Lok Sabha Question No. 2526 (UNSTARRED), answered on 2023-03-15
Subject: Funds for Start-ups Scheme
Ministry: COMMERCE AND INDUSTRY
Asked by: Nusrat Jahan Ruhi

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

## UNSTARRED QUESTION NO. 2526. TO BE ANSWERED ON WEDNESDAY, THE 15 TH  MARCH, 2023.

## FUNDS FOR START-UPS SCHEME

## 2526.  MS. NUSSRAT JAHAN:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज्य एवं उद्योग मंत्री

- (a) the details of the funds for Start-up Scheme during the last three years, yearwise;
- (b) the details and the total number of start-ups that received support under the said scheme;
- (c) the State/UT-wise details thereof along with the details of start-ups that got support with respect to the State of West Bengal including the details of the benefits received from the scheme; and
- (d) the proposed measures to be taken by the Government in this respect to further support startups in the country?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री सोम प्रकाश ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI SOM PARKASH)

- (a): Under Startup India initiative, to provide capital at various stages of business cycle of a startup, the Government is implementing Fund of Funds for Startups (FFS) and Startup India Seed Fund Scheme (SISFS). Both the Schemes are implemented on a Pan-India basis.

The Fund of Funds for Startup Scheme was approved and established in June, 2016 with a corpus of Rs. 10,000 crore, with contribution spread over the 14 th and 15 th  Finance Commission Cycle based on progress of implementation, to provide  much-needed  boost  to  the  Indian  Startup  ecosystem  and  enable access to domestic capital.  The scheme is operationalized by Small Industries Development Bank of India (SIDBI).

Under FFS, the Scheme does not directly invest in startups, instead provides capital  to  SEBI-registered  Alternative  Investment  Funds  (AIFs),  known  as daughter funds, who in turn invest money in growing Indian startups through equity  and  equity-linked  instruments.  SIDBI  has  been  given  the  mandate  of operating this Fund  through selection of suitable daughter funds  and overseeing the disbursal of committed capital. AIFs supported under FFS are required  to  invest  at  least  2  times  of  the  amount  committed  under  FFS  in startups.

Under FFS, in the last three years viz. 2020, 2021 and 2022, Rs. 4,857 crore has  been  committed  by  SIDBI.  The  year-wise  break-up  of  the  amount committed to the AIFs under the Scheme specifically in the last three years viz. 2020, 2021 and 2022 is as under:

|   Year | Amount Committed (in Rs. Crore)   |
|--------|-----------------------------------|
|   2020 | 1,254                             |
|   2021 | 1,892                             |
|   2022 | 1,711                             |

The Startup India Seed Fund Scheme has been approved for the period of 4 years starting from 2021-22 with a corpus of Rs. 945 crore. The Scheme aims to  provide  financial  assistance  to  startups  for  proof  of  concept,  prototype development, product trials, market entry and commercialization.

Under  SISFS,  as  per  provisions  of  the  Scheme,  the  Government  has constituted an Experts Advisory Committee (EAC) which is responsible for the overall execution and monitoring of the SISFS. The EAC evaluates and selects incubators for allocation of funds under the Scheme.

Under SISFS, in the last two years (SISFS is implemented with effect from 1st April 2021) viz. 2021 and 2022, Rs. 495.25 crore has been approved to the incubators by the EAC. The year-wise break-up of the amount approved to the incubators under the Scheme specifically in the last two years is as under:

|   Year |   Amount Approved (in Rs. Crore) |
|--------|----------------------------------|
|   2021 |                           227.75 |
|   2022 |                           267.5  |

- (b) : Under FFS, as per provisions of the Scheme, the AIFs invest in startups and the  AIFs  supported  are  required  to  invest  at  least  2  times  of  the  amount committed by SIDBI under FFS in startups. The number of startups and the amount invested in the last three years viz. 2020, 2021 and 2022 is as under:

|   Year |   Number of Startups | Amount Invested (in Rs. Crore)   |
|--------|----------------------|----------------------------------|
|   2020 |                  100 | 1,802                            |
|   2021 |                  152 | 3,403                            |
|   2022 |                  251 | 5,992                            |

Under SISFS, as per provisions of the Scheme, the selected incubators shortlist the startups based on certain parameters outlined in Scheme guidelines. The number of startups selected and the amount approved in the last two years

(SISFS is implemented with effect from 1st April 2021) viz. 2021 and 2022 is as under:

|   Year |   Number of Startups |   Amount Approved (in Rs. Crore) |
|--------|----------------------|----------------------------------|
|   2021 |                  146 |                            20.8  |
|   2022 |                  569 |                            99.44 |

- (c) : The state-wise details of the number of startups and the amount invested under FFS in the last three years viz. 2020, 2021 and 2022 including for the State of West Bengal is placed as Annexure-I .

The  state-wise  details  of  the  number  of  startups  selected  and  the  amount approved  by  the  incubators  under  SISFS  in  the  last  two  years  (SISFS  is implemented with effect from 1st April 2021) viz. 2021 and 2022 including for the State of West Bengal is placed as Annexure-II .

- (d) Under  the  Startup  India  initiative,  the  Government  constantly  undertakes various  efforts  for  the  development  and  growth  of  startup  ecosystem  in  the country.

The flagship Schemes namely, Fund of Funds for Startups (FFS), Startup India Seed  Fund  Scheme  (SISFS)  and  Credit  Guarantee  Scheme  for  Startups (CGSS) support startups at various stages of their business cycle to enable startups to graduate to a level where they are able to raise investments from angel investors or venture capitalists or seek loans from commercial banks or financial institutions.  The  Government  also  implements  flagship annual exercises  and  programs  including  States' Startup  Ranking,  National  Startup Awards  and  Innovation  Week  which  play  an  important  role  in  holistic development  of  the  startup  ecosystem.  The  Government  also  facilitates participation  and  engagement  of  Indian  startup  ecosystem  at  international platforms. Details of such programs implemented under Startup India initiative by the Government  to  support  startups  in  the country are placed  as Annexure-III .

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## ANNEXURE-I

## ANNEXURE  REFERRED  TO  IN  REPLY  TO    PART  (c)  OF  THE  LOK  SABHA USTARRED QUESTION NO. 2526 FOR ANSWER ON 15.03.2023

The state-wise details of the number of startups and the amount invested under FFS in  the last three years viz. 2020, 2021 and 2022 including for the State of    West Bengal:

1

7

4

1

3

1

| S.No.   | Name of State/UT   | No. of Startups   | Amount Invested by AIFs (in Rs. Crore)   |
|---------|--------------------|-------------------|------------------------------------------|
| 1.      | Karnataka          | 152               | 3,775                                    |
| 2.      | Delhi              | 84                | 1,726                                    |
| 3       | Maharashtra        | 98                | 2,566                                    |
| 4       | Haryana            | 43                | 994                                      |
| 5       | Tamil Nadu         | 18                | 641                                      |
| 6       | Kerala             | 8                 | 150                                      |
| 7       | Rajasthan          | 8                 | 119                                      |
| 8       | Telangana          | 11                | 226                                      |
| 9       | Gujarat            | 14                | 347                                      |
| 10      | Bihar              | 3                 | 86                                       |
| 11      | Madhya Pradesh     | 12                | 156                                      |
| 12      | Uttar Pradesh      | 16                | 265                                      |
| 13      | Andhra Pradesh     | 1                 | 16                                       |
| 14      | Arunachal Pradesh  | 1                 | 1                                        |
| 15      | Assam              | 12                | 25                                       |
| 16      | Manipur            | 7                 | 7                                        |
| 17      | Chandigarh         | 1                 | -                                        |
| 18      | Chhattisgarh       | 1                 | 4                                        |
| 19      | Meghalaya          | 3                 | 1                                        |
| 20      | Odisha             | 2                 | 3                                        |
| 21      | Pondicherry        | 1                 | 1                                        |
| 22      | Punjab             | -                 | 12                                       |
| 23      | Tripura            | 1                 | -                                        |
| 24      | Uttarakhand        | -                 | -                                        |
| 25      | West Bengal        | 6                 | 75                                       |
| Total   | Total              | 503               | 11,197                                   |

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## ANNEXURE-II

## ANNEXURE  REFERRED  TO  IN  REPLY  TO    PART  (c)  OF  THE  LOK  SABHA USTARRED QUESTION NO. 2526 FOR ANSWER ON 15.03.2023

The state-wise details of the number of startups selected and the amount approved by the incubators under SISFS in the last two years (SISFS is implemented with effect from 1st April 2021) viz. 2021 and 2022 including for the State of West Bengal:

| S.No.   | Name of State/UT   |   No. of Startups |   Funds Approved by the Incubators as per Seed Fund Portal (in Rs. Crore) |
|---------|--------------------|-------------------|---------------------------------------------------------------------------|
| 1       | Andhra Pradesh     |                 7 |                                                                      0.78 |
| 2       | Arunachal Pradesh  |                 1 |                                                                      0.2  |
| 3       | Assam              |                10 |                                                                      0.95 |
| 4       | Bihar              |                12 |                                                                      2.66 |
| 5       | Chandigarh         |                 4 |                                                                      0.6  |
| 6       | Chhattisgarh       |                 5 |                                                                      0.22 |
| 7       | Delhi              |                38 |                                                                      7.46 |
| 8       | Goa                |                13 |                                                                      1.45 |
| 9       | Gujarat            |                52 |                                                                      6.95 |
| 10      | Haryana            |                32 |                                                                      4.65 |
| 11      | Himachal Pradesh   |                 3 |                                                                      0.35 |
| 12      | Jammu and Kashmir  |                 1 |                                                                      0.1  |
| 13      | Jharkhand          |                 4 |                                                                      1.05 |
| 14      | Karnataka          |               132 |                                                                     26.14 |
| 15      | Kerala             |                26 |                                                                      4.47 |
| 16      | Madhya Pradesh     |                39 |                                                                      6.25 |
| 17      | Maharashtra        |               113 |                                                                     18.53 |
| 18      | Manipur            |                 2 |                                                                      0.25 |
| 19      | Meghalaya          |                 1 |                                                                      0.2  |
| 20      | Nagaland           |                 1 |                                                                      0.25 |
| 21      | Odisha             |                13 |                                                                      1.61 |
| 22      | Puducherry         |                 5 |                                                                      0.34 |
| 23      | Punjab             |                 4 |                                                                      0.42 |
| 24      | Rajasthan          |                19 |                                                                      3.27 |
| 25      | Sikkim             |                 2 |                                                                      0.2  |
| 26      | Tamil Nadu         |                56 |                                                                     10.82 |
| 27      | Telangana          |                52 |                                                                      9.67 |
| 28      | Uttar Pradesh      |                47 |                                                                      7.9  |
| 29      | Uttarakhand        |                 6 |                                                                      0.7  |
| 30      | West Bengal        |                15 |                                                                      1.83 |
|         | Total              |               715 |                                                                    120.24 |

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## ANNEXURE-III

## ANNEXURE  REFERRED  TO  IN  REPLY  TO    PART  (d)  OF  THE  LOK  SABHA USTARRED QUESTION NO. 2526 FOR ANSWER ON 15.03.2023

## Programs Implemented under Startup India initiative

The details of various programs undertaken by the Government to promote startups under Startup India initiative across the country are as under:

- Startup India Action Plan : An Action Plan for Startup India was unveiled on 16 th January 2016. The Action Plan comprises of 19 action items spanning across areas such as 'Simplification and handholding', 'Funding support and incentives' and  'Industry-academia  partnership  and  incubation'.  The  Action  Plan  laid  the foundation of Government support, schemes and incentives envisaged to create a vibrant startup ecosystem in the country.
- Fund of Funds for Startups (FFS) Scheme : The Government has established FFS with  corpus  of  Rs.  10,000  crore,  to  meet  the  funding  needs  of  startups. DPIIT is the monitoring agency and Small Industries Development Bank of India (SIDBI) is the operating agency for FFS. The total corpus of Rs. 10,000 crore is envisaged to be provided over the 14th and 15th Finance Commission cycles based on progress of the scheme and availability of funds. It has not only made capital available for startups at early stage, seed stage and growth stage but also played a catalytic role in terms of facilitating raising of domestic capital, reducing dependence on foreign capital and encouraging home grown and new venture capital funds.
- Credit  Guarantee  Scheme  for  Startups  (CGSS) :  The  Government  has established  the  Credit  Guarantee  Scheme  for  Startups  for  providing  credit guarantees  to  loans  extended  to  DPIIT  recognized  startups  by  Scheduled Commercial  Banks,  Non-Banking  Financial  Companies  (NBFCs)  and  Venture Debt Funds (VDFs) under SEBI registered Alternative Investment Funds. CGSS is  aimed  at  providing  credit  guarantee  up  to  a  specified  limit  against  loans extended by Member Institutions (MIs) to finance eligible borrowers viz. DPIIT recognised startups.
- Regulatory Reforms : Over 50 regulatory reforms have been undertaken by the Government  since  2016  to  enhance  ease  of  doing  business,  ease  of  raising capital and reduce compliance burden for the startup ecosystem.
- Ease  of  Procurement :  To  enable  ease  of  procurement,  Central  Ministries/ Departments  are  directed  to  relax  conditions  of  prior turnover and  prior experience  in  public  procurement  for  all  DPIIT  recognised  startups  subject  to meeting quality and technical specifications. Further, Government e-Marketplace (GeM)  Startup  Runway  has  been  developed  which  is  a  dedicated  corner  for startups to sell products and services directly to the Government.
- Support  for  Intellectual  Property  Protection :  Startups  are  eligible  for  fasttracked patent application examination and disposal. The Government launched Start-ups Intellectual Property Protection (SIPP) which facilitates the startups to file applications for patents, designs and trademarks through registered

facilitators in appropriate IP offices by paying only the statutory fees. Facilitators under this  Scheme are responsible for providing  general  advisory  on  different IPRs, and information on protecting and promoting IPRs in other countries. The Government bears the entire fees of the facilitators for any number of patents, trademark  or  designs,  and  startups  only  bear  the  cost  of  the  statutory  fees payable. Startups are provided with an 80% rebate in filing of patents and 50% rebate in filling of trademark vis-a-vis other companies.

- Self-Certification  under  Labour  and  Environmental  laws :  Startups are allowed to self-certify their compliance under 9 Labour and 3 Environment laws for a period of 3 to 5 years from the date of incorporation.
- Income Tax Exemption for 3 years: Startups incorporated on or after 1st April 2016  can  apply  for  income  tax  exemption.  The  recognized  startups  that  are granted an Inter-Ministerial Board Certificate are exempted from income-tax for a period of 3 consecutive years out of 10 years since incorporation.
- International  Market  Access  to  Indian  Startups :  One  of  the  key  objectives under the Startup India initiative is to help connect Indian startup ecosystem to global startup ecosystems through various engagement models. This has been done though international Government to Government partnerships, participation in international forums and hosting of global events. Startup India has launched bridges with over 15 countries (Brazil, Sweden, Russia, Portugal, UK, Finland, Netherlands, Singapore, Israel, Japan, South Korea, Canada, Croatia, Qatar and UAE) that provides a soft-landing platform for startups from the partner nations and aid in promoting cross collaboration.
- Faster Exit for Startups : The Government has notified Startups as 'fast track firms' enabling them to wind up operations within 90 days vis-a-vis 180 days for other companies.
- Startup India Hub :  The  Government launched a Startup India Online Hub on 19 th  June 2017 which is one of its kind online platform for all stakeholders of the entrepreneurial ecosystem in India to discover, connect and engage with each other.  The  Online  Hub  hosts  Startups,  Investors,  Funds,  Mentors,  Academic Institutions, Incubators, Accelerators, Corporates, Government Bodies and more.
- Exemption for the Purpose Of Clause (VII)(b) of Sub-section (2) of Section 56 of the Act (2019) : A DPIIT recognized startup is eligible for exemption from the provisions of section 56(2)(viib) of the Income Tax Act.
- Startup  India  Showcase :  Startup  India  Showcase  is  an  online discovery platform for the most promising startups of the country chosen through various programs  for  startups  exhibited  in  a  form  of  virtual  profiles.  The  startups showcased on the platform have distinctly emerged as the best in their fields. These  innovations  span  across  various  cutting-edge  sectors  such  as  Fintech, EntrepriseTech,  Social  Impact,  HealthTech,  EdTech,  among  others.  These startups are solving critical problems and have shown exceptional innovation in their respective sectors. Ecosystem stakeholders have nurtured and supported these startups, thereby validating their presence on this platform.
- National Startup Advisory Council : The Government in January 2020 notified constitution of the National Startup Advisory Council to advise the Government on measures needed to build a strong ecosystem for nurturing innovation and startups in the country to drive sustainable economic growth and generate large scale employment opportunities. Besides the ex-officio members, the council has a  number of non-official members, representing various stakeholders from the
- startup ecosystem.
- Startup  India:  The  Way  Ahead :  Startup  India:  The  Way  Ahead  at  5  years celebration of Startup India was unveiled on 16 th  January 2021 which includes actionable plans for promotion of ease of doing business for startups, greater role of technology in executing various reforms, building capacities of stakeholders and enabling a digital Aatmanirbhar Bharat.
- Startup  India  Seed  Fund  Scheme  (SISFS): Easy  availability  of  capital  is essential for entrepreneurs at the early stages of growth of an enterprise. The capital required at this stage often presents a make-or-break situation  for startups with good business ideas. The Scheme aims to provide financial assistance to

startups for proof of concept, prototype development, product trials,  market entry and  commercialization.  Rs.  945  crore  has  been  sanctioned  under  the  SISFS Scheme for period of 4 years starting from 2021-22.

- National  Startup  Awards  (NSA) :  National  Startup  Awards  is  an  initiative  to recognize  and  reward  outstanding  startups  and  ecosystem  enablers  that  are building  innovative  products  or  solutions  and  scalable  enterprises,  with  high potential of employment generation or wealth creation, demonstrating measurable  social  impact.  Handholding  support  is  provided  to  all  the  finalists across  various  tracks  viz.  Investor  Connect,  Mentorship,  Corporate  Connect, Govt. Connect, International Market Access, Regulatory Support, Startup Champions on Doordarshan and Startup India Showcase, etc.
- States' Startup Ranking Framework (SRF) : States' Startup Ranking Framework is a unique initiative to harness strength of competitive federalism and create a flourishing startup ecosystem in the country. The major objectives of the ranking exercise are facilitating states to identify, learn and replace good practices,  highlighting  the  policy  intervention  by  states  for  promoting  startup ecosystem and fostering competitiveness among states.
- Startup  Champions  on  Doordarshan : Startup Champions program on Doordarshan is a one-hour weekly program covering stories of award winning/ nationally recognised startups. It is telecasted in both Hindi and English across Doordarshan network channels.
- Startup  India  Innovation  Week :  The  Government  organises  Startup  India Innovation  week  around  the  National  Startup  Day  i.e.  16 th   January,  with  the primary  goal  was  to  bring  together  the  country's  key  startups,  entrepreneurs, investors, incubators, funding entities, banks, policymakers, and other national/international  stakeholders  to  celebrate  entrepreneurship  and  promote innovation.

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