Karnataka Startup Policy 2025–30: what it means for AI startups

The Karnataka Startup Policy 2025–30 supports startups through grants, subsidies and programmes. For AI startups, the most relevant parts are ELEVATE grants of up to ₹50 lakh without taking equity, ELEVATE NxT for deep-tech startups including AI with support of up to ₹1 crore, reimbursement of PF and ESI costs for new hires, cloud and R&D subsidies, and regulatory sandboxes. The policy also aims to grow startups outside Bengaluru. Check the official Startup Karnataka portal for current calls and rules.

What is the Karnataka Startup Policy 2025–30?

Karnataka approved its Startup Policy 2025–30 in late 2025, with an allocation reported at about ₹518 crore. Its stated goals include supporting 25,000 startups, with 10,000 of them outside Bengaluru. It continues earlier programmes such as ELEVATE and adds support for deep-tech startups, hiring, cloud and research costs, and regulatory sandboxes where new products can be tested. The policy is run through Startup Karnataka and the state’s IT, BT and S&T department.

What do ELEVATE and ELEVATE NxT offer?

ELEVATE is Karnataka’s flagship grant programme for early-stage startups. Selected startups can receive grants of up to ₹50 lakh, and the state does not take equity. In the 2025 round, 146 startups were selected for a total of about ₹38.85 crore. ELEVATE NxT focuses on deep-tech startups, including AI, and offers support of up to ₹1 crore. Both run through calls for applications with a set window, so watch the Startup Karnataka portal.

ELEVATE: Grants of up to ₹50 lakh for early-stage startups, with no equity taken.
ELEVATE NxT: Support of up to ₹1 crore for deep-tech startups, including AI.
Beyond Bengaluru Cluster Seed Fund: A ₹75 crore fund for startups in clusters outside Bengaluru.
Hiring support: PF and ESI reimbursement of up to ₹3,000 per employee per month for the first two years, capped at ₹12 lakh.
Cloud and R&D subsidies: Help with cloud services and research costs, which matter for AI startups.
Regulatory sandboxes: Controlled environments to test new products with regulators.

Why does this matter for AI startups?

AI startups spend heavily on cloud computing, model access, data work and skilled engineers before they earn much revenue. Grants without equity, cloud subsidies and help with hiring costs address exactly those early costs. Deep-tech support through ELEVATE NxT recognises that AI products often need longer development cycles. Regulatory sandboxes can help startups working in areas such as finance or health, where rules shape what an AI product can do.

Which central schemes can be combined?

DPIIT recognition: Needed for most central benefits and many state schemes.
Startup India Seed Fund Scheme: Grants of up to ₹20 lakh for proof of concept and prototypes, and up to ₹50 lakh through debt or convertibles, via incubators.
Tax benefits: Eligible recognised startups can apply under section 80-IAC.
Incubators: Bengaluru has many incubators linked to universities, research institutes and companies.

Check the Startup India portal for central schemes. For the comparable picture in the north, see startup schemes in Punjab, Chandigarh and Haryana.

How should an AI startup prepare?

Confirm eligibility: Registration in Karnataka, age of the company, turnover limits and DPIIT recognition.
Build a pilot: A working product with a few real users is far stronger than a slide deck.
Measure results: Accuracy, time saved, cost reduced or users retained.
Plan the funds: Show exactly what the grant pays for and the milestones it unlocks.
Address data and safety: Explain where data comes from, how privacy is protected and how errors are handled.

For product design of AI features, see designing for AI agents. For data rules, India’s DPDP Act and Rules apply, with most obligations from May 2027.

What about startups outside Bengaluru?

The policy puts weight on growth beyond Bengaluru, including cities such as Mysuru, Hubballi-Dharwad, Mangaluru and Kalaburagi. The Beyond Bengaluru Cluster Seed Fund and a target of 10,000 startups outside the capital make it worth checking for founders in those cities. Remote collaboration with partners elsewhere is common, which suits startups building AI products with distributed teams.

What mistakes should applicants avoid?

Common mistakes include applying with an idea but no working product, describing AI in general terms without saying what problem it solves, asking for funds for costs the scheme does not cover, and missing the application window. Another is ignoring data: reviewers increasingly ask where training and test data comes from, whether users have consented and how the product handles wrong answers. Keep a short, honest risk section in every application. Finally, plan what happens after the grant. A clear path to paying customers or follow-on funding shows reviewers that the money will lead somewhere, and it helps you use the grant period well.

How UIUX Studio helps

We work with Karnataka startups remotely from our Mohali office, helping scope and design AI pilots that are clear enough to present in an application and practical enough to deliver. We do not process applications. See our Agentic AI & Automation and Product Design services, or read AI automation for SaaS startups in Bengaluru.

Frequently asked questions

Does ELEVATE take equity?

No. ELEVATE grants are given without taking equity.

Can AI startups apply for ELEVATE NxT?

Yes, it is aimed at deep-tech startups, including AI.

Do I need to be registered in Karnataka?

Generally yes; check the eligibility rules for each call.

Can I combine state and central schemes?

Often yes, subject to each scheme’s rules.

Where do I find open calls?

On the official Startup Karnataka portal.