In a significant move to strengthen India’s startup ecosystem, Finance Minister Nirmala Sitharaman announced an additional Rs. 10,000 crore infusion into the Fund of Funds (FoF) during Budget 2025.

This increase will double the government’s previous contribution and provide further support to Alternate Investment Funds (AIFs), which have already secured over Rs. 91,000 crore in commitments.

The new funding aims to create a self-sustaining revolving corpus to continue supporting emerging businesses. The government hopes to build a capital pool of Rs. 20,000 crore to Rs. 25,000 crore over the next five years, as outlined by M Nagaraju, Secretary of the Department of Financial Services. He clarified that the gains and losses from investments made by the fund would be added or subtracted from the corpus.

Additionally, AIFs benefiting from the FoF will be required to maintain at least double the leverage on the government’s contribution, further increasing available capital.

This initiative is expected to help around 500 startups, especially those in both traditional and emerging sectors that struggle to secure funding from conventional financial institutions.

The funding will cater to vital areas such as modernization, research, IPO readiness, and acquisition financing.

This announcement is seen as a game-changer for India’s startup sector, ensuring that promising businesses receive the necessary financial backing for growth.

The move has been widely welcomed by industry leaders and investors, marking a significant step in the country’s efforts to nurture innovation and entrepreneurship. With this structured support, India is set to strengthen its position as a global leader in innovation.