A startup industry has put in a plea for creating a Rs 25,000-crore fund from the government with the end in view to enable the digital ecosystem to over this period of liquidity crisis that is caused by the global pandemic Covid-19. This community is led by a group of home grown entrepreneurs structure.

The Delhi-based Startup Association of India (SAI) wrote to Minister of Commerce and Industry PiyushGoyalappealing the use of the proposed Startup India Fund on a priority. It has also seeked for a little bit more by asking the government to support all startups space by contributing Rs 15,000 crore towards it. It has also pointed out the emergency of rolling out an existing Rs 10,000 crore fund-of-funds, which is currently being administered by the Small Industries Development Board of India (Sidbi).

The letter contained the following substance, “As you are aware, out of the corpus of Rs 10,000 crore with Sidbi, only Rs 3,798 crore has been committed out of which just Rs 1,025 crore has been disbursed till June 2019. The proposed Fund would then constitute a total corpus of over Rs 25,000 crore. The current situation called for extraordinary measures.”

The letter has also been addressed to GuruprasadMohapatra, secretary in the Department for Promotion of Industry and Internal Trade (DPIIT).SAI was set up in 2018 and counts leading entrepreneurs, including Deep Kalra, group chief executive of India’s largest online travel company MakeMyTrip; SanjeevBikhchandani, executive vice-chairman of Info Edge; Dinesh Agarwal, chief executive of home-grown B2B marketplace major Indiamart as well as MahendraSwarup, founder of early-stage investment company Venture Gurukool, among its board members.

The industry collective also recommended that the Fund be registered as an Alternative Investment category-II Fund, on the lines of the National Investment and Infrastructure Fund and be managed by professional fund managers.SAI also sought an exception for startups from a recent government amendment that requires prior approval for any investment from China.It said this should not be applicable for capital calls from existing investors in ventures where they have already invested or impact subsequent investment by an existing shareholder in a startup.

Chinese investors - both, strategic and financial - have pumped in $3.9 billion in 2019, almost double the $2 billion they invested into Asia’s third-largest economy in the year before,, emerging as the biggest backers of the country’s fast-growing digital economy.

SAI also requested that investments in startups coming from Hong Kong-based venture funds be exempt from government approvals, given that Hong Kong is a Special Administrative Region with whom India has a separate tax treaty.

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