Lok Sabha Question No. 4594 (UNSTARRED), answered on 2022-03-30
Subject: Startups Proposals
Ministry: COMMERCE AND INDUSTRY
Asked by: Nama Nageswara Rao

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY

## DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE LOK SABHA

UNSTARRED QUESTION NO. 4594.

TO BE ANSWERED ON WEDNESDAY, THE 30 TH  MARCH, 2022.

## STARTUPS PROPOSALS

## 4594.  SHRI NAMA NAGESWARA RAO:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state: वाणिज्य एवं उद्योग मंत्री

- (a) the details and the number of Startup proposals received by the Government under  the  'Startup  India'  scheme  and  the  number  of  entrepreneurs  given financial assistance under this scheme in the last three years, State-wise;
- (b) whether a number of Startups have been denied financial assistance under the Startup India scheme and if so, the reasons therefor;
- (c) whether the bureaucratic procedure prescribed for scrutinising funding proposals is a big hindrance for the success of the said scheme and if so, the details thereof; and
- (d) the details of the measures taken by the Government to review the above said procedure to help the Startups grow 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) to (d):

Startup India is a flagship initiative of Government of India launched on 16th January 2016 with an aim to build a strong ecosystem for nurturing innovation and entrepreneurship to drive sustainable economic growth and generate large scale employment opportunities. India is one of the largest startup  ecosystems  in  the world  with  more  than  65,000 recognized  startups,  having  at  least  one  recognized  startup  spread across 641 districts in every State and UT.

Under  the  Startup  India  initiative,  Fund  of  Funds  for  Startups  (FFS) Scheme and Startup India Seed Fund Scheme (SISFS) are operational to provide capital at various stages of business cycle of a startup.

The  Fund  of  Funds  for  Startups  (FFS)  Scheme  was  approved  and established in 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 much-needed boost to the Indian startup ecosystem and enable access to domestic capital. The FFS does not directly invest into startups. It invests into SEBI-registered Alternative Investment Funds (AIFs), who in turn make investments into startups.  Small  Industries  Development  Bank  of  India  (SIDBI)  is  the operating agency for FFS.

As on 28 th  March 2022, Department has allocated Rs. 2791.29 crore to SIDBI and SIDBI has in turn committed Rs. 6,914 crore to 83 Alternative Investment  Funds  (AIFs).  These  AIFs  in  turn  have  invested  in  580 startups so far. State-wise and Year-wise distribution of last three years, of startups supported under FFS are at Annexure I .

The Startup India Seed Fund Scheme (SISFS) aims to provide financial assistance  to  startups  for  proof  of  concept,  prototype  development, product trials, market entry and commercialization. This would enables these startups to graduate to a level where they will be able to raise investments from angel investors or venture capitalists or seek loans from  commercial  banks  or  financial  institutions.  The  funds  under  the Scheme are released to startups through approved incubators. Rs. 945 crore has been allocated under the Scheme for period of 4 years starting from  2021-22.  The  funds  are  released  to  startups  through  approved

Incubators. As  on  28 th   March  2022,  Rs.  295.75  crore  has  been  approved  to  76 Incubators.  As  the  scheme  is  launched  in  current  Financial  Year  i.e. 2021-22, about 300 startup applications have been approved by these incubators  for  financial  assistance  so  far.  State-wise  distribution  of startups supported under SISFS is at Annexure II . The  above  mentioned  schemes  have  well  defined  guidelines  and institutional framework which include eligibility criteria, selection process,  and  evaluation  committees  comprising  of  subject  matter experts from the ecosystem and monitoring mechanisms. In addition to the above, the Government has taken several measures under Startup India initiative to develop and promote startup ecosystem in the country. The details of measures taken by the government to help the startups grow in the country are at Annexure III.

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ANNEXURE I

## ANNEXURE REFERRED TO IN REPLY TO PARTS (a) TO (d) OF THE LOK SABHA UNSTARRED QUESTION NO. 4594 FOR ANSWER ON 30.03.2022

## A) Year-wise distribution of startups supported during last 3 financial years under FFS as on 28 th  March 2022 is as under:

| Financial Year   |   No. of Startups |
|------------------|-------------------|
| FY 2018-19       |                98 |
| FY 2019-20       |               120 |
| FY 2020-21       |                86 |
| FY 2021-22       |               156 |

## B) State-wise distribution of startups supported under FFS as on 28 th  March 2022 is as under

| S.No   | Name of State/UT   |   No. of startups |
|--------|--------------------|-------------------|
| 1      | Karnataka          |               191 |
| 2      | Maharashtra        |               120 |
| 3      | Delhi              |                98 |
| 4      | Haryana            |                38 |
| 5      | Tamil Nadu         |                24 |
| 6      | Gujarat            |                 8 |
| 7      | Telangana          |                13 |
| 8      | Uttar Pradesh      |                17 |
| 9      | Rajasthan          |                12 |
| 10     | Kerala             |                14 |
| 11     | Madhya Pradesh     |                11 |
| 12     | West Bengal        |                 9 |
| 13     | Bihar              |                 2 |
| 14     | Punjab             |                 1 |
| 16     | Assam              |                11 |
| 17     | Andhra Pradesh     |                 1 |
| 18     | Odisha             |                 2 |
| 19     | Chhattisgarh       |                 1 |
| 20     | Manipur            |                 4 |
| 21     | Arunachal Pradesh  |                 1 |
| 22     | Uttarakhand        |                 1 |
| 23     | Tripura            |                 1 |
|        | Total              |               580 |

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ANNEXURE II ANNEXURE REFERRED TO IN REPLY TO PARTS (a) TO (d) OF THE LOK SABHA  UNSTARRED QUESTION NO. 4594 FOR ANSWER ON 30.03.2022 State-wise list of startups supported under SISFS as on 28 th  March 2022 is as

## under:

| Name of State/UT   |   No. of startups |
|--------------------|-------------------|
| Andhra Pradesh     |                 4 |
| Assam              |                 4 |
| Bihar              |                 3 |
| Chandigarh         |                 1 |
| Chhattisgarh       |                 1 |
| Delhi              |                17 |
| Goa                |                 9 |
| Gujarat            |                13 |
| Haryana            |                13 |
| Himachal Pradesh   |                 2 |
| Jharkhand          |                 2 |
| Karnataka          |                65 |
| Kerala             |                11 |
| Madhya Pradesh     |                 9 |
| Maharashtra        |                43 |
| Manipur            |                 1 |
| Odisha             |                 5 |
| Puducherry         |                 3 |
| Rajasthan          |                 6 |
| Sikkim             |                 1 |
| Tamil Nadu         |                30 |
| Telangana          |                24 |
| Uttar Pradesh      |                24 |
| Uttarakhand        |                 1 |
| West Bengal        |                 8 |
| Grand Total        |               300 |

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## ANNEXURE III

## ANNEXURE REFERRED TO IN REPLY TO PARTS (a) TO (d) OF THE LOK SABHA UNSTARRED QUESTION NO. 4594 FOR ANSWER ON 30.03.2022

## Programs Launched under Startup India initiative

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

1. 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.
2. 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.
3. Regulatory  Reforms :  51  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.
4. 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.
5. 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.
6. 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.
7. 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 13 countries (Brazil, Sweden, Russia, Portugal, UK,  Finland,  Netherlands,  Singapore,  Israel,  Japan,  South  Korea,  Canada, Croatia)  that  provides  a  soft-landing  platform  for  startups  from  the  partner nations and aid in promoting cross collaboration.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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
14. 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.
14. 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.

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