Union Cabinet Approves ₹10,000 Crore Startup India Fund of Funds 2.0

In a significant boost to India’s fast-growing startup ecosystem, the Union Cabinet has approved the establishment of the Startup India Fund of Funds 2.0 (Startup India FoF 2.0) with a total corpus of ₹10,000 crore. The move aims to mobilise domestic venture capital, strengthen innovation-driven entrepreneurship, and support high-growth sectors such as deep tech and advanced manufacturing.

Union Cabinet Approves ₹10,000 Crore Startup India Fund of Funds 2.0

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the establishment of the Startup India Fund of Funds 2.0 (Startup India FoF 2.0) with a total corpus of ₹10,000 crore for the purpose of mobilising venture capital for the startup ecosystem of the country.

The new scheme is designed to accelerate the next phase of India’s startup growth by unlocking long-term domestic capital, expanding the venture capital landscape, and encouraging innovation-driven entrepreneurship across sectors and regions.

Building on a Decade of Startup India Success

Launched as part of the Startup India programme in 2016, the initiative has transformed India into one of the world’s largest startup ecosystems.

Since 2016, India’s startup base has surged from under 500 ventures to over 2 lakh Department for Promotion of Industry and Internal Trade (DPIIT)-recognised startups, with 2025 witnessing a record number of annual registrations.

India is currently home to one of the largest startup ecosystems globally, supported by policy reforms, digital public infrastructure such as UPI and Aadhaar, and increased investor participation.

Startup India FoF 2.0 builds on this nearly decade-long policy push, aiming to deepen domestic capital availability and reduce reliance on foreign venture funding.

Key Features of Startup India FoF 2.0

Startup India FoF 2.0 is structured with a targeted and segmented funding approach to address specific capital gaps within the ecosystem.

Deep Tech and Innovative Manufacturing Focus

The scheme will prioritise deep tech and tech-driven innovative manufacturing sectors, which require patient, long-term capital due to high research and development intensity. This includes emerging areas such as artificial intelligence, semiconductors, robotics, advanced materials, clean energy, and biotechnology.

Empowering Early-Growth Stage Founders

The fund aims to support early-growth stage startups by providing access to institutional capital. Many innovative ventures struggle during early scaling phases due to limited funding options. By strengthening capital pipelines, the scheme seeks to reduce early-stage failures caused by funding constraints.

Expanding National Reach Beyond Metro Cities

A major objective of Startup India FoF 2.0 is to expand access to capital beyond traditional startup hubs like Bengaluru, Mumbai, and Delhi-NCR. The initiative encourages investments in Tier-2 and Tier-3 cities, ensuring innovation thrives in every corner of the country.

Addressing High-Risk Capital Gaps

The fund is designed to address high-risk capital gaps in priority sectors critical for self-reliance and economic growth. By directing more capital into strategic sectors, the scheme supports India’s broader vision of becoming a manufacturing and technology powerhouse.

Strengthening Domestic Venture Capital Funds

Startup India FoF 2.0 also aims to strengthen India’s domestic venture capital base, particularly smaller and emerging VC funds. By acting as a limited partner in SEBI-registered Alternative Investment Funds (AIFs), the government can catalyse larger private investments into startups.

Strategic Importance for India’s Innovation-Led Growth

Startup India Fund of Funds 2.0 is expected to play a critical role in advancing India’s innovation-led growth agenda. By backing startups that build globally competitive technologies, products, and solutions, the fund is likely to:

• Enhance economic resilience

• Boost advanced manufacturing capabilities

• Generate high-quality employment opportunities

• Reduce dependency on external capital

• Strengthen India’s position as a global innovation hub

According to a statement by the Ministry of Commerce and Industry, the scheme aligns with India’s long-term economic transformation strategy and supports entrepreneurship as a key growth engine.

Strengthening India’s Position as a Global Startup Hub

India already ranks among the top startup ecosystems worldwide in terms of the number of startups and unicorns. With over 2 lakh DPIIT-recognised startups and consistent annual growth in registrations, the ecosystem is maturing rapidly.

Startup India FoF 2.0 is expected to deepen the quality of funding, improve access to long-term capital, and encourage innovation in frontier technologies that can compete globally.