Union Cabinet Approves ₹10,000 Crore Startup India Fund of Funds 2.0

Union Cabinet chaired by Prime Minister Narendra Modi has approved the Startup India Fund of Funds 2.0 (FoF 2.0) with a ₹10,000 crore corpus. The scheme aims to mobilise venture capital for India’s startup ecosystem, especially in deep tech, innovative manufacturing, and early-growth sectors. The move is expected to strengthen India’s domestic investment landscape and accelerate innovation-led economic growth.

What Is Startup India Fund of Funds 2.0?

The Startup India Fund of Funds 2.0 is a government-backed initiative designed to channel long-term capital into startups through Alternative Investment Funds (AIFs).

Unlike direct funding to startups, the government invests in AIFs, which in turn invest in promising ventures. This model helps,

• Expand venture capital availability
• Crowd in private investments
• Strengthen domestic VC funds
• Reduce funding gaps in high-risk sectors

The scheme marks the next phase of India’s startup development journey.

Background: Success of Fund of Funds 1.0

The new scheme builds upon the success of the Fund of Funds for Startups (FFS 1.0) launched in 2016.

Key achievements of FFS 1.0,

• ₹10,000 crore corpus fully committed
• Investment routed to 145 Alternative Investment Funds
• Over ₹25,500 crore invested in 1,370+ startups
• Supported sectors like AI, robotics, clean tech, fintech, biotech, space tech, and manufacturing
• FFS 1.0 played a crucial role in nurturing first-time founders and building India’s venture capital ecosystem.

Key Focus Areas of Startup India FoF 2.0

The new fund has a more targeted and segmented funding approach.

Deep Tech & Innovative Manufacturing

The scheme prioritizes high-technology sectors that require patient capital, such as,

• Artificial Intelligence
• Robotics
• Semiconductor design
• Clean energy
• Advanced manufacturing

These areas are critical for strategic self-reliance.

Early-Growth Stage Startups: FoF 2.0 will provide a funding cushion for early-stage startups to reduce failure due to capital constraints. Early-stage funding gaps often limit innovation, and this scheme aims to address that challenge.

National Reach Beyond Metro Cities: The scheme encourages venture capital flow into tier-2 and tier-3 cities, ensuring innovation is not limited to major hubs like Bengaluru or Mumbai.

Addressing High-Risk Capital Gaps: Priority sectors linked to economic resilience and self-reliance will receive focused capital allocation.

Growth of India’s Startup Ecosystem

Since the launch of the Startup India initiative in 2016, India’s startup landscape has expanded significantly.

• From fewer than 500 startups in 2016
• To over 2 lakh DPIIT-recognised startups
• 2025 recorded the highest annual startup registrations

This growth has positioned India among the world’s leading startup ecosystems.

Alignment with Viksit Bharat @ 2047

The ₹10,000 crore Startup India Fund of Funds 2.0 aligns with India’s long-term vision of Viksit Bharat @ 2047. By promoting innovation-driven entrepreneurship, the scheme aims to,

• Boost manufacturing capacity
• Generate high-quality employment
• Enhance global competitiveness
• Build economic resilience

It strengthens India’s ambition to become a global innovation hub.

Question

Q. The corpus of Startup India Fund of Funds 2.0 approved by the Cabinet is,

A. ₹5,000 crore
B. ₹8,000 crore
C. ₹10,000 crore
D. ₹15,000 crore