Government Expands Startup Funding Push with Major Focus on Advanced Technologies
The Indian government has announced a major boost to the startup ecosystem with the launch of Startup India Fund of Funds 2.0, allocating ₹10,000 crore to support deep-tech innovation across the country.
The new funding initiative aims to strengthen India’s position in emerging technology sectors such as artificial intelligence, semiconductors, robotics, clean energy, and space technology. Officials say the move is part of a broader strategy to build global-scale technology companies from India.
The announcement comes at a time when deep-tech startups are gaining importance worldwide, as countries compete in advanced research, manufacturing, and digital infrastructure.
What Is the Startup India Fund of Funds 2.0
The Fund of Funds 2.0 is a government-backed initiative designed to provide capital to startups indirectly through venture capital funds.
Under this model, the government invests in selected venture capital funds, and these funds then invest in startups. This approach allows professional fund managers to identify and support high-potential companies.
The new ₹10,000-crore allocation is expected to be deployed over several years, with a strong focus on deep-tech sectors. This initiative builds on the original Startup India Fund of Funds, which was launched earlier to support early-stage companies across sectors.
Why the Focus Is on Deep-Tech Startups
Deep-tech refers to startups working on advanced scientific and engineering innovations rather than consumer apps or services.
These startups typically operate in areas such as artificial intelligence and machine learning, semiconductor design and manufacturing, space technology, quantum computing, biotechnology, advanced materials, and robotics.
Deep-tech companies often require high research and development spending and long development cycles. Because of these factors, private investors are sometimes cautious about funding such ventures. The government’s new fund aims to bridge this gap.
Key Objectives of Fund of Funds 2.0
The new funding programme has several major goals.
1. Strengthening India’s Deep-Tech Ecosystem
The primary aim is to help India build strong companies in strategic technology areas. Officials want to reduce dependence on imports and strengthen domestic innovation in critical sectors.
2. Supporting Long-Term Research and Development
Deep-tech startups often need years of research before generating revenue. The new fund is expected to provide long-term capital to support these projects.
3. Attracting Global Investment
By supporting early-stage deep-tech companies, the government hopes to attract international venture capital and strategic investors.
4. Creating High-Skill Jobs
Deep-tech sectors require highly skilled engineers, scientists, and researchers. The initiative is expected to create new employment opportunities in high-value industries.
How the New Fund Will Work
The government will not invest directly in startups. Instead, it will provide capital to venture capital funds, which will then invest in deep-tech startups.
Investments will be spread across multiple sectors and stages, allowing the programme to reach a larger number of startups, leverage private sector expertise, and reduce risks through diversified investments.
Officials say the fund will work with both domestic and global venture capital firms.
Sectors Likely to Benefit the Most
Several high-priority sectors are expected to receive funding support.
Artificial Intelligence and Machine Learning
Artificial intelligence is seen as a core technology for the future. Startups working on AI models, automation tools, and data platforms are likely to benefit.
Semiconductors and Electronics
India is trying to build a strong semiconductor ecosystem. Deep-tech startups in chip design, fabrication technologies, and advanced electronics could receive funding support.
Space Technology
India’s private space sector has grown rapidly in recent years. Startups working on satellites, launch services, and space data applications are expected to attract investment.
Clean Energy and Climate Tech
With growing focus on sustainability, startups working on green hydrogen, battery technologies, renewable energy systems, and carbon capture solutions may also benefit from the fund.
Robotics and Advanced Manufacturing
Automation and robotics are becoming critical for industries such as manufacturing, logistics, and healthcare. Deep-tech startups in these areas are expected to be a major focus.
Impact on India’s Startup Ecosystem
India is already one of the world’s largest startup ecosystems, with thousands of new companies launching every year.
However, most investments so far have gone into e-commerce, fintech, consumer apps, and software services. Deep-tech startups have received a smaller share of funding due to higher risks and longer timelines.
The ₹10,000-crore fund is expected to increase capital availability for deep-tech founders, encourage more engineers and scientists to start companies, strengthen India’s innovation ecosystem, and improve global competitiveness.
Link to India’s Larger Technology Strategy
The new fund is part of a broader government strategy to strengthen key technology sectors.
In recent years, India has launched initiatives in semiconductor manufacturing, space sector reforms, national AI missions, electronics production incentives, and clean energy programmes.
The deep-tech funding push is expected to complement these efforts by supporting startup innovation.
Opportunities for Startups and Investors
The new fund is likely to create fresh opportunities across the startup ecosystem.
For startups, it could mean easier access to capital, support for long-term research projects, and increased investor confidence.
For venture capital firms, the programme offers government-backed capital, opportunities to invest in strategic sectors, and access to a growing pool of deep-tech startups.
Industry experts say this could lead to a new wave of deep-tech investments in India over the next few years.
Challenges Ahead
While the new fund is expected to boost deep-tech innovation, some challenges remain.
Long Development Cycles
Deep-tech startups often take years to reach commercial success. Investors will need patience and a long-term vision.
Talent Shortages
Advanced technology sectors require highly skilled professionals. India will need to expand its pool of engineers and researchers.
Infrastructure and Manufacturing Gaps
Some deep-tech sectors, especially semiconductors and advanced materials, require expensive infrastructure and manufacturing facilities.
Addressing these challenges will be key to the success of the programme.
What to Expect Next
In the coming months, officials are expected to announce selected venture capital partners, outline sector-specific funding strategies, begin deploying capital to startup funds, and launch additional support programmes for deep-tech founders.
The rollout will likely happen in phases over the next few years.
Bottom Line
Startup India Fund of Funds 2.0, with a ₹10,000-crore allocation, marks a major push toward deep-tech innovation in India.
The initiative aims to support startups in advanced technology sectors, strengthen domestic research and manufacturing, create high-skill jobs, and improve India’s global tech competitiveness.
As deep-tech becomes central to economic growth and national security, the new fund could play a crucial role in shaping India’s next generation of technology companies.
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Last Updated on Monday, February 16, 2026 1:37 pm by Startup Magazine Team
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