The Government launched the Startup India initiative on January 16, 2016, to foster an environment that supports innovation, startups, and investments within the country’s startup ecosystem. Union Minister of State for Commerce and Industry, Shri Som Parkash, conveyed this information in a written response in Lok Sabha.
To realize these objectives, the Government introduced an Action Plan encompassing schemes and incentives aimed at cultivating a vibrant startup ecosystem. The Action Plan spans 19 action items categorized into segments like “Simplification and Hand Holding,” “Funding Support and Incentives,” and “Industry-Academia Partnership and Incubation.”
To achieve specific goals, diverse programs have been executed under the Startup India initiative. As a result of persistent efforts, the Government has officially recognized 1,14,902 entities as startups as of October 31, 2023.
In line with the Action Plan, the Government has implemented flagship schemes under the Startup India initiative: Fund of Funds for Startups (FFS), Startup India Seed Fund Scheme (SISFS), and Credit Guarantee Scheme for Startups (CGSS). These schemes aim to aid startups at different stages of their business cycle, facilitating their progression to a level where they can secure investments or loans. Detailed outlines of these three schemes are outlined in Annexure-I.
ANNEXURE-I:
The summary of the three flagship schemes implemented under the Startup India initiative:
- Startup India Seed Fund Scheme (SISFS): Approved for a four-year period starting from 2021-22 with a corpus of Rs. 945 crore, this scheme provides financial support to startups for proof of concept, prototype development, product trials, market entry, and commercialization. An Experts Advisory Committee (EAC) oversees and monitors the scheme’s execution, evaluating and selecting incubators for fund allocation based on specified criteria.
- Fund of Funds for Startups (FFS) Scheme: Established in June 2016 with a corpus of Rs 10,000 crore, this scheme aims to boost the Indian startup ecosystem by providing capital to SEBI-registered Alternative Investment Funds (AIFs), known as daughter funds. These funds, operated by Small Industries Development Bank of India (SIDBI), invest in growing Indian startups through equity instruments.
- Credit Guarantee Scheme for Startups (CGSS): This scheme guarantees credit to DPIIT-recognized startups, extending loans through Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs), and Venture Debt Funds (VDFs) under SEBI-registered Alternative Investment Funds. Operationalized by the National Credit Guarantee Trustee Company Limited (NCGTC), CGSS provides credit guarantees up to a specified limit for eligible borrowers.