Nearly 58 per cent of the government-recognised start-ups are confined to just five states in the country.
A total of 84,012 start-ups have been recognised by the government (as on November 30, 2022). However, the latest government data showed that nearly 60% of the total government recognized start-ups are from the states including Maharashtra, Karnataka, Delhi, Gujarat and Uttar Pradesh.
While Maharashtra tops with 15,571 government recognised start-ups, states like Karnataka, Delhi, Uttar Pradesh and Gujarat have respectively 9,904; 9,588; 7,719, and 5,877 such entities.
The government with the intent to build a strong ecosystem for nurturing innovation and start-ups in the country launched the Start-up India initiative on January 16, 2016.
In order to meet the objectives of the initiative, the government unveiled an Action Plan for Start-up India that laid the foundation of government support, schemes and incentives envisaged to create a vibrant start-up ecosystem in the country.
The Action Plan comprises multiple items spanning areas such as "Simplification and handholding", "Funding support and incentives" and "Industry-academia partnership and incubation".
Under the Start-up India Initiative, to provide capital at various stages of the business cycle of a start-up, the government has implemented the Fund of Funds for Start-ups (FFS) and the Start-up India Seed Fund Scheme (SISFS). Both the schemes have been implemented on a pan-India basis.
Fund of Funds for Start-ups
The Fund of Funds for Start-ups Scheme was approved and established in June 2016 with a corpus of Rs 10,000 crore, with contribution spread over the 14th and 15th Finance Commission cycle based on progress of implementation, to provide a much-needed boost to the Indian start-up ecosystem and enable access to domestic capital.
Under the FFS, the scheme does not directly invest in start-ups, instead it provides capital to the SEBI-registered Alternative Investment Funds (AIFs), known as daughter funds, who in turn invest money in growing Indian start-ups through equity and equity-linked instruments.
The Small Industries Development Bank of India (SIDBI) has been given the mandate of operating this Fund through selection of suitable daughter funds and overseeing the disbursal of committed capital. The AIFs supported under FFS are required to invest at least 2x of the amount committed under FFS in start-ups.
As per the Ministry of Commerce, as on November 30, 2022, in the FFS of the corpus of Rs 10,000 crore Rs 7,527.95 crore has been committed to the AIFs.
Start-up India Seed Fund Scheme
Moreover, the Start-up India Seed Fund Scheme has been approved for 4 years starting 2021-22. The scheme aims to provide financial assistance to start-ups for proof of concept, prototype development, product trials, market entry and commercialisation.
As on November 30, 2022, in the SISFS, of the corpus of Rs. 945 crore, Rs. 455.25 crore has been approved to 126 incubators of which Rs. 186.15 crore has been disbursed.
Under the Start-up India Initiative, entities are recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) as start-ups.
The government has also established the Credit Guarantee Scheme for Start-ups for providing credit guarantees to loans extended to DPIIT recognized start-ups by Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs) and Venture Debt Funds (VDFs) under the SEBI registered Alternative Investment Funds.
(To receive our E-paper on WhatsApp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)