India has announced a new $1.15 billion Fund of Funds for startups, as part of its efforts to boost tech innovation and clean energy in the world's fifth-largest economy. The fund was unveiled by Finance Minister Nirmala Sitharaman while presenting the federal budget for 2025-26.

The new fund builds on earlier startup funding programs that have already deployed more than $1 billion from alternate investment funds. According to Sitharaman, the fund will have an "expanded scope" compared to previous initiatives, although specific focus areas weren't detailed in the budget. The move is expected to provide a significant boost to India's startup ecosystem, which has emerged as a large jobs creator and a source of pride for the country.

In addition to the fund, the government also outlined plans for a High-Level Committee for Regulatory Reforms that will review all non-financial sector regulations, certifications, licenses, and permissions within a year. The initiative aims to strengthen "trust-based economic governance" and ease compliance burdens for startups and technology companies. This move is seen as a significant step towards creating a more conducive business environment in India.

New Delhi will also explore creating a separate Deep Tech Fund of Funds to catalyze next-generation startups working on advanced technologies, as part of a broader push to strengthen India's position in emerging tech sectors. This move is expected to have a significant impact on the country's tech industry, which is seen as a key driver of economic growth.

The government's efforts to boost innovation and entrepreneurship are part of its broader goal to achieve 8% growth needed to create adequate jobs for its young population. India's economy is projected to grow between 6.3% and 6.8% in the coming year, and the government is betting on innovation and entrepreneurship to help achieve its longer-term goals.

Industry experts have welcomed the government's initiatives, with Sanjeev Bikhchandani, a high-profile investor and early backer of Zomato and Policybazaar, saying that the first fund "gave a huge fillip to the Indian venture capital industry." He added that "dozens of Indian VC funds got set up providing risk capital to hundreds of startups. India needs domestic venture capital."

In addition to the startup-focused initiatives, the government also announced a $2.3 billion Nuclear Energy Mission aimed at developing at least five indigenous small modular reactors by 2033. The program is part of India's goal to achieve 100 gigawatts of nuclear energy capacity by 2047, with planned amendments to the Atomic Energy Act to enable private sector participation.

The government also extended tax benefits for startups by five years, allowing companies incorporated before April 2030 to claim certain deductions. For startups in 27 sectors deemed crucial for India's self-reliance goals, the government reduced guarantee fees to 1% while doubling their credit guarantee limit to $230,000.

A new scheme targeting 500,000 first-time entrepreneurs, particularly women and those from scheduled castes and tribes, will provide term loans up to $24,000 over the next five years. The program builds on lessons from the existing Stand-Up India scheme, the minister said, aiming to broaden the startup ecosystem's reach.

To boost innovation in electronics manufacturing, a key focus area for tech startups, the government introduced a presumptive taxation scheme for non-residents involved in establishing manufacturing facilities. The budget also proposes "BharatTradeNet," a unified platform for trade documentation and financing solutions that could benefit fintech startups.

Overall, the government's initiatives are expected to have a significant impact on India's startup ecosystem, providing a much-needed boost to innovation and entrepreneurship in the country. As the government continues to focus on creating a more conducive business environment, India's tech industry is likely to emerge as a key driver of economic growth in the years to come.