Cabinet Approves Rs 1 Lakh Crore UCF and Startup India Fund of Funds 2.0In February 2026, the Union Cabinet chaired by Prime Minister (PM) Narendra Modi, has approved two major initiatives aimed at bolstering urban infrastructure financing and strengthening India’s startup ecosystem: the Urban Challenge Fund (UCF) with a Rs 1 lakh crore central assistance and the Startup India Fund of Funds 2.0 (FoF 2.0) with a Rs 10,000 crore corpus.
About Urban Challenge Fund (UCF):
Overview: The newly approved fund will be operational from Financial Year 2025-26 (FY26) to FY 2030-31 (FY31), with an extendable implementation period up to FY34.
Funding Structure: Under the UCF, Central Assistance (CA) will cover 25% of the project cost, while minimum 50% of funding have to be mobilised from market sources such as: municipal bonds, bank loans and Public-Private Partnerships (PPPs).

• And, the remaining amount will be funded by states, Union Territories (UTs), Urban Local Bodies (ULBs) or other sources.

About Startup India Fund of Funds 2.0: 
Overview: The Union Cabinet has also approved the establishment of the Startup India Fund of Funds 2.0 (FoF 2.0) with total budget outlay of Rs 10,000 crore, aimed to mobilize venture capital for the startup ecosystem of the country.
Launched under: It was launched under the wider Startup India initiative, launched in 2016.