The Commerce and Industry Ministry is expected to request more funding for startups in the upcoming Budget for 2024-25, to be announced by the new government in July. This move aims to enhance innovation across India’s startup ecosystem, according to a report by PTI.
Current Funding Initiatives and New Proposals
The existing seed fund scheme, introduced in April 2021 with a corpus of INR 945 crore, is set to conclude this year. In light of this, the ministry is contemplating a new scheme with similar objectives. The Startup India Seed Fund Scheme (SISFS) is one of several initiatives launched in recent years, including the Fund of Funds for Startups (FFS) and the Credit Guarantee Scheme for Startups (CGSS), to bolster the country’s startup environment.
The SISFS was allocated over four years and aimed to provide seed funding to eligible startups through various incubators across India. Announced in 2021, the scheme offers financial assistance for proofs of concept, prototype development, product trials, market entry, and commercialization of innovative products or ideas.
Importance of Early-Stage Funding
An official highlighted the critical importance of easy access to capital for entrepreneurs in the early stages of their ventures. The funding at this stage often determines the success or failure of startups with promising business ideas. Recognizing this, the ministry is also anticipated to propose a dedicated policy for deep tech startups.
Achievements and Future Plans
As of April 30, 2023, over 1,000 startups had been selected by approved incubators under the SISFS, providing cumulative financial support of INR 177 crore. Startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) are eligible to receive funding through one of the government-recognized incubators under this scheme. To qualify, startups must have at least 51% shareholding by Indian promoters.
Broader Impact on the Startup Ecosystem
The potential increase in funding and new schemes are part of a broader strategy to ensure sustained growth and innovation within India’s startup ecosystem. These measures are designed to provide the necessary financial support and resources to early-stage startups, enabling them to scale and succeed in a competitive market.
The anticipated budget proposals reflect the government’s commitment to fostering a robust environment for startups, encouraging technological advancements, and driving economic growth through innovation.
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