In a significant boost to India’s startup ecosystem, Finance Minister Nirmala Sitharaman announced another round of the Fund of Funds for Startups (FFS) scheme with a corpus of Rs 10,000 crore to support and accelerate the growth of emerging businesses. This initiative underscores the Indian government’s commitment to fostering innovation, entrepreneurship, and self-reliance in the country’s economy.

Government’s Renewed Push for Startups

The announcement comes at a crucial time as India continues to cement its position as a global startup hub. With over 1.5 lakh startups officially recognized by the Department for Promotion of Industry and Internal Trade (DPIIT), the government has been consistently working towards providing adequate financial assistance and resources to these budding enterprises.

“Our focus is on ensuring that startups not only receive initial funding but also get the necessary support to scale up and thrive,” said Finance Minister Nirmala Sitharaman while addressing industry leaders.

The FFS scheme was originally introduced on January 16, 2016, as part of the Startup India Action Plan. With an initial corpus of Rs 10,000 crore, it was aimed at addressing the funding gap faced by startups at various stages—seed, early, and growth phases.

Unlike direct funding schemes, FFS operates through Alternative Investment Funds (AIFs), which then invest in eligible startups. This mechanism helps reduce dependence on foreign venture capitalists while boosting domestic investment channels. The scheme has been instrumental in nurturing homegrown venture capital (VC) firms that back Indian startups.

How the Fund of Funds Has Transformed the Startup Landscape

Over the years, FFS has played a pivotal role in fueling India’s startup ecosystem. Here’s a closer look at its impact: The scheme has unlocked crucial financial resources for startups at different growth stages, allowing them to expand and innovate. It has also reduced the ecosystem’s dependency on foriegn players. By promoting indigenous investment, the initiative has decreased reliance on foreign VC funds, leading to a more self-sufficient startup landscape. Encouraging domestic AIFs has created a strong foundation for Indian investment firms, fostering a robust financial ecosystem. Startups funded through FFS have contributed significantly to job creation and economic expansion.

The latest round of Rs 10,000 crore comes with enhanced strategies and structured investments. The DPIIT continues to act as the nodal monitoring agency, while the Small Industries Development Bank of India (SIDBI) remains the primary operating entity.

Challenges Faced by Startups and the Role of FFS

Despite India’s dynamic startup ecosystem, challenges persist. Some of the major hurdles include:

• Funding Bottlenecks: Accessing capital beyond initial funding rounds remains a challenge.
• Regulatory Compliance: Many startups struggle with legal and tax regulations.
• Market Scalability: Achieving sustainable growth remains a key concern.
• Global Competition: Indian startups face stiff competition from global tech giants.

By addressing these concerns, FFS continues to act as a catalyst, bridging the financing gap and offering the much-needed support to fledgling businesses.

Industry experts and startup founders have welcomed the government’s renewed focus on fostering entrepreneurship. Kunal Bahl, co-founder of Snapdeal, remarked, “This move will ensure that more Indian startups get access to structured funding, paving the way for stronger and more sustainable businesses.”

Similarly, venture capitalists see this as a golden opportunity for nurturing innovative businesses. “The additional corpus under FFS will encourage more private investment, leading to greater risk-taking and innovation,” noted a senior investment analyst at Sequoia India.

Impact on India’s Startup Ecosystem in 2025 and Beyond

With this new round of funding, India’s startup landscape is expected to witness: More entrepreneurs will be encouraged to register their businesses under DPIIT’s Startup India initiative. More homegrown VC firms are likely to emerge, strengthening domestic investment channels. Key sectors such as fintech, agritech, AI, and healthtech are expected to benefit significantly from this scheme. Indian startups will be better positioned to compete on a global scale.

The Rs 10,000 crore Fund of Funds for Startups is a game-changer for India’s entrepreneurial ecosystem. By ensuring better access to capital, mentorship, and market support, this initiative will further strengthen the country’s reputation as a global startup powerhouse. As more startups emerge and scale up, the economic ripple effect will be profound—leading to job creation, technological advancements, and sustained economic growth.

With this renewed push from the government, India’s startup ecosystem is set to scale new heights in innovation and self-reliance.