समाचार Samāchār · Startups · 29 October 2026

Workers’ savings may finally back Indian startups as EPFO drafts a 3% plan

EPFO is drafting rules to put up to 3% of its fresh annual inflows into SEBI-regulated Category I and II funds. Its trustees take up the proposal in November.

The retirement savings of India’s salaried workers may soon reach the funds that back its startups. The Employees’ Provident Fund Organisation is drafting guidelines to put up to 3% of its fresh annual accretions into SEBI-regulated Category I and Category II alternative investment funds. Business Standard and Free Press Journal report this, citing The Times of India. EPFO manages about ₹30 lakh crore for nearly 30 crore members.

The permission is not new. The government allowed EPFO into these fund categories five years ago. The finance ministry’s investment pattern already lets it place up to 5% of fresh accretions in asset-backed and trust-structured investments. EPFO has not yet invested in a Category I or II fund. A September letter from DPIIT asking it to join the Startup India Fund of Funds 2.0 restarted the work.

The draft is cautious by design. Eligible funds would need a corpus of at least ₹100 crore. Exposure to any single fund would be capped. Investment in entities incorporated overseas would be barred, and fund managers would have to be independent. EPFO would start through institutional routes: SIDBI’s Startup India Fund of Funds 2.0 and the National Investment and Infrastructure Fund. The proposal goes to EPFO’s Central Board of Trustees, chaired by Labour Minister Mansukh Mandaviya, in November. Nothing is final until the trustees approve it.

This is the right direction, taken carefully. Long-term domestic money makes Indian startups less dependent on capital cycles abroad. The guardrails matter as much as the allocation. This is the savings of working families, and every rupee has to earn its place through returns and jobs. Credit goes to DPIIT for pressing the case and to EPFO for writing the safeguards first. The next markers are the November board meeting and then the first commitment to a fund.

What a founder takes from it: A large, patient domestic investor may enter Indian venture and private funds, with strict rules on size and independence. Fund managers should prepare for that diligence now. The bar on overseas-incorporated entities tells founders that this money favours companies domiciled in India.