DPIIT To Seek Go-Ahead For Start-Up Credit Scheme, Seed Fund
The Department for Promotion of Industry and Internal Trade (DPIIT) has decided to soon approach the Cabinet with a proposal to create a Startup India seed fund and launch a credit guarantee scheme to help budding entrepreneurs and startups. The National Seed Fund seeks to support ideation and development of early stage startups whereas the credit guarantee scheme will enable startups to raise easier loans. The two schemes are part of a larger roadmap to improve India's standing on the start-up front and the overall vision for the sector will detail the priority areas that need support, the official said.
A National Seed Fund was announced in Budget 2020-21 to support ideation and development of early stage startups whereas the credit guarantee scheme will enable startups to raise loans for their business purposes. The government is keen to attract investments in Indian startups and has already set the ball rolling to evaluate the progress of the Startup India programme.
Due to the nation-wide crisis and lockdown, a major number of start-ups have temporarily halted operations or are in the process of shutting down. The start-up industry has sought help from the government. At present, startups get support from the government-backed Rs 10,000 crore fund through Small Industries Development Bank of India (Sidbi). The Fund of Funds does not directly invest in startups but provides capital to alternative investment funds (AIF), known as daughter funds, registered with the Securities and Exchange Board of India. These AIFs invest in growing Indian startups through equity and equity-linked instruments. As of February, this year, Sidbi had committed Rs 3,123.20 crore to 47 Sebi-registered AIFs. "The revenue implications of the two schemes are being assessed," the official says.
Since the launch of the Startup India initiative on January 16, 2016, the DPIIT has recognised 28,979 startups as of March 1, 2020. Of these, 27,137 startups employed around 337,000 people.
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