India’s startup ecosystem has become one of the largest in the world, with nearly 2 lakh DPIIT-recognised startups operating across sectors. To strengthen innovation, manufacturing, deep-tech, and entrepreneurship, the Government of India has introduced multiple funding, tax, and credit support schemes.
If you are a founder looking for startup funding, government grants, collateral-free loans, or tax exemptions in 2026, this detailed guide explains everything — including eligibility, benefits, and how to apply.
Why Government Schemes Matter for Startups in 2026
- Reduce funding gaps
- Provide non-dilutive grants
- Offer collateral-free loans
- Guarantee bank loans
- Extend tax exemptions
- Support women and SC/ST entrepreneurs
- Back deep-tech and manufacturing startups
Note: Most schemes require DPIIT Startup Recognition as the first step.
1. Startup India Seed Fund Scheme (SISFS)
The Startup India Seed Fund Scheme (SISFS) supports early-stage startups with grant and convertible debt funding.
Funding Support
- Up to ₹20 lakh grant for Proof of Concept (PoC), prototype, product trials
- Up to ₹50 lakh convertible debt for commercialization
- Total possible support: ₹70 lakh
Eligibility Criteria
- DPIIT-recognised startup
- Incorporated within last 2 years
- Innovative and technology-driven model
- Minimum 51% Indian ownership
- Not received more than ₹10 lakh from other government schemes
Application Process
- Register on Startup India portal
- Select approved incubator
- Submit proposal and pitch deck
- Incubator evaluation and approval
2. Startup India Fund of Funds (FoF 2.0)
In 2026, the Government approved an additional ₹10,000 crore corpus under the Startup India Fund of Funds (FoF 2.0).
How It Works
- Government invests in SEBI-registered AIFs (VC Funds)
- These funds invest in startups
- Indirect equity funding support
Eligibility
- DPIIT-recognised startup
- Scalable and investment-ready business model
3. Credit Guarantee Scheme for Startups (CGSS)
This scheme provides collateral-free loan guarantees to DPIIT-recognised startups.
Key Features
- Loan support up to ₹20 crore per borrower
- Government guarantees up to 75% of loan
- Covers venture debt and bank loans
Eligibility
- DPIIT-recognised startup
- Non-defaulting entity
- Loan from registered Member Institution
4. PM Mudra Yojana (Updated 2026)
PM Mudra Yojana supports micro and small businesses with unsecured loans.
Eligibility
- Udyam (MSME) Registration required
- Manufacturing, service, or trading business
5. PSB Loans in 59 Minutes
This digital platform enables fast MSME loan approvals.
- Loan range: ₹10 lakh to ₹5 crore
- Minimal documentation
- Quick sanction letters
6. Stand-Up India Scheme
This scheme promotes entrepreneurship among SC/ST and women.
- Loan range: ₹10 lakh to ₹1 crore
- Greenfield (new) enterprises only
- Manufacturing, trading, or service sector
7. Women Entrepreneurship Platform (WEP)
Launched by NITI Aayog, WEP provides mentoring, networking, funding access information, and training support to women-led startups.
8. Budget 2026 Key Announcements
- ₹10,000 crore SME Growth Fund
- ₹10,000 crore Biopharma SHAKTI Fund
- ₹2,000 crore CGTMSE top-up
- Section 80-IAC tax holiday extended till March 2030
Basic Eligibility for Most Startup Schemes
- Incorporation within 10 years
- Turnover below ₹100 crore
- Innovative and scalable business model
- DPIIT recognition required
Grant vs Loan vs Equity – Comparison
Step-by-Step Strategy to Apply in 2026
- Incorporate your company
- Obtain DPIIT recognition
- Register under MSME (Udyam)
- Prepare financial projections and pitch deck
- Check scheme eligibility
- Apply through official portals
Conclusion
India now offers a comprehensive funding and policy ecosystem for startups in 2026. From seed grants and equity funding to collateral-free loans and tax holidays, entrepreneurs have multiple options to scale their ventures.
Strategic planning, proper documentation, and timely application can significantly increase approval chances and reduce capital burden.
Janki Gupta
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