The new scheme will provide term loans of up to $24,000 to 500,000 entrepreneurs over the next five years. This move is expected to encourage diversity in India’s startup ecosystem and ensure equal opportunities for all.

Additionally, a presumptive taxation scheme has been introduced for non-residents involved in establishing electronics manufacturing facilities, a vital area for tech startups. The introduction of BharatTradeNet, a unified platform for trade documentation and financing solutions, will further benefit fintech startups.

Extending Support to Startups

The Indian government has also extended tax benefits for startups by five years, allowing companies incorporated before April 2030 to claim specific deductions. For 27 sectors that are crucial to India’s self-reliance goals, the government has reduced guarantee fees to 1% and doubled the credit guarantee limit to $230,000.