Rs 10K crore Fund of Funds fillip gladdens Hyderabad startups

Essentially, whenever startups borrow loans, they have to pay the lender what is called a guarantee fee, which covers projected credit losses from borrower defaults.
Industry leaders and startups in Hyderabad expressed satisfaction, underscoring that the announcements were a welcome boost to the industry.
Industry leaders and startups in Hyderabad expressed satisfaction, underscoring that the announcements were a welcome boost to the industry.
Updated on
2 min read

If last year’s Budget, which abolished Angel Tax, brought cheer to startups, the Union government’s annual financial statement for 2025-26 extended a friendly hand with the Rs 10,000 crore Fund of Funds (FoF) for the industry in 27 focus sectors under Atmanirbhar Bharat.

Industry leaders and startups in Hyderabad expressed satisfaction, underscoring that the announcements were a welcome boost to the industry.

Sujit Jagirdar, interim CEO of T-Hub, told TNIE that the announcement of a Rs 10,000 crore corpus aims to support the startup ecosystem in India. “This funding is expected to provide access to capital for startups at various stages, which may enhance innovation and entrepreneurship across multiple sectors,” he pointed out.

Key individuals in the industry also highlighted the budgetary proposal to enhance the credit guarantee cover from Rs 10 crore to Rs 20 crore and moderate the guarantee to 1% for loans availed by startups in the 27 focus sectors.

Essentially, whenever startups borrow loans, they have to pay the lender what is called a guarantee fee, which covers projected credit losses from borrower defaults. From the earlier 2%, the new Budget has reduced this to 1%.

Sujit added that the Rs 10,000 crore corpus, along with moderated guarantee fees and loan provisions ranging from Rs 10 crore to Rs 20 crore, aims to provide startups with financial resources to grow and innovate.

“The focus on 27 sectors intends to support ventures in areas like deep tech and AI. This initiative represents a step towards enhancing India’s entrepreneurial landscape and seeks to advance the startup ecosystem and innovation in India,” he said.

Rahul Paith, CEO of MATH, a transformative hub for AI and ML technologies, said that the Budget signals a progressive shift in India’s startup landscape, particularly for research-driven and deep-tech ventures.

“The introduction of a Rs 10,000 crore corpus, combined with structured loan mechanisms and a 1% moderated guarantee fee, addresses a critical gap in the funding lifecycle of high-impact startups.

By prioritising 27 key sectors, the government is ensuring that innovation is directed towards strategic areas essential for India’s self-reliance and global competitiveness,” he noted.

Srinivas Rao Mahankali, former T-Hub CEO and adjunct professor at IIM-Raipur, said: “A notable announcement is the allocation of the Rs 10,000 crore FoF to provide equity financing to high-growth potential startups — 30% for deeptech and AI startups, 20% for agritech startups, 15% for space and defence startups, and 35% for other sectors like fintech, healthtech and green energy,” he added.

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