The Indian government is gearing up to significantly scale its support for emerging technology sectors through a new ₹10,000 crore Fund of Funds Scheme (FFS), with a major chunk earmarked for artificial intelligence (AI), deep tech, and machine building startups. This move is aimed at accelerating India’s position as a global innovation hub and supporting the domestic development of next-generation technologies.
A Strategic Shift in Startup Funding
Speaking to the media, a senior official from the Ministry of Commerce and Industry said, “We are going to dedicate a lot of this ₹10,000 crore fund of funds largely for the new age tech, AI, and machine building.” This marks a more targeted approach compared to the earlier FFS initiative launched in 2016, which had a broader mandate.
The renewed fund is expected to serve as a catalyst for capital deployment into highly innovative and capital-intensive sectors that are vital for India’s digital transformation and self-reliance goals under the Atmanirbhar Bharat mission.
Building on the 2016 Model
The first FFS was launched in 2016 to boost startup growth by easing access to venture capital. Operated by the Small Industries Development Bank of India (SIDBI), the fund invested in SEBI-registered Alternative Investment Funds (AIFs), which then backed early-stage and growth-stage startups.
The same operational model is expected for the new ₹10,000 crore scheme, with SIDBI likely to be designated as the implementation agency. This structure ensures that capital flows to professionally managed AIFs that have the expertise to identify and support promising startups, especially in sectors with longer gestation periods such as deep tech and AI.
Boost to Startup India Initiative
The new fund aligns with the broader vision of the Startup India initiative, which was launched on January 16, 2016. Since then, more than 1.5 lakh entities have been recognised as startups under this initiative, spanning over 55 sectors. These recognised startups benefit from tax incentives, easier compliance, access to public procurement, and various funding avenues including earlier FFS allocations.
By directing funding toward advanced tech sectors, the government aims to nurture high-impact innovation that can contribute to global competitiveness and job creation.
Need for Long-Term Capital in Deep Tech
Experts have long argued that deep tech startups require patient capital and strategic hand-holding due to longer R&D cycles, higher infrastructure costs, and uncertain paths to commercialisation. The decision to earmark a large share of public funds for such sectors could bridge the gap between early-stage innovation and market deployment.
With this renewed commitment, the government appears to be acknowledging that sectors like AI, semiconductors, robotics, and high-performance computing will be key to India’s economic future and technological sovereignty.
Also read: Deep Tech Demands More Than Startups: Bikhchandani
A Step Toward Global Tech Leadership
The announcement comes at a time when India is aiming to position itself among the top three startup ecosystems globally. By encouraging investment in frontier technologies and reducing dependency on imports in high-value sectors, this fund could help lay the foundation for long-term strategic capabilities.
Moreover, the push toward machine building and AI aligns with the government’s vision of creating robust, export-worthy technologies and strengthening domestic supply chains.
The upcoming months are likely to see more clarity on eligibility, fund allocation mechanisms, and partnerships with venture capital firms. If executed efficiently, this new fund has the potential to not only bolster high-tech entrepreneurship but also create ripple effects across allied sectors, accelerating India’s march toward becoming a $5 trillion economy and beyond.
