India’s ₹10,000 Crore Fund of Funds Targets New-Age Tech Startups
The Indian government’s second ₹10,000 crore Fund of Funds Scheme (FFS) is set to focus on new-age technology startups, with a significant allocation expected for sectors such as artificial intelligence and machine building. According to an official cited by PTI, the Ministry of Commerce and Industry will dedicate a major chunk of the fund to support new entrepreneurs in these cutting-edge areas.
The Small Industries Development Bank of India (SIDBI) is anticipated to manage this scheme, continuing its role from the previous fund. The FFS is designed to provide capital to SEBI-registered Alternative Investment Funds (AIFs), also known as ‘daughter funds,’ which invest in startups through equity and equity-linked instruments.
Finance Minister Nirmala Sitharaman had initially announced the scheme during the budget presentation, highlighting its role in boosting the startup ecosystem. The minister also mentioned exploring the creation of a ‘Fund of Funds’ specifically for DeepTech, recognizing its growing influence on the next generation of startups.
This initiative is part of the government’s broader efforts to enhance the ‘Ease of Doing Business’ for startups. Other measures include extending the time limit under Section 80-IAC for startups incorporated before April 1, 2030, providing them with tax benefits for an additional five years.
The government’s support for startups extends beyond the Fund of Funds Scheme. Earlier in the July 2024 Budget, Sitharaman had announced the abolition of ‘Angel Tax’ for all classes of investors, a move that was widely welcomed by both investors and startup founders. This decision aimed to improve capital flow into the startup ecosystem.
These initiatives demonstrate the Indian government’s commitment to fostering a conducive environment for new-age tech startups, potentially boosting innovation and entrepreneurship in the country.
