The Ministry of Commerce and Industry will allocate a major chunk of the second INR 10,000 crore Fund of Funds Scheme (FFS) to new entrepreneurs in sectors such as technology, artificial intelligence, and machine building, according to an official cited by PTI.
Earlier announced by Nirmala Sitharaman, the Union finance minister, during the budget announcement, the scheme intends to provide capital to the Security and Exchange Board of India (SEBI)-registered Alternative Investment Fund (AIFs), also known as daughter funds, who invest money into the startup ecosystem as part of fundraises through equity and equity linked-instruments.
According to PTI, the official said, “We are going to dedicate a lot of this Rs 10,000 crore fund of funds largely for the new age tech, AI, and machine building.”
The Small Industries Development Bank of India is expected to manage the second scheme as well, according to the official.
Sitharaman also said during the announcement in February that a ‘Fund of Funds’ specifically for DeepTech will also be explored, as the new-age technology is growing more influential by the day to the next generation of startups. As part of the ‘Ease of Doing Business’ (EODB), an extension of the time limit under section 80-IAC for startups was also announced.
The initiative is supposed to extend the benefits provided under the section for another five years, with eligibility counted for startups incorporated before the 1st of April, 2030.
Earlier in the July 2024 Budget, Sitharaman had announced the abolition of ‘Angel Tax’ for investors of all classes, aimed at improving the capital flow into the ecosystem. The abolition was welcomed with open arms by investors and startup founders alike.