The Department for Promotion of Industry and Internal Trade (DPIIT) is urging the government to revive the Startup India Seed Fund Scheme (SISFS) in the upcoming Union Budget. This move comes after concerns over early-stage funding gaps, particularly for proof-of-concept and prototype-stage startups.

Key Highlights

• DPIIT seeks reinstatement of the Startup Seed Fund Scheme to strengthen early-stage financing for innovative founders.
• Proposal aims to boost India’s startup ecosystem by improving capital access and supporting new entrepreneurial growth.

In recent discussions, DPIIT officials met with over 70 Alternative Investment Funds (AIFs) to explore ways to deepen capital mobilisation for startups, especially in tier-2 and tier-3 cities.

While these talks are focused on increasing long-term funding, DPIIT confirms that a revived seed fund would complement—not replace the recently announced ₹10,000 crore Fund of Funds Scheme (FFS), which prioritises high-technology and deep-tech ventures.

Launched in April 2021, the SISFS initially had a corpus of ₹945 crore, aimed at supporting startups through incubators for prototype development, market trials, and scaling.

So far, 165 incubators have been selected under the scheme, and ₹611 crore has been allocated to them. However, DPIIT is now suggesting a significant increase to this corpus to better address the evolving needs of new-age ventures.

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The push to reinstate and expand the SISFS signals DPIIT’s intent to provide patient, early-stage capital to startups. This could boost innovation, deepen the startup ecosystem, and fill funding gaps that are not always met through private VC channels — especially for nascent or high-risk companies.