India has just formally adopted a $1.1 billion state-backed venture capital program. This plan would help steer public dollars towards promising new companies by working in conjunction with private investors. This strategic initiative intends to enhance the resiliency of critical infrastructure. It zeroes in on sectors such as artificial intelligence and advanced manufacturing, which together are referred to as deep tech. The program’s cabinet approval comes on the heels of recent amendments to India’s startup policies, which are designed to alleviate challenges faced by deep-tech companies.
This ₹100 billion fund was initially flagged in India’s finance minister’s budget speech way back in January 2025. After over a year of contentious negotiations this week it finally gained cabinet approval. This new funding program is broader in some ways, but much more targeted than its predecessor. Launched in 2016, that earlier program had pledged ₹100 billion to 145 private equity funds. That previous effort led to more than ₹255 billion ($3.1 billion) being invested across upwards of 1,370 different startups.
Startup funding in India totaled $10.5 billion in 2025, signaling a drop of just over 17% compared to the year prior. This decrease is blamed on investors being more picky thus resulting in less deals done over the course of the year. Even with a downturn in funding, the number of registered startups skyrocketed to more than 49,000 by 2025. This 30 percent increase was the largest annual gross total on record.
The new venture capital program will invest in deep-tech and advanced manufacturing startups. Each of these ventures requires longer time horizons and larger capital investments to succeed. Specifically, it’s focused on helping underrepresented, early-stage founders. By encouraging investment outside of the large urban hubs, the initiative will deepen India’s domestic venture capital ecosystem, particularly for smaller funds.
India’s startup ecosystem has seen tremendous development since 2016, when the government put the number of registered startups at less than 500. Fast forward to today, and that number has grown to more than 200,000, illustrating the vitality and diversity of the country’s entrepreneurial ecosystem. This expansion highlights the importance of durable funding streams, which are essential to supporting and promoting innovation in both urban and rural communities.