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

India cleared a 1.1 billion dollar state-backed venture capital program that will direct government funds to startups through private investors. The 100 billion rupee initiative, first proposed in the January 2025 budget speech, received cabinet approval this week. It builds on a 2016 program under which 145 private funds received commitments and invested more than 255 billion rupees in over 1,370 startups, according to official data released on Saturday. The new program adopts a fund of funds structure with a targeted focus on deep tech and manufacturing startups that need extended timelines and larger capital. It also supports early-stage founders, investments outside major cities, and smaller domestic venture capital firms, according to the Indian government. IT minister Ashwini Vaishnaw highlighted the expansion of India's startup ecosystem at the Saturday announcement, with the number of startups rising from fewer than 500 in 2016 to more than 200,000 currently. More than 49,000 startups registered in 2025, the highest yearly figure recorded. The cabinet decision follows updates to startup rules that extend the classification period for deep tech companies to 20 years and increase the revenue threshold for tax and regulatory benefits to 3 billion rupees. Vaishnaw said the program will stay flexible after extensive consultations with stakeholders.