India Unveils ₹10,000 Crore Deep Tech Fund to Supercharge AI Innovation

In a significant boost to India's burgeoning high-technology sector, Union Minister for Commerce and Industry, Piyush Goyal, announced a second tranche of INR 10,000 crore for the government's Fund of Funds for Startups (FFS), with this installment specifically earmarked for the nation's deep tech ecosystem. The announcement was made at Sangam 2025, a global innovation and alumni summit organized by the Indian Institute of Technology Madras (IIT Madras) in Bengaluru. This financial injection is poised to accelerate innovation in critical areas such as artificial intelligence, machine learning, quantum computing, and biotechnology, underpinning the government's strategic push towards technological self-reliance and global leadership in these contemporary fields. The move signals a clear intent to foster a robust environment for startups engaged in foundational research and development, which often face longer gestation periods and higher capital requirements.

The new fund is a continuation of the government's efforts to provide sustained financial support to the startup landscape.[1][2] The initial INR 10,000 crore under the FFS has been fully committed, prompting this second, more focused tranche.[1] Goyal emphasized that the guidelines for the new fund are currently being formulated with the primary objective of promoting innovation, encouraging the adoption of new technologies, and supporting the development of solutions in cutting-edge domains.[3][2][4] This capital infusion is not designed as a standalone measure but as part of a broader, multi-faceted strategy. It complements other key government initiatives, including the National Deep Tech Startup Policy (NDTSP), which aims to create a comprehensive framework to address the unique challenges faced by deep tech ventures.[5][6][7] The policy framework focuses on nurturing research and development, strengthening intellectual property rights, facilitating access to funding, and enabling shared infrastructure.[7]

The significance of this dedicated funding is amplified by another major financial commitment mentioned by the minister. Goyal referred to a recent Cabinet decision to approve a $12 billion (approximately ₹1 lakh crore) package for the Department of Science and Technology. This capital will be provided as a 50-year, zero-interest loan, offering unprecedented flexibility to support research and innovation.[8][9] This long-term, patient capital is intended to de-risk investments in high-stakes R&D, allowing for a more dynamic allocation of resources through equity support, grants, and low-cost financing.[2][9] The idea is to create a revolving fund, where returns from successful ventures are reinvested to support new waves of innovation.[2] This two-pronged approach—a targeted Fund of Funds for startups and a massive, flexible loan for the broader R&D infrastructure—demonstrates a cohesive vision for building a resilient and self-sustaining deep tech pipeline, from academic research to commercial viability.

The implications for India's artificial intelligence industry are particularly profound. AI has been a major driver of the deep tech sector's growth, with AI-powered platforms attracting the lion's share of recent funding.[10][11] The government has explicitly identified AI and machine learning as priority areas for the new fund.[12] This strategic focus aligns with the rapid global adoption of AI technologies, which are projected to contribute trillions to the global economy.[11][13] For Indian AI startups, this dedicated government backing can help overcome significant entry barriers, such as the high cost of talent and the intensive computational resources required for developing and training sophisticated models. The funding can act as a catalyst, enabling Indian firms to not only solve domestic challenges but also to build globally competitive products. The minister highlighted that India's cost advantage—with technology development costs being a fraction of those in the US or Europe—combined with strategic public investment, positions the country to become a major force in the global AI landscape.[8][9]

In conclusion, the announcement of the second INR 10,000 crore deep tech fund, coupled with the substantial long-term financing for the Department of Science and Technology, marks a pivotal moment for India's innovation ecosystem. This concerted effort addresses the critical funding gap for deep tech startups, which are essential for driving economic growth and national competitiveness.[14][15] By creating a more favorable environment for R&D and entrepreneurship, the government is laying the groundwork for India to transition from a nation of job seekers to one of job creators, powered by indigenous technology.[16][17] This strategic investment is expected to have a ripple effect across the economy, fostering advancements in key sectors like AI, enhancing productivity, and solidifying India's position as a rising leader in the global technology race.[5][17]