Union commerce minister Piyush Goyal on Monday formally unveiled a Start-ups India Seed Fund Scheme (SISFS) to handhold and financially support early-stage Start-ups across 300 incubation centres, almost three months after the Centre announced the plan.
According to the commerce ministry, the fund is expected to benefit around 3,600 Start-ups and boost the Start-ups ecosystem, particularly in tier-2 and 3 cities. The fund aims to provide financial assistance to Start-ups for proof of concept, prototype development, product trials and market entry.
A sum of ₹945 crore has been allocated for the fund. Goyal said the SISFS will “secure seed funding, inspire innovation, support transformative ideas, facilitate implementation and start a Start-ups revolution”.
He said the scheme will create a robust Start-ups ecosystem, particularly in non-metros, “which are often deprived of adequate funding”. The minister said he would like to encourage innovators from rural areas to come forward and benefit from this scheme.
Grants of up to ₹5 crore shall be provided to eligible incubators selected by an expert committee. They shall be offered grants of up to ₹20 lakh for validation of proof of concept, prototype development or product trials. Furthermore, investments of up to ₹50 lakh shall be provided to Start-ups for market entry, commercialization or scaling up through convertible debentures or debt-linked instruments.
Goyal said this scheme is being launched within three months of its announcement by Prime Minister Narendra Modi and underlined that the “times are tough, but our resolve is strong, and never before has it become more important for us to empower our Start-ups”.
In January, at the Start-ups India’s international summit, ‘Prarambh’, PM Modi had said that his government is trying to “create a Start-ups system, which is based on the mantra ‘of the youth, by the youth, for the youth’.”
There are over 41,000 Start-ups in the country and 44% of these ventures are officially recognized. More than 5,700 Start-ups are in information technology (IT), around 3,600 in healthcare and over 1,700 in agriculture. “These Start-ups are changing the demographic character of business. India today is one of the biggest nations in the Start-ups ecosystem,” Modi had said.
Despite the pandemic-led disruption, 11 Start-ups turned unicorns in 2020, and over 30 today are valued at over $1 billion, he had said, comparing it to just four unicorns in 2014. The commerce ministry said on Monday that the scheme will allow incubators to apply for funds through an online platform and an experts’ advisory committee has been created to execute and monitor the scheme.