Highlighting the success of the initial ₹10,000 crore FoF, Sitharaman noted that it helped mobilise commitments worth ₹91,000 crore.
Push for start-ups
“The renewal of the ₹10,000 crore commitment to the Fund of Funds for AIFs is a significant step forward for the Indian start-up and investment ecosystem. The initial ₹10,000 crore commitment catalysed ₹91,000 crore in investments, and I fully expect this fresh infusion to attract an additional ₹1 lakh to ₹1.5 lakh crore in capital. This initiative will provide much-needed growth capital to early-stage start-ups, further strengthening India’s position as a global innovation hub. We are supremely excited about this development and look forward to actively participating in this next wave of investment momentum,” said Anirudh A. Damani, Managing Partner, Artha Venture Fund.
The first FoF was launched in 2016. The government provides these funds through SEBI registered AIFs. This has given an impetus to the Indian startup ecosystem over the last few years.
Fund of Funds
“The announcement of a ₹10,000 crore Fund of Funds (FoF) and the exploration of a dedicated Deep Tech fund in the Union Budget 2025 is a monumental step towards strengthening India’s startup ecosystem. By expanding the scope of funding and focusing on high-impact sectors like deep tech, this initiative will provide much-needed ‘patient capital’ to start-ups working on cutting-edge technologies such as AI, robotics, blockchain, and clean energy,” said Dr Apoorva Ranjan Sharma, Co-Founder & MD of Venture Catalysts.
Additionally, FM proposed that startups incorporated by April 1, 2030, can avail tax benefits under Section 80-IAC of the Income Tax Act, provided they are eligible, extending the deadline by five years.
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“We continue to support the Indian start-up ecosystem. I propose to extend the period of incorporation by 5 years to allow the benefit available to start-ups which are incorporated before April 1, 2030,” the Finanace Minister said in her budget speech on February 1.
Earlier, startups incorporated between April 1, 2016 and March 31, 2024 were eligible for tax benefits under the Startup India program. The union budget 2024 extended this deadline to March 2025. These benefits include a three-year tax holiday, exemption from long-term capital gains tax, and exemption from tax on investments.
“The FM announced a 5-year extension of the start-up incorporation period, allowing more startups, including those established before January 2013, to enjoy benefits like extended tax concessions—a vital move as startups often require longer timelines to become profitable,” said Pankit Desai, Co-founder and CEO, Sequretek – a cybersecurity start-up.
