List of Government Schemes To Support Startups In India

Ashwini Ashwini
Jan 18, 2021 9 min read
List of Government Schemes To Support Startups In India

India is gradually building a robust startup ecosystem. In order to promote and support entrepreneurs, the government has created a ministry (department) dedicated to helping new businesses. The ruling party has introduced many schemes to bolster entrepreneurship in India and to assist emerging startups financially.

β€œTake up one idea. Make that one idea your life, think of it, dream of it, live on that idea, let the brain, muscles, nerve, every part of your body be full of that idea and just leave every other idea alone. This is the way to success.”
- Mr Narendra Modi, Prime Minister of India

Here is a list of government schemes launched to develop and encourage entrepreneurship in India.

Startup India Seed Fund
Startup India Initiative
ASPIRE
MUDRA Bank
Ministry of Skill Development and Entrepreneurship
ATAL Innovation Mission
eBiz Portal
Dairy Processing and Infrastructure Development Fund (DIDF)
Support for International Patent Protection in Electronics & Information Technology (SIP-EIT)
Multiplier Grants Scheme (MGS)
Credit Guarantee Fund Trust for Micro and Small Entreprises (CGTMSE)
Software Technology Park (STP) Scheme
The Venture Capital Assistance Scheme (VCA)
Loan For Rooftop Solar Pv Power Projects
NewGen Innovation and Entrepreneurship Development Centre (NewGen IEDC)
Single Point Registration Scheme
Modified Special Incentive Package Scheme (M-SIPS)
Conclusion

Startup India Seed Fund

On 16 January 2021, Prime Minister Narendra Modi announced the launch of the 'Startup India Seed Fund' β€” worth INR 1,000 crores β€” to help startups and support ideas from aspiring entrepreneurs. PM Modi said that the government is taking important measures to ensure that startups in India do not face any capital shortage.

Startup India Initiative

Startupindia initiative government scheme
Startup India Initiative | Government Schemes for Startup Companies in India

The Prime Minister of India launched the Startup India Initiative in the year 2016. The idea is to increase wealth and employability by giving wings to entrepreneurial spirits. The government gives tax benefits to startups under this scheme and 798 applicants have made use of this scheme to date. The Department of Industrial Policy and Promotion is maintaining this initiative and is treating it as a long term project. Moreover, the overall age limit for startups has been increased from two years to seven years. And for biotechnology firms, the age limit is ten years from the date of incorporation. It is one of the best government-sponsored startup schemes for entrepreneurs as it is provides several concessions.

ASPIRE

ASPIRE scheme innovation entrepreneurship INDIA
Aspire | Small Business Ideas for Rural Areas in India

The government has made continuous efforts to improve the social and economic aspects of life in rural areas of India. Since 56% of the Indian population lives in the rural areas, the government is promoting entrepreneurship and innovation in the rural sector. The ASPIRE scheme aims at increasing employment, reducing poverty, and encouraging innovation in rural India. However, the main idea is to promote the agro-business industry. The Ministry of Medium and Small Enterprises has tried to boost economic development at the grassroots level. The total budget of the scheme was INR 62.5 crores for the period of 2014-2016.


Also read: Startup Hubs in India


MUDRA Bank

Mudra Yojana Government Funding scheme
Mudra Bank | Government Funding Schemes for Startups in India

Micro Units Development Refinance Agency (MUDRA) banks has been created to enhance credit facility and boost the growth of small business in rural areas. The government has introduced this scheme to support small businesses in India. In 2015, the government allocated INR 10,000 crores to promote startup culture in the country. The MUDRA banks provides startup loans of up to INR 10 lakhs to small enterprises, business which are non-corporate, and non-farm small/micro enterprises. MUDRA comes under Pradhan Mantri Mudra Yojana (PMMY) which was launched on 8 April 2015. The loans have been categorized as Tarun, Kishore, and Shishu. The assets are created through the bank’s finance and there is no collateral security.

Ministry of Skill Development and Entrepreneurship

Ministry of Skill Development and Entrepreneurship logo
Government Support for Startups & Entrepreneurs in India

The task of promoting entrepreneurship was earlier given to different departments and government agencies. In 2014, the Prime Minister decided to dedicate an entire ministry to build this sector as he felt that skill development required greater push from the government's side. Furthermore, the idea is to reach 500 million people by the year 2022 through gap-funding and skill development initiatives.

3 minute video explaining everything about Skill India Mission

ATAL Innovation Mission

Atal Innovation Mission lolo
Atal Innovation Mission | Initiatives for Entrepreneurship development

In the budget session of 2015, the Indian government announced the Atal Innovation Mission (AIM); with the name coming from Atal Bihari Vajpayee, the Former Prime Minister of India. Atal Innovation Mission was established to create a promotional platform involving academicians and draw upon national and international experiences to foster a culture of innovation, research, and development. The government allocated AIM about INR 150 crores in the year 2015.

eBiz Portal

India eBiz Portal G2B
eBiz Portal | Government Schemes for Startup Projects in India

This is the first electronic government-to-business(G2B) portal. The main purpose of the portal is to transform and develop a conducive business environment in the country. eBiz Portal was developed by Infosys in a public-private partnership model. It is a communication center for investors and business communities in India. The portal has launched 29 services in 5 states of India, viz., Andhra Pradesh, Delhi, Haryana, Maharashtra, and Tamil Nadu. The government will add more services to the scheme with time.

Dairy Processing and Infrastructure Development Fund (DIDF)

DIDF processing plant
DIDF | Startup India Initiative

National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India. The Government of India announced the creation of Dairy Processing and Infrastructure Development Fund under NABARD in the Union Budget of 2017-18 for the sustained benefit of farmers. The total corpus for this fund is INR 8000 crores over a period of 3 years (i.e. 2017-18 to 2019-20)

Milk Unions, multi-state milk cooperatives, state dairy federations, milk producing companies, and NDDB subsidiaries meeting the eligibility criteria under the project can borrow loan from NABARD. The loan component would be 80% (maximum rate) with the end borrower's contribution at 20 % (minimum rate). Borrowers shall get the loan at an interest rate of 6.5% per annum. The period of repayment will be 10 years. The respective state government will be the guarantor of loan repayment. Moreover, if the borrower is not able to contribute his or her share in the scheme, the state government shall step in.


Also read: Rise and Fall of Doodhwala- A Milk Delivery Startup


Support for International Patent Protection in Electronics & Information Technology (SIP-EIT)

SIP-EIT Support for International Patent Protection
SIP-EIT | Startup Schemes in India

The Department of Electronics and Information Technology (DeiTY) has launched a scheme entitled β€œSupport for International Patent Protection in E&IT (SIP-EIT)”. This scheme provides financial support to MSMEs and Technology Startups for international patent filing.

Features and benefits of the SIP-EIT scheme are:

  • Financial support is provided for international filing in Information Communication Technologies and Electronics sector.
  • The Reimbursement limit has been set at a maximum of INR 15 lakhs per invention or 50% of the total charges incurred in filing and processing of a patent application, whichever is lesser.
  • The SEP-EIT scheme can be applied at any stage of international patent filing by the applicant.

Multiplier Grants Scheme (MGS)

MGS Multiplier Grants Scheme India
MGS | Government Grants for Startups in India

Department of Electronics and Information Technology (DeitY) started the Multiplier Grants Scheme (MGS). The scheme aims to encourage collaborative Research & Development (R&D) between industry and academics/institutions for the development of products and packages. Under the scheme, if the industry supports the R&D of products that can be commercialized at the institutional level, the government shall provide financial support which will be up to twice the amount provided by industry. MGS promotes and expedites the development of aboriginal products and packages. The government grants would be limited to a maximum amount of INR 2 crores per project and the duration of each project could considerably be less than 2 years. It would be INR 4 crores and 3 years for industry associations.

Credit Guarantee Fund Trust for Micro and Small Entreprises (CGTMSE)

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE ) was set up by the government of India to provide business loans to micro-level businesses, small-scale industries, and startups with zero collateral. It allows businesses to avail loans at highly subsidized interest rates without requiring security. By working along with SIDBI (Small Industries Development Bank of India), the government provides a maximum amount of up to INR 100 lakhs under this scheme for boosting new enterprises as well as rehabilitating the existing ones. Primarily meant for manufacturing units, this loan can be availed in the form of working capital or term loan.

Software Technology Park (STP)

The Software Technology Park (STP) scheme is a totally export-oriented scheme for the development and export of computer software. This includes the export of professional services using communication links or media.

The scheme is unique in its nature as it focuses on only one sector, i.e., computer software. The scheme integrates the government concept of "100% Export Oriented Units" (EOU), "Export Processing Zones" (EPZ), and the concept of Science Parks or Technology Parks as operating elsewhere in the world. The sales in the Domestic Tariff Area (DTA) shall be permissible up to 50% of the export in value terms. STP gives total depreciation on capital goods over a period of five years.

The Venture Capital Assistance Scheme (VCA)

Small Farmer’s Agri-Business Consortium (SFAC) has launched the Venture Capital Assistance (VCA) scheme for the welfare of farmer-entrepreneurs and to develop their agri-business. The scheme is approved by the banks and financial institutions regulated by the RBI. It intends to provide assistance in the form of term loans to farmers so that the latter can meet the capital requirements for their project's implementation. VCA promotes the training and nurturing of agri-entrepreneurs.

The quantum of the loan will be 26% (40% for hilly regions) of the promoter’s equity. The maximum amount of loan provided under this scheme will be INR 50 lakhs.

Loan For Rooftop Solar Pv Power Projects

Rooftop Solar Panels
Loan for Rooftop Solar Projects | Government Support for Entrepreneurs in India

To build reliance on non-conventional sources of power, the government of India has decided to set up 40,000 MWp of Grid-Interactive Rooftop Solar PV Plants in the next five years. These rooftop solar PV plants will be set up in residential, commercial, industrial, and institutional sectors in the country and shall range from 1 kWp to 500 kWp in terms of capacity. Such rooftop plants are economically viable since they can produce electricity using solar energy at about INR 7 per kWh without any subsidy. The government also provides a subsidy of 15% on these plants to the associations or individual companies, making the scheme even more lucrative.

NewGen Innovation and Entrepreneurship Development Centre (NewGen IEDC)

NewGen IEDC is an initiative launched by the National Science and Technology Entrepreneurship Development Board under the Department of Science and Technology, Government of India. The initiative aims to inculcate the spirit of innovation and entrepreneurship among the Indian youth. It also endeavors to support and encourage entrepreneurship through guidance, mentorship, and support.

NewGen IEDC is a five-year programme that would be implemented in educational institutions. It will support up to 20 new projects.

Single Point Registration Scheme (SPRS)

NSIC Single Point Registration logo
SRPS | Indian Government Schemes for Startup Business

The Single Point Registration Scheme (SPRS) was launched in 2003. It is managed by the National Small Industries Corporation (NSIC). NSIC registers all Micro & Small Enterprises (MSEs) in India under the Single Point Registration Scheme to enable them to participate in government purchases.

Enterprises are classified as Micro, Small, or Medium based on the limit of investment. Eligible MSME units are provided with Udyog Aadhar registration certificate. All central ministries, departments, and PSUs shall set an annual goal of minimum 20% of the total annual purchases of products produced or rendered by MSMEs. About 358 items are reserved for exclusive purchase from MSMEs .

Modified Special Incentive Package Scheme (M-SIPS)

The government of India has approved a special incentive package to promote large-scale manufacturing in the Electronic System Design and Manufacturing (ESDM) sector. The scheme is called the Modified Special Incentive Package Scheme (M-SIPS).

Under M-SIPS, the Indian government will provide a subsidy of 20% on capital investments in special economic zones (SEZs) and 25% on capital investments in non-SEZs for individual companies. It also provides the re-imbursement of CVD/excise on capital equipment for non-SEZ units. Re-imbursement of central taxes and duties is also provided for high technology and high capital investment units.


Also read: List of Startups in Delhi


Conclusion

The government is promoting these schemes not only to increase the number of people who are benefitting from them but also to highlight the work they have done in the last 5 years. These initiatives have been introduced for the development of the Indian startup ecosystem. India seems to be heading towards the golden era of entrepreneurship. If things go as planned, India may host as many successful startups as the USA or any other leading nation by 2030.

Read more: 2018 list of top 50 richest people in India

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