In early 2025, the Indian government unveiled a new ₹10,000 crore fund aimed at energizing the deep-tech startup ecosystem. Finance Minister Nirmala Sitharaman announced in the Budget (Feb 1, 2025) that a second tranche of the Startup India Fund-of-Funds (FoF) would be created with a fresh ₹10,000 Cr corpus. This scheme – to be managed by the Small Industries Development Bank of India (SIDBI) – is explicitly targeted at “new-age tech” ventures. Commerce and Industry officials say a major chunk of the fund will be dedicated to sectors like artificial intelligence (AI), deep-tech, and advanced manufacturing (“machine building”). In short, the government is mobilizing patient capital for high-capital, high-innovation startups that can drive India’s digital economy and self-reliance goals.
Focus Areas: AI, Deep Tech and More
The fund’s focus is on cutting-edge technologies requiring long gestation. Union Commerce Minister Piyush Goyal has listed AI and related areas among the top targets: “cutting-edge technologies like AI, robotics, quantum computing, machine learning, precision manufacturing and biotech” will be fostered by the new fund. In practice, this means startups in sectors such as:
AI & Machine Learning: Core beneficiaries, including startups building AI platforms, analytics, and data-driven solutions.
Robotics & Automation: Companies innovating in industrial robots, drones, or automation systems.
Quantum Computing: Emerging ventures working on quantum hardware or software (cited as a priority alongside AI).
Precision/Advanced Manufacturing: Firms in next-gen manufacturing and “machine building” (heavy-tech manufacturing) – areas explicitly mentioned by officials
Semiconductors & Hardware: Design and fabrication of chips, sensors, telecom hardware, etc. Analysts note semiconductors are strategic – the fund is expected to support startups in chip design and related R&D.
Biotech & Life Sciences: Deep-tech startups in biotech, healthcare devices or agritech, also listed among “high-tech” domains.
Other Deep-Tech Fields: This catch-all includes areas like advanced materials, aerospace, and similar “hard-tech” sectors. The Budget even hints at a separate Deep Tech FoF to back such ventures.
In summary, the FoF is a targeted funding vehicle. Rather than a general startup fund, it will allocate a large portion to AI, deep-tech and new-age domains.
Purpose and Strategic Goals
The strategic purpose of the fund is to catalyze capital into segments that struggle to attract conventional funding. Early-stage deep-tech ventures often require patient capital and have long R&D cycles. By backing them via professional AIFs, the government aims to bridge this financing gap. As DPIIT Secretary Amardeep Bhatia explains, this scheme will cover “the large spectrum of startups which need longer duration of funds, … beyond the equity infusion”. In effect, the FoF is intended to enable high-tech startups to scale up prototypes, invest in research, and accelerate go-to-market strategies – roles where traditional VCs or bank loans may fall short.
Implications for the Indian Startup Ecosystem
The new fund is expected to have far-reaching effects on India’s tech startup landscape. By channeling government capital into AIFs, it should unlock more private investment as well. Deep-tech investors note that India’s startups in AI, quantum or hardware often face a series-B funding drought – they must go abroad for growth capital. For example, Chirag Gupta of 8X Ventures observes that “Indian deeptech startups currently look overseas for Series B and above funding, given the small size of domestic deeptech funds,” and believes the FoF could help fill this gaptimesofindia.indiatimes.com. With more domestic funds available, homegrown startups may scale faster, create more Indian unicorns, and reduce reliance on foreign VCs.
On the ground, these funds will provide seed and growth funding for chosen startups. Officials have instructed SIDBI to reserve a significant portion of the new FoF for very early-stage ventures. This could mean more seed grants or accelerator funding, especially for promising teams
Who Can Apply – Eligibility and Process
It’s important to note that the Fund of Funds does not invest directly in startups. Instead, as under the existing Startup India FoF framework, it provides capital to SEBI-registered Alternative Investment Funds (AIFs) (often called “daughter funds”), which in turn invest in startups. Thus, the immediate applicants to this scheme are venture fund managers, not entrepreneurs themselves.
According to SIDBI guidelines, eligible applicants include:
SEBI-registered AIFs (Category I or II): These must have a track record and a fund corpus below ₹1,000 Cr. They should be focused on startup investments and must commit to investing at least twice the FoF contribution in qualifying startups.
Fund Managers with clean records: All key fund personnel must meet eligibility requirements (e.g. no disqualifications under Indian company law).
Those AIFs can apply online via SIDBI’s Fund of Funds portal. (SIDBI VCF’s website provides full scheme guidelines and application forms.) Once approved, the government co-invests alongside the fund into startups through equity or equity-linked instruments.
For further details, interested parties can refer to official sources. SIDBI maintains an FFS page with eligibility rules and an online application link. The Startup India website and DPIIT communications will also likely post updates on this new fund. (For example, SIDBI’s portal at vcfapplication.sidbi.in is where AIFs submit FoF applications.)
Alignment with India’s Digital Economy and Global Ambitions
This fund is a clear signal that the government sees deep-tech as central to India’s digital economy strategy. By investing in AI, semiconductors, quantum etc., India aims to capture more value in high-tech supply chains rather than remain a user. Prime Minister Modi has often emphasized “digital India” and “Atmanirbhar Bharat” (self-reliant nation) – this FoF directly ties into both.
International Context: How India’s Fund Compares
India’s ₹10,000 Cr (~US$1.2 billion) FoF is part of a global trend of governments investing in next-gen tech. For perspective, in 2025 the European Commission launched calls totalling €140 million (about ₹1,300 Cr) for AI, advanced semiconductor and quantum projects. Notably, the EU earmarked €55M for AI and semiconductor initiatives and €27M for training in quantum and AI.
Another example: countries like the UK, Japan, and South Korea have also launched multibillion-dollar plans for AI and deep tech research. Singapore and Canada similarly support AI innovation through grants and co-investment funds. Against this backdrop, India’s ₹10,000 Cr fund underscores its intent to join the ranks of major tech powers. It is part of a broader narrative – governments worldwide see control of AI, quantum and advanced manufacturing as a national priority and are using public funds to shape the outcome. India’s fund, therefore, brings its ecosystem in line with that global momentum.
Conclusion
The ₹10,000 Crore startup fund announced in 2025 is a clear commitment by India’s government to bolster its deep-tech and AI ecosystem. By focusing on advanced R&D sectors and providing long-term capital, the initiative aims to transform India’s startup landscape and strengthen its role in the global digital economy. Entrepreneurs and investors alike should watch this space closely: the new funds, coupled with other policy reforms, promise a more robust future for AI and high-tech innovation in India.
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