The Department for Promotion of Industry and Internal Trade (DPIIT) is seeking for the implementation of the Credit Guarantee Scheme for Start-ups (CGSS) and Start-up India Seed Fund Scheme (SISFS) in the Budget 2021-2022. The DPIIT seeks to implement these schemes in order to sort out the concerns of adequate funding for start-ups.
What is the need of these schemes?
The start-ups often face the challenge of inadequate funding available for their capital requirement for growth. The start-ups have faced the challenge to access early-stage debt to finance their capital requirements for growth. They begin their venture but cannot proceed far as they start facing the fund crunch as it is difficult for them to obtain loans from banks. Thus, these schemes are required to provide funding to the start-ups.
Credit Guarantee Scheme for Start-ups (CGSS)
- The Start-up India action plan 2016 also proposed for the implementation of the CGSS to fuel entrepreneurship by making credit accessible to innovators.
- It was also suggested that the scheme would encourage banks and other lending institutions to provide the start-ups with venture debt.
- The DPIIT wants the implementation of the CGSS with an outlay of ?2,000 crore.
Start-up India Seed Fund Scheme (SISFS)
The implementation of the scheme is being pushed by the DPIIT in order to provide seed funding to start-ups to conduct the proof-of-concept trials. The scheme will provide the financial assistance to start-ups for proof of concept, prototype development, market entry, product trials, and commercialization. The Expenditure Finance Committee proposed the implementation of the SISFS with the corpus of ?945 crore as was formulated by the DPIIT.
Start-ups in India
There are around 50,000 start-ups in India as of 2018. Out of them, around 8,9009,300 are technology led start-ups. In the year 2019, 1300 new tech start-ups were added to the list. Further, as per the government data, 2-3 tech start-ups are established per day in India.
Department for Promotion of Industry and Internal Trade (DPIIT)
It is a central government department working under the Ministry of Commerce and Industry. The department is responsible to formulate and implement the promotional and developmental measures for the growth of the industrial sector. It is also responsible for the overall industrial policy and facilitating & increasing the foreign direct investment (FDI) flows in India. It was established on January 27, 2019 after changing the name of the Department of Industrial Policy & Promotion. After the name was changed, internal trade was added to the mandate of new department.