The Government of India reinforces its commitment to fostering a thriving startup ecosystem with the recent launch of the Startup India Seed Fund Scheme (SISFS). This move was announced during the ‘Prarambh: Startup India International Summit’, coinciding with the completion of the five-year milestone of the Startup India initiative.
The Startup India Seed Fund Scheme (SISFS)
With the primary objective of offering financial assistance to startups for proof of concept, prototype development, product trials, market entry, and commercialization, the SISFS is being launched by the Department for Promotion of Industry and Internal Trade (DPIIT) with an outlay of Rs. 945 Crore.
Eligibility Conditions
To qualify for this scheme, a startup should meet specific conditions like being recognized by DPIIT, incorporated not more than two years before the time of application, and must not have received more than Rs. 10 lakh of funding under any other Central or State Government scheme.
Features of SISFS
In the next four years, SISFS aims to support approximately 3,600 entrepreneurs via 300 incubators. An Experts Advisory Committee (EAC), formed by DPIIT, will oversee the scheme’s execution and monitoring. Grants as high as Rs. 5 crore will be extended to eligible incubators handpicked by the committee. In turn, these incubators will grant up to Rs. 20 lakh to startups for validating their proof of concept, prototype development, or product trials. Investments up to Rs. 50 lakh will also be offered to startups for market entry, commercialization, or scaling up through convertible debentures or debt-linked instruments.
Expected Benefits
The scheme is expected to significantly contribute to building a robust startup ecosystem, especially in Tier 2 and Tier 3 regions. The funding from the scheme will help smaller towns that usually lack appropriate funding options.
About Startup India Initiative
Launched in 2016, Startup India aims to create an ecosystem conducive for nurturing innovation and providing opportunities to budding entrepreneurs. The initiative’s action plan focusses on simplification and handholding, funding support and incentives, as well as industry-academia partnership and incubation.
Government Initiatives Related to Startup India
Various government initiatives geared towards encouraging startups include Startup Innovation Challenges, National Startup Awards, Ranking of States on Support to Startup Ecosystems, and SCO Startup Forum.
About Seed Funding
Seed funding usually constitutes the first formal financial investment in a startup or business venture. It aids the company in its initial steps, such as market research and product development.
About Department for Promotion of Industry and Internal Trade
Initially called the Department of Industrial Policy & Promotion, DPIIT was renamed in January 2019. Falling under the Ministry of Commerce and Industry, it acquired charge of matters related to e-commerce in 2018 and internal trade plus startups in 2019. DPIIT facilitates industrial development by promoting investment in new technology and balanced development of industries.
