Backing India's Builders

The plan

A. Domestic fund of funds: the Bharat Growth Fund of Funds

1. Corpus of ₹25,000 crore. Fund of Funds 2.0's ₹10,000 crore, plus ₹15,000 crore of new money from privatisation proceeds. Chapter 12 counts this ₹15,000 crore once, inside its ₹4 lakh crore of sales. It is the only new public money in this chapter.
2. Independent managers only. The fund invests only through SEBI-registered venture funds picked by open, published scoring. No ministry invests directly. SIDBI runs it, as it runs Fund of Funds 2.0.
3. Sector sleeves:

4. Hard rules.
   • At most 5% of the fund in any single company, counted through all the underlying funds.
   • At most 30% of any one venture fund, so at least 70% comes from private investors.
   • A selected fund that does not reach first close within 6 months loses its commitment to the next-ranked manager.
   • The private 70% may include foreign investors. Every portfolio company follows the Chapter 10 ownership rule, and companies in Tier 1 sectors (Sovereignty first) take Indian money only.
   • Buyer of last resort (Sovereignty first) sits in a separate window, not in the venture sleeves: NIIF, the government's existing ₹60,000 crore fund, buys any Tier 1 or Tier 2 stake that finds no Indian buyer at the independent valuation, and sells it on to Indian buyers within 3 years. The 5% and 30% caps on the fund of funds are untouched.
5. Quarterly audit by the CAG (Comptroller and Auditor General). The government entrusts the audit to the CAG under Section 20 of the CAG (Duties, Powers and Conditions of Service) Act, 1971, and each report is tabled in Parliament.

B. America as the benchmark for raising money

6. Crowdfunding safe harbour. A startup raises up to about ₹47 crore a year (the US Regulation Crowdfunding limit of $5 million; estimate at ₹94.5 to the dollar) from anyone, through SEBI-registered online portals, with a short standard disclosure. Each investor's yearly total is capped by income or net worth, as in the US, with no cap for professional investors.
7. Light listing. A growing company raises up to about ₹709 crore a year (the US Regulation A Tier 2 limit of $75 million; estimate) through a short offer document, with simple ongoing reporting, and may list on an Indian exchange.
8. Stock options taxed simply. With only three taxes (Chapter 1), an employee stock option pays nothing at grant, vesting, exercise or sale. The only tax is the bank-transaction tax when sale money lands, as on any other credit, so no valuation report or tax withholding is needed for options.
9. The gap, published. Each year SIDBI publishes India's total venture investment beside the US figure from the NVCA Yearbook: $320 billion across 15,352 deals in 2025, against India's $10.5 billion.

Cost and return

• Domestic multiplier (estimate): at Fund of Funds 1.0's 2.55 times, ₹25,000 crore brings in about ₹63,750 crore of startup investment (₹25,000 × 2.55), about $6.75 billion. That equals about 64% of all 2025 tech funding ($6.75 billion ÷ $10.5 billion). Venture funds invest over 3 to 5 years, so this is the total over the funds' lives.
• Jobs (estimate): about 64,000 direct jobs, assuming ₹1 crore of venture money per direct job (₹63,750 crore ÷ ₹1 crore).
• Who pays: ₹15,000 crore of privatisation proceeds (Chapter 12), not new borrowing and not reserves. The other ₹10,000 crore is Fund of Funds 2.0's existing corpus.
• Fees: managers get at most 1.5% a year, plus 20% carried interest (performance pay) only on returns above the hurdle.
• Domestic return target: a net annual return of the 10-year government bond yield plus 3 points, measured over 10 years. Returns flow back to the Consolidated Fund.
• Crowdfunding and light listing: no public money. SEBI writes the rules, and registered portals and exchanges run them.

Timeline

First 30 days:

• Cabinet approves the fund and notifies the governance charter: independent investment committees, 5% single-company cap, 30% cap on any one venture fund, quarterly CAG audit.
• SIDBI opens the call for venture fund managers on Fund of Funds 2.0 terms and adds the ₹15,000 crore.
• The public holdings dashboard format is published.
• SEBI publishes draft rules for the crowdfunding safe harbour and the light listing route.

Within 1 year:

• Two open manager calls are completed, and all ₹25,000 crore is allocated to ranked managers.
• At least ₹12,500 crore is signed with at least 80 venture funds that have reached first close, at least 20 of them first-time Indian managers.
• Four quarterly CAG audits are published.
• The crowdfunding portals and the light listing route are live; the first yearly comparison with US venture investment is published.

Outcomes after year 1:

• The rest of the domestic fund is signed by month 24.
• Returns are judged against the hurdle over 10 years.

Guardrails

• Caps: 5% single-company cap, counted through all the underlying funds. A breach triggers an automatic sell-down within 90 days.
• No politicians: no minister, MP or MLA sits on any investment committee.
• Conflicts: managers and committee members disclose all their holdings. A violation means removal plus clawback of carried interest.
• Disclosure: every holding and its value is published within 30 days of each quarter-end.
• Crowdfunding safety: portals are registered with SEBI and liable for the disclosure they host; each investor's yearly total follows the published income or net-worth limit; a founder found to have misled investors is barred from raising public money for life and repays them.
• Deployment test: a venture fund that has not invested at least 20% of its commitments in companies within 12 months (the normal first-year pace) or misses a quarterly report gets no new money.

Limits to know

Venture returns cannot be proven within 1 year. The year-1 test is speed of commitment and quality of governance; returns are judged over 10 years, against the published hurdle.

Sources: Fund of Funds 1.0 results and 2.0 approval, PM India · Fund of Funds 2.0 notified, run by SIDBI, Drishti IAS · Startup funding $10.5 bn in 2025, Free Press Journal/Tracxn · NIIF ₹30,000 crore more, total ₹60,000 crore, Drishti IAS · Yozma, GEN Global · NVCA 2026 Yearbook: 15,352 US deals worth $320 bn in 2025 · SEC: capital-raising exemptions, Regulation Crowdfunding $5 mn and Regulation A Tier 2 $75 mn · CAG (Duties, Powers and Conditions of Service) Act, 1971, Section 20