RT team
Union Budget 2025 provides a major uplift for India’s startup ecosystem, particularly in deeptech and AI innovation. Finance Minister Nirmala Sitharaman introduced several forward-looking measures designed to tackle key challenges such as funding shortages, tax hurdles, and infrastructure gaps faced by startups. A notable highlight is the additional Rs10,000 crore infusion into the Fund of Funds Scheme (FFS). This move will channel capital to Sebi-registered Alternative Investment Funds (AIFs) investing in startups across emerging sectors like deeptech, AI, fintech, health tech, and clean energy. Sitharaman noted that AIFs have already attracted commitments exceeding Rs91,000 crore, and the enhanced fund is expected to accelerate innovation further.
Launched in June 2016 with a Rs10,000 crore corpus and managed by SIDBI, the FFS operates by providing capital to daughter funds, which then invest in startups using equity and equity-linked instruments. Additionally, a Rs20,000 crore allocation will spur private sector-led research and development, particularly benefiting deeptech ventures that require long-term, patient capital. This strategy positions India to join global leaders in quantum computing, AI, biotech, and advanced manufacturing.
Other budget measures include extending the startup incorporation period by five years and doubling the credit guarantee from Rs10 to Rs20 crore, with a reduced fee of 1 percent. Moreover, the government is set to launch three Centres of Excellence in AI for education, backed by Rs500 crore, and establish five National Centres of Excellence for Skilling to fortify India’s technological workforce. These initiatives bolster startup growth and cement India’s rising status in global tech innovation.
