India will double down on government-run payments, agreeing to a $1.1B fund

India has scrapped a $1.1 billion government-backed investment plan that will channel public money to start-ups through private investors, doubling down on its efforts to find high-risk investments such as artificial intelligence, advanced manufacturing and other sectors known as deep technology.

The first one is explained in the January 2025 budget speech by India’s finance minister, the ₹100 billion fund received cabinet approval this week (more than a year after the speech), allowing the government to move forward with sending people. The previous program, launched in 2016, allocated ₹100 billion to 145 private funds that have invested more than ₹255 billion (about $2.8 billion) in 1,370 startups, according to government sources. release Wednesday.

The program is designed as a venture capital fund, a business model in which governments support startups indirectly by providing funding to private businesses. It is designed to be more focused than its 2016 counterpart, focusing on technology and innovation startups that require long-term and capital investment, as well as supporting early adopters, expanding investment beyond major cities and strengthening Indian businesses, especially small businesses, according to the Indian government.

In an announcement on Saturday, IT Minister Ashwini Vaishnaw highlighted the rapid growth of India’s startups, pointing to data showing that the number of startups has risen from 500 in 2016 to more than 200,000 today. The slide said more than 49,000 were registered in 2025 alone, the highest annual number on record.

The Cabinet’s approval follows recent amendments to the Indian Constitution aimed at reducing the pressure on deep-rooted companies. New Delhi doubled the term for such businesses to be designated as start-ups to 20 years and raised the amount of tax on start-ups, subsidies and controls to $3 billion, or about $33 million, from ₹1 billion previously.

The approval comes first with the help of the government India AI Impact Summitwhile international AI companies including OpenAI, Anthropic, Google, Meta, Microsoft, and Nvidia are expected to participate along with Indian corporations such as Reliance Industries and Tata Group. India, the world’s most populous country and its largest internet market with over one billion internet users, has become an attractive destination for tech companies around the world looking to increase their user base.

At the same time, private investments have become difficult to protect. Introduction to Ecosystem in India raised $10.5 billion in 2025a slight decrease of 17% from the previous year, even as investors grew more selective and significantly reduced the number of sales. The number of coins in circulation fell by about 39% to 1,518, according to data from Tracxn.

Vaishnaw said the new program will be flexible, adding that “extensive discussions have taken place with all stakeholders.”