Finance Minister Nirmala Sitharaman’s Budget 2025 is making waves—and it’s not just about numbers. With a move to supercharge India’s startup ecosystem and uplift women entrepreneurs, FM has laid down a blueprint for economic resilience and growth.
“The alternate investment fund for startups has received commitments of more than Rs 91,000 crore. These are supported by the fund of funds set up with the government of India's contribution of Rs 10,000 crore,” Sitharaman announced during her budget speech on February 1. But she wasn’t stopping there. “Now, a new fund of funds with expanded scope and a fresh contribution of another Rs 10,000 crore will be set up,” she declared, signalling a fresh wave of support for India’s innovation hubs.
But what exactly is a fund of funds (FoF)? Unlike traditional funds that invest directly in companies, a fund of funds acts as an umbrella fund that invests in other venture capital or private equity funds. This strategy helps diversify risk while enabling broader capital flow to startups across sectors. The government’s FoF has already played a pivotal role in channelling investments into budding enterprises, and this new infusion is expected to amplify that impact—reaching more sectors, fostering innovation, and driving job creation.
Startups won’t just see more funding—they’ll get better access to credit too. Sitharaman revealed that the government will provide loans ranging from Rs 10 crore to Rs 20 crore, with the guarantee fee slashed to just 1%. These loans will target 27 focus sectors critical to the ‘Atmanirbhar Bharat’ vision, fueling self-reliance across industries.
In a major win for inclusivity, Sitharaman announced a new scheme aimed at empowering five lakh SC/ST women who are first-time entrepreneurs. “This will provide term loans up to Rs 2 crore during the next five years,” she said, adding that the scheme will draw lessons from the successful Stand Up India initiative.