India doubles down on state-backed enterprise capital, approving $1.1B fund

India has cleared a $1.1 billion state-backed enterprise capital program that may channel authorities cash into startups via non-public buyers, doubling down on its effort to finance high-risk areas similar to synthetic intelligence, superior manufacturing and different sectors broadly referred to by the trade as deep tech.

First outlined within the January 2025 price range speech by India’s finance minister, the ₹100 billion fund gained cupboard approval this week (greater than a yr after the speech), permitting the federal government to maneuver forward with deployment. A earlier iteration of this system, launched in 2016, dedicated ₹100 billion to 145 non-public funds which have invested greater than ₹255 billion (about $2.8 billion) in over 1,370 startups, based on official information released on Saturday.

This system is structured as a fund of funds, a typical enterprise capital mannequin wherein governments again startups not directly by committing capital to non-public funding corporations. It’s designed to take a extra focused strategy than its 2016 counterpart, specializing in deep-tech and manufacturing startups that sometimes require longer time horizons and bigger quantities of capital, whereas additionally backing early-stage founders, increasing funding past main cities and strengthening India’s home enterprise capital trade, significantly smaller funds, per the Indian authorities.

On the announcement on Saturday, IT minister Ashwini Vaishnaw highlighted the dimensions of India’s startup enlargement, pointing to figures proven on a presentation slide indicating the variety of startups has grown from fewer than 500 in 2016 to greater than 200,000 as we speak. The slide mentioned greater than 49,000 startups had been registered in 2025 alone, the very best annual whole on file.

The cupboard approval follows latest adjustments to India’s startup guidelines aimed toward easing strain on deep-tech corporations. New Delhi doubled the interval for which such corporations are labeled as startups to twenty years and raised the income threshold for startup-specific tax, grant and regulatory advantages to ₹3 billion, or about $33 million, up from ₹1 billion beforehand.

The approval comes simply forward of the government-backed India AI Affect Summit, the place world AI corporations together with OpenAI, Anthropic, Google, Meta, Microsoft, and Nvidia are set to take part alongside Indian corporates similar to Reliance Industries and Tata Group. India, the world’s most populous nation and one in every of its largest web markets with greater than a billion on-line customers, has turn into an more and more enticing enviornment for world tech corporations trying to increase their consumer base.

On the identical time, non-public capital has turn into more durable to safe. India’s startup ecosystem raised $10.5 billion in 2025, down simply over 17% from a yr earlier, whilst buyers grew extra selective and sharply lowered the variety of offers. The variety of funding rounds fell almost 39% to 1,518 transactions, based on information from Tracxn.

Vaishnaw mentioned the brand new enterprise capital program would stay versatile, including that “in depth consultations have taken place with all stakeholders.”