Centre Approves Startup India FoF 2.0 With An Outlay Of ₹10,000 Cr
•February 13, 2026
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Why It Matters
The infusion of ₹10,000 crore reinforces government commitment to scaling India’s startup ecosystem, especially deep‑tech, and mobilises private capital for high‑growth ventures.
Key Takeaways
- •FoF 2.0 adds ₹10,000 Cr corpus.
- •AIFs invested ₹25,548 Cr across 1,371 startups.
- •Over 200,000 jobs generated by supported startups.
- •SISFS disbursed ₹590.93 Cr to 3,271 seed firms.
- •CGSS guaranteed ₹808.18 Cr loans for 334 ventures.
Pulse Analysis
The renewed Fund of Funds (FoF) 2.0 marks a strategic escalation in India’s startup financing architecture. By allocating a fresh ₹10,000 crore, the government aims to deepen the pipeline of private capital flowing into early‑stage and deep‑tech enterprises. Unlike direct equity injections, the FoF leverages SEBI‑registered alternative investment funds (AIFs), allowing institutional investors to apply sophisticated due‑diligence and sector expertise. This structure not only amplifies fund deployment efficiency but also aligns with global best practices for venture‑capital ecosystems.
Performance data underscores the scheme’s impact: AIFs have already invested more than ₹25,500 crore across 1,371 startups, spurring the creation of over 200,000 jobs nationwide. Parallel initiatives, such as the Startup India Seed Fund Scheme (SISFS) and the Credit Guarantee Scheme for Startups (CGSS), have disbursed ₹590.93 crore to 3,271 seed‑stage firms and guaranteed ₹808.18 crore in loans for 334 ventures respectively. Recent policy tweaks—extending deep‑tech recognition to 20 years and raising turnover thresholds—further enhance the attractiveness of high‑innovation sectors.
For investors and ecosystem builders, FoF 2.0 signals a robust, government‑backed catalyst that reduces risk while unlocking sizable market opportunities. The infusion of capital, coupled with tax incentives like Section 80‑IAC deductions and ESOP‑related TDS deferments, creates a more favourable operating environment for founders. As private funds scale their commitments, India is poised to accelerate its deep‑tech trajectory, positioning the country as a competitive hub for next‑generation technologies and attracting global venture capital interest.
Centre Approves Startup India FoF 2.0 With An Outlay Of ₹10,000 Cr
In the first set of decisions to come out of the new Prime Minister Office (PMO), Seva Teerth, PM Narendra Modi has approved the second phase of the Startup India Fund of Funds (FoF) scheme with a corpus of ₹10,000 Cr.
“This will encourage startups in early stages and deeptech research,” PM Modi said in a post on X.
The fund of funds scheme was first launched by the Union Government in 2016 under the Startup India action plan, with an initial corpus of ₹10,000 Cr. At the time, the primary goal of the initiative was to catalyse private investment into Indian startups.
While the FoF does not invest directly in startups, it provides capital to SEBI-registered alternative investment funds (AIFs). These investment vehicles, which are managed by institutional investors, then deploy the capital in startups.
The Small Industries Development Bank of India (SIDBI) manages the operational aspects of the FoF under the oversight of the Department for Promotion of Industry and Internal Trade (DPIIT).
In a written reply before the Rajya Sabha today, minister of state for commerce, Jitin Prasada, said that the supported AIFs under the schemes have invested ₹25,548 Cr in 1,371 startups across 29 states and union territories (UTs). “Such supported startups have generated over 2 Lakh jobs,” Prasad noted.
It is pertinent to mention that the finance minister Nirmala Sitharaman, in her 2025 budget speech, had announced a new fund of funds for startups with a corpus of an additional ₹10,000 Cr. Back then, the government had also announced plans to set up a separate fund of funds for the deeptech sector.
As of now, the government supports the Indian startup ecosystem via three flagship schemes – the Fund of Funds for Startups (FFS), Startup India Seed Fund Scheme (SISFS), and Credit Guarantee Scheme for Startups (CGSS).
Here’s a brief outline of the performance of the SISFS and CGSS initiatives:
SISFS: Operational since April 2021, this scheme provides financial assistance to seed-stage startups through incubators in the form of grants, convertible debentures, debt or debt-linked instruments. As of December 31, 2025, incubators under the scheme have disbursed ₹590.93 Cr to 3,271 startups across 32 states and UTs.
CGSS: Launched in April 2023, this scheme facilitates debt funding by offering guarantees on credit instruments. Operated by the National Credit Guarantee Trustee Company (NCGTC) Limited, the scheme has, as of December 2025, guaranteed 334 loans worth about ₹808.18 Cr across 20 States and UTs.
The official approval of the second edition of the fund of funds scheme aligns with the Centre’s broader push for the Indian startup ecosystem, especially deeptech ventures.
Just a few days back, the Centre relaxed the framework for recognition of deeptech entities by extending the qualification timeline to 20 years. The government also increased the turnover threshold to ₹300 Cr from ₹200 Cr currently.
Tax incentives such as Section 80-IAC profit-linked deductions, ESOP-related TDS deferment, relaxed loss carry-forward norms and GST concessions for eligible incubator-based startups further aim to improve the operating environment, Prasad said today.
The post Centre Approves Startup India FoF 2.0 With An Outlay Of ₹10,000 Cr appeared first on Inc42 Media.
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