India Unveils Ambitious Plans to Boost Tech Innovation and Clean Energy

A New Fund of Funds for Startups

India has announced a new $1.15 billion Fund of Funds for startups, which builds on earlier funding programs that have already deployed over $1 billion from alternate investment funds. The new fund will have an "expanded scope" compared to previous initiatives, although specific focus areas were not detailed in the budget.

Regulatory Reforms to Strengthen Trust-Based Economic Governance

Finance Minister Nirmala Sitharaman also outlined plans for a High-Level Committee for Regulatory Reforms, which will review all non-financial sector regulations, certifications, licenses, and permissions within a year. The initiative aims to strengthen "trust-based economic governance" and ease compliance burdens for startups and technology companies.

Deep Tech Fund of Funds to Catalyze Next-Generation Startups

New Delhi will explore creating a separate Deep Tech Fund of Funds to catalyze next-generation startups working on advanced technologies, part of a broader push to strengthen India’s position in emerging tech sectors.

Boosting the Startup Ecosystem

These measures come as India’s startup ecosystem emerges as a large jobs creator and a source of pride for the country, whose broader economy is projected to grow between 6.3% and 6.8% in the coming year. The government is betting on innovation and entrepreneurship to help achieve its longer-term goal of 8% growth needed to create adequate jobs for its young population.

A Decade of Investment in Startups

India startups have attracted over $100 billion in the past decade from investors including Norges, SoftBank, Sequoia, Accel, Tiger Global, General Catalyst, and General Atlantic. Home to over 100 unicorn startups, India has also cemented its place as perhaps the last great growth market for Silicon Valley giants.

The Importance of Domestic Venture Capital

"The first fund done a few years ago gave a huge fillip to the Indian venture capital industry," said Sanjeev Bikhchandani, a high-profile investor who is among the earliest backers of Zomato and Policybazaar. "Dozens of Indian VC funds got set up providing risk capital to hundreds of startups. India needs domestic venture capital."

Nuclear Energy Mission to Develop Indigenous Small Modular Reactors

The government also announced a $2.3 billion Nuclear Energy Mission aimed at developing at least five indigenous small modular reactors by 2033. The program is part of India’s goal to achieve 100 gigawatts of nuclear energy capacity by 2047, with planned amendments to the Atomic Energy Act to enable private sector participation.

Decriminalizing Provisions and Extending Tax Benefits

"We are determined to ensure that our regulations keep up with technological innovations and global policy developments," Sitharaman said in her budget speech, announcing plans to decriminalize more than 100 provisions across various laws through a new Jan Vishwas Bill 2.0. The government also extended tax benefits for startups by five years, allowing companies incorporated before April 2030 to claim certain deductions.

Supporting First-Time Entrepreneurs

A new scheme targeting 500,000 first-time entrepreneurs, particularly women and those from scheduled castes and tribes, will provide term loans up to $24,000 over the next five years. The program builds on lessons from the existing Stand-Up India scheme, the minister said, aiming to broaden the startup ecosystem’s reach.

Presumptive Taxation Scheme for Electronics Manufacturing

To boost innovation in electronics manufacturing, a key focus area for tech startups, the government introduced a presumptive taxation scheme for non-residents involved in establishing manufacturing facilities. The budget also proposes "BharatTradeNet," a unified platform for trade documentation and financing solutions that could benefit fintech startups.

Key Takeaways

• India has announced a new $1.15 billion Fund of Funds for startups to boost tech innovation and clean energy.
• The government has outlined plans for a High-Level Committee for Regulatory Reforms to strengthen trust-based economic governance.
• New Delhi will explore creating a separate Deep Tech Fund of Funds to catalyze next-generation startups working on advanced technologies.
• The government has extended tax benefits for startups by five years and introduced a presumptive taxation scheme for electronics manufacturing.
• A new scheme targeting 500,000 first-time entrepreneurs will provide term loans up to $24,000 over the next five years.