India’s startup space has seen a rapid rise in terms of numbers and impact. Number of recognised startups by the government has gone up from 452 in 2016 to 84,012 in 2022 (as on November 30 2022).
Among other key actions, the Startup India program has been primarily set up to provide an enabling environment for the startups.
49% of startups are from Tier II and Tier III. The enabling environment for the startup community has been facilitated by several government initiatives from time to time.
From providing funding to tax incentives, from support on intellectual property rights to eased public procurement, from enabling regulatory reforms to access to international fests and events, Startup India program has been a key policy initiative of the government.
Startup India is a flagship initiative launched by the Government of India in 2016 to build a strong eco-system for nurturing innovation and startups in the country which will drive economic growth and generate large scale employment opportunities.
The initiative aims to empower startups to grow through innovation and design. The Standup India scheme was launched in April, 2016 to facilitate bank loans from Scheduled Commercial Banks (SCBs) between Rs.10 lakh to Rs.1 Crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) and one woman per bank branch for setting up a greenfield enterprise in trading, services or manufacturing sector.
Under the Startup India initiative, to provide capital at various stages of the business cycle of a startup, the government has implemented the Fund of Funds for Startups (FFS) and Startup India Seed Fund Scheme (SISFS).
Both the Schemes are implemented on Pan-India basis.
Fund of Funds for Startups (FFS) Scheme: The Government has established FFS to meet the funding needs of startups. DPIIT is the monitoring agency and Small Industries Development Bank of India (SIDBI) is the operating agency for FFS.
Under FFS, the Scheme does not directly invest in startups, instead provides capital to SEBI-registered AIFs, known as daughter funds, who in turn invest money in growing Indian startups through equity and equity-linked instruments. Small Industries Development Bank of India (SIDBI) has been given the mandate of operating this Fund through selection of suitable daughter funds and overseeing the disbursal of committed capital. AIFs supported under FFS are required to invest at least 2 times of the amount committed under FFS in startups.
Startup India Seed Fund Scheme (SISFS): The Scheme aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialisation. Under SISFS, the government has constituted an Experts Advisory Committee (EAC) which is responsible for the overall execution and monitoring of the SISFS. The EAC evaluates and selects incubators for allocation of funds under the Scheme. The selected incubators thereon shortlist the startups based on certain parameters outlined in Scheme guidelines.
Credit Guarantee Scheme for Startups (CGSS): The Government has also established the Credit Guarantee Scheme for Startups for providing credit guarantees to loans extended to DPIIT recognised startups by Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs) and Venture Debt Funds (VDFs) under SEBI registered Alternative Investment Funds.
Apart from the above details, budding entrepreneurs can get more details on the official website of Startup India (https://www.startupindia.gov.in/).
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