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The government is launching a second INR 10,000 crore Fund of Funds Scheme (FFS) to support startups in artificial intelligence, next-gen technology, and machine-building. Managed by SIDBI, the fund will channel capital through Sebi-registered AIFs, rather than investing directly. Building on the success of the 2016 edition, the new fund aligns with the Startup India mission and aims to bridge early-stage funding gaps in high-tech sectors. Officials say the focus is on de-risking investments in innovation-heavy startups. With over 1.5 lakh recognised startups, this move signals India's intent to lead in deep-tech and prepare for the next wave of industrial growth.
The government is preparing to roll out the second edition of its INR 10,000 crore Fund of Funds Scheme (FFS) for startups, with a large portion of the funds expected to support entrepreneurs working in artificial intelligence (AI), next-gen tech, and machine-building industries. The scheme aims to boost India's growing startup ecosystem by supporting early-stage ventures in critical tech-driven sectors. Advertisement
An official from the commerce and industry ministry said that the focus this time will be on new-age innovation. The office stated that they are going to dedicate a lot of this INR 10,000 crore fund of funds largely for the new age tech, AI, and machine building.
Like the earlier 2016 version, the new fund will be managed by the Small Industries Development Bank of India (SIDBI). Rather than directly investing in startups, SIDBI provides capital to Sebi-registered Alternative Investment Funds (AIFs), which then invest in startups across various sectors.
The first FFS, also with a INR 10,000 crore corpus, helped catalyse India's venture capital industry and attracted private investments into young businesses. The new fund aims to build on this success by targeting high-growth sectors that could shape India's future tech capabilities.
This move comes under the wider umbrella of the government's Startup India initiative, launched in 2016 to build a strong innovation ecosystem. So far, more than 1.5 lakh startups have been officially recognised under the scheme, spread across over 55 sectors-from fintech and healthtech to agriculture and clean energy.
Recognised startups are eligible for tax breaks, easier compliance processes, and funding support. The new Fund of Funds will provide fresh momentum for high-tech startups that often require large upfront investment and longer development cycles.
Venture capital experts say the government's renewed focus on core technology areas is a positive sign for India's innovation economy. AI-based startups, in particular, are seeing a rise in demand across sectors like healthcare, logistics, education, and manufacturing. However, many still struggle with early-stage funding gaps. Government-backed support through schemes like FFS can help de-risk investments for private players and speed up innovation cycles.
By focusing on deep-tech and AI, the government is not just supporting startups-it's also preparing India's economy for the next wave of industrial transformation.
Source: PTI
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