The government is keen on increasing funding for startups and plans to meet with Alternate Investment Funds (AIFs) to explore avenues for collaboration. Officials have indicated that efforts are underway to boost capital mobilization for startups and enhance mentorship through the MAARG (Mentorship, Advisory, Assistance, Resilience, and Growth) portal. The recent abolition of the angel tax in India has sparked optimism among startups, with many companies relocating their headquarters back to the country.
The Department for Promotion of Industry and Internal Trade (DPIIT) has reported an uptick in the number of startups returning to India, a phenomenon called “reverse flipping.”
Since the launch of the Startup India initiative in 2016, the number of registered startups has surged to over 157,000 by the end of 2024. Startups received $155 billion in funding in 2024, a significant increase from just $8 billion in 2016. This growth has led to the creation of over 1.7 million jobs across the country.
Countries like Saudi Arabia have shown interest in Indian startups, and the DPIIT is actively pursuing collaborations that allow foreign sovereign pension funds to invest in Indian startups.
AIFs lobbying for deep-tech funding
The DPIIT has also engaged large companies to identify products they can procure from startups to boost manufacturing startups.
Ahead of the ninth anniversary of the Startup India programme, the DPIIT is convening with AIFs to discuss startup funding. Approximately 75 AIFs are expected to participate, denoting the growing interest in supporting the startup ecosystem in India. AIFs are lobbying the government for funds dedicated to new-age, deep-tech startups to foster innovation.
They also urge expanding the Fund of Funds for Startups (FFS) scheme. During a recent meeting with DPIIT officials, AIFs pressed for an increase in funds under the existing FFS initiative and specialized funds to uplift sectors defined by contemporary technologies. The dialogue also touched upon facilitating capital flows into smaller cities and extending the lifecycle of the FFS beyond its current 12-year span.
The government’s efforts to support startups and collaborate with AIFs are expected to rejuvenate the startup ecosystem in India, fostering innovation, job creation, and economic growth.
