Lok Sabha Question No. 1384 (UNSTARRED), answered on 2021-02-10
Subject: Setting up of National Startup Advisory Council
Ministry: COMMERCE AND INDUSTRY
Asked by: Sougata Ray

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

UNSTARRED QUESTION NO. 1384.

TO BE ANSWERED ON WEDNESDAY, THE 10 TH  FEBRUARY, 2021.

## SETTING UP OF NATIONAL STARTUP ADVISORY COUNCIL

## 1384.  PROF SAUGATA RAY:

Will the Minister of COMMERCE AND INDUSTRY वाणिज्य एवं उद्योग मंत्री

be pleased to state:

- (a) whether the Government has set up a new National Startup Advisory Council; and
- (b)      if so, the composition and objectives of the said Council?

## ANSWER

## वाणिज् यवव द्योग म त्रालयमेंराज् यम त्रर(श्रर सोमप्रकाश) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI SOM PARKASH)

- (a) & (b): Yes  Sir, Department  for  Promotion  of  Industry  and  Internal  Trade (DPIIT)  had  constituted  the  'National  Startup  Advisory  Council'  vide January 2020 (copy enclosed) to  advise  the  Government  on  measures  needed  to build  a strong ecosystem for nurturing innovation and startups in the country to scale

Notification No.5(24)/2019-Startup India dated 21 st drive sustainable economic growth and generate large employment opportunities.

- 2)   The  objectives  of  the  National  Startup  Advisory  Council  are  as
2. follows:
- i. Foster a culture of innovation amongst citizens and students in particular;
- ii. Promote innovation in all sectors of economy across the country, including semi-urban and rural areas;
- iii. Support creative and  innovative ideas through incubation and research and development to transform them into valuable products, processes or solutions to improve productivity and efficiency;
- iv. Create an environment of absorption of innovation in industry;
- v. Facilitate public organizations to assimilate innovation with a view to improving public service delivery;
- vi. Promote creation, protection and commercialization of intellectual property rights;
- vii. Make it easier to start, operate, grow and exit businesses by reducing regulatory compliances and costs;
- viii. Promote ease of access to capital for startups;
- ix. Incentivize domestic capital for investments into startups;
- x. Mobilize global capital for investments in Indian startups;
- xi. Keep control of startups with original promoters.
- xii. Provide access to global markets for Indian startups.
- 3) The National Startup Advisory Council shall be chaired by Minster for Commerce & Industry, Government of India. The council shall have the ex-officio  members,  not  below  the  rank  of  Joint  Secretary  to  the Government of India of the following Ministries/Departments/Organisations:
- 4)  The  following  persons  have  been  nominated  as  non-official  members representing various stakeholders:
1. Shri Byju Raveendran, Byju's
2. Ms. Shradha Sharma, YourStory-
3. Ms. Lizzie Chapman, ZestMoney
4. Shri Abhiraj Singh, Urban Company
5. Shri Kunal Bahl, Snapdeal
6. Shri Deepak Garg, Rivigo Service Pvt. Ltd.
7. Shri Bhavish Aggarwal, Ola Cab
8. Shri Krishna Kumar, Cropln
9. Shri Sanjeev Bhikchandani
10. Shri Sridhar Vembu
11. Shri Kris Gopalakrishnan
12. Shri Pavuluri Subba Rao
13. Shri Mohandas Pai
14. Shri Gopal Srinivasan, TVS Capital Funds Limited
15. Shri Prashant Prakash, Accel
16. Ms. Vani Kola, Kalaari Capital
17. Shri Manoj Kohli, Softbank India
18. Shri Rajan Anandan, Sequoia Capital India
19. Shri Amitabha Bandyopadhyay SIIC, IIT Kanpur
20. Shri Kunal Upadhayaya, Startup Oasis (CIIE Initiatives), IIM Ahmedabad
21. Shri Ramesh Byrapaneni, Endiya Partners
22. Ms. Renuka Ramnath, Indian Private Equity & Venture Capital Association
23. Shri Venkatesh Shukla, The IndUS Entrepreneurs (TiE)
24. Shri Sharad Sharma, Indian Software Product Industry RoundTable (iSpirit)
25. Ms. Debjani Ghosh, National Association of Software and Service Companies (NASSCOM)
26. Shri Uday Kotak, Confederation of Indian Industry (CII)
27. Shri Vineet Agarwal, Associated Chambers of Commerce and Industry of India (ASSOCHAM)
28. Shri Uday Shankar, Federation of Indian Chambers of Commerce & Industry (FICCI)
45. *******

|   Sl. No. | Members                                               |
|-----------|-------------------------------------------------------|
|         1 | Office of Pr. Scientific Advisor to the Government    |
|         2 | NITI Aayog                                            |
|         3 | Department Of Revenue                                 |
|         4 | Department Of Financial Services                      |
|         5 | Department Of Expenditure                             |
|         6 | Department Of Commerce                                |
|         7 | Department Of Science And Technology                  |
|         8 | Department Of Bio-Technology                          |
|         9 | Department Of Health & Family Welfare                 |
|        10 | Ministry Of Labour And Employment.                    |
|        11 | Department Of Higher Education                        |
|        12 | Department Of School Education & Literacy             |
|        13 | Ministry Of Corporate Affairs                         |
|        14 | Ministry Of Electronic And Information And Technology |
|        15 | Ministry Of Micro, Small And Medium Entrepreneurs     |
|        16 | Central Board of Direct Taxes                         |
|        17 | Central Board of Indirect Taxes and Customs           |
|        18 | Small Industrial Development Bank Of India            |

[To be published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-Section (ii)]

P-38015/5/2020-STARTUP INDIA Government of India Ministry of Commerce & Industry Department for Promotion of Industry and Internal Trade (Startup India Section) st

New Delhi, 21 January, 2021

--------------

## NOTIFICATION

P-38015/5/2020-STARTUP INDIA - The Central Government has approved the 'Startup India Seed Fund Scheme (SISFS)' to provide financial assistance to startups for proof of concept, prototype  development,  product  trials,  market  entry  and  commercialization.  SISFS  shall provide  financial  assistance  to  startups  via  corpus  of  Rs.  945  Crore  that  will  be  disbursed through selected incubators across India in 2021-25.

2.  The scheme is sector-agnostic and will support startups across all sectors. The scheme shall have a central common application on Startup India portal for startups and incubators on an ongoing basis.
3. SISFS will be implemented by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India.
4. The Guidelines of the above-mentioned scheme is available on the website of Startup India at https://www.startupindia.gov.in/.
5. Eligibility  Criteria  for  Startups: The  eligibility  criteria  for  a  startup  to  apply  under  the Startup India Seed Fund Scheme shall be as follows:
1. A startup, recognized by DPIIT, incorporated not more than 2 years ago at the time of application
2. Startup must have a business idea to develop a product or a service with market fit, viable commercialization, and scope of scaling
3. Startup should be using technology in its core product or service, or business model, or distribution model, or methodology to solve the problem being targeted
4. Preference would be given to startups creating innovative solutions in sectors such as social impact, waste management, water management, financial inclusion, education, agriculture,  food  processing,  biotechnology,  healthcare,  energy,  mobility,  defence, space, railways, oil and gas, textiles, etc.
5. Startup should not have received more than Rs 10 lakh of monetary support under any other Central or State Government scheme. This does not include prize money from competitions and grand challenges, subsidized working space, founder monthly allowance, access to labs, or access to prototyping facility
6. Shareholding by Indian promoters in the startup should be at least 51% at the time of application  to  incubator  for  the  scheme,  as  per  Companies  Act,  2013  and  SEBI (ICDR) Regulations, 2018
7. Any startup will not receive seed support more than once each as per provisions of guidelines.
6. Eligibility Criteria for Incubators: The eligibility criteria for an incubator to apply in the Startup India Seed Fund scheme are as follows:
1. Incubator must be a legal entity:
- a)  A society registered under the Societies Registration Act 1860, or
- b)  A Trust registered under the Indian Trusts Act 1882, or
- c)  A  Private  Limited  company  registered  under  the  Companies  Act  1956  or  the Companies Act 2013, or
- d)  A statutory body created through an Act of legislature
2. Incubator should be operational for at least two years on the date of application to the scheme
3. Incubator must have facilities to seat at least 25 individuals
4. Incubator must have at least 5 startups undergoing incubation physically on the date of application
5. Incubator  must  have  a  full-time  Chief  Executive  Officer,  experienced  in  business development  and  entrepreneurship,  supported  by  a  capable  team  responsible  for mentoring startups in testing and validating ideas, as well as in finance, legal and human resources functions
6. Incubator should not be disbursing seed fund to incubatees using funding from any thirdparty private entity
7. Incubator must have been assisted by Central/State Government(s)
8. In case the incubator has not been assisted by Central or State Government(s):
- a) Incubator must be operational for at least three years
- b) Must have at least 10 separate startups undergoing incubation in the incubator physically on the date of application
- c) Must present audited annual reports for the last 2 years
9. Any additional criteria as may be decided by the Experts Advisory Committee (EAC).
7. Assistance to Incubators: Experts Advisory Committee (EAC) shall evaluate incubators for grant assistance. A Grant of up to Rs. 5 (five) crore would be provided to a selected incubator in milestone-based  three  (or)  more  installments.  The  exact  quantum  of  grant  and  instalments  for each incubator will be decided by the Experts Advisory Committee (EAC) based on its evaluation
8. Disbursement of Seed Fund to Startups by Incubators: Seed Fund to an eligible startup by the incubator shall be disbursed as follows:
1. Up  to  Rs.  20  Lakhs  as  grant  for  validation  of  Proof  of  Concept,  or  prototype development, or product trials. The grant shall be disbursed in milestone-based installments. These  milestones  can  be  related  to  development  of  prototype,  product  testing,  building  a product ready for market launch, etc.
2. Up to Rs. 50 Lakhs of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments
3. Seed fund shall strictly not be used by startups for creation of any facilities and shall be utilized for the purpose it has been granted for
9. Constitution  of  Experts  Advisory  Committee: An  Experts  Advisory  Committee  (EAC)  will  be constituted by DPIIT, which will be responsible for the overall execution and monitoring of the Startup India Seed Fund Scheme. The EAC will evaluate and select incubators for allotment of Seed Funds, monitor progress, and take all necessary measures for efficient utilization of funds towards fulfilment of  objectives  of  Startup  India  Seed  Fund  Scheme.  The  Experts  Advisory  Committee  (EAC)  will comprise of the following members:
1. Chairman, an individual of eminence
2. Financial Advisor, DPIIT or his representative
3. Additional Secretary/ Joint Secretary/ Director/ Deputy Secretary, DPIIT (Convener)
4. Representative of Department of Biotechnology (DBT)
5. Representative of Department of Science & Technology (DST)
6. Representative of Ministry of Electronics and Information Technology (MeiTY)
7. Representative of Indian Council of Agricultural Research (ICAR)
8. Representative of NITI Aayog
9. At  least  three  expert  members  nominated  by  Secretary,  DPIIT  from  the  startup ecosystem, investors, experts in the domain of R&D, technology development and commercialization, entrepreneurship and other relevant domains.

## 10. Selection of Incubators:

10.1  Online  Applications  will  be  invited  from  incubators  across  India  to  participate  in  the scheme on  https://www.startupindia.gov.in  or  any  other  platform  specifically  designated  for the purpose.

Incubators shall be selected on the basis of the following parameters:

- a. Fulfillment of eligibility criteria
- b. Quality of the team of Incubator
- c. Available infrastructure, testing labs etc.
- d. Composition of ISMC (as defined in para 7)
- e. Incubation support provided by incubator in last three years:
- i. No. of startups incubated
- ii. No.  of  startups  graduated,  i.e.  progressed  from  one  stage  of  business development cycle to the next
- iii. No. of startups that raised follow on investments
- iv. No. of startups that crossed a revenue of Rs 1 Cr in last 1 year
- v. 2-year survival rate of startups from the date of joining incubator
- f. Funding support extended to incubatees in last three years:
- i. Investment agreements signed between incubator and startups
- ii. No. of startups invested in
- iii. Total corpus allocated to incubatees
- iv. Total investments raised by incubatees from external sources
- g. Mentoring provided to incubatees in last three years:
- i. No. of mentors hired
- ii. Average mentoring hours allocated per startup per month
- iii. No.  of  IP  (patents,  copyrights,  designs,  and  trademarks)  registered  by incubatees
- h. Other support extended to incubatees in last three years:
- i. Industry/Corporate connects
- ii. Events held for stakeholder engagements
- iii. Participation in other events
- i. Number of startups that the incubator intends to support
- j. Quantum of funds applied for, along with fund deployment plan with timelines
- k. Any other relevant parameters that decided by the EAC
27. 10.2 The Call for Applications for incubators will be open online throughout the year
28. 10.3 Experts Advisory Committee (EAC) will convene at least quarterly to:
1. Evaluate the applications received during the period
2. Select incubators for funds under the Scheme
3. Decide  the  total  amount  of  fund  and  number  of  installments  in  which  it  is  to  be allocated to each incubator
4. Specify milestones to be achieved by each incubator for release of installments
33. 10.4 EAC shall  also  monitor  progress  of  incubators  against  sanctioned  funds  under  the Scheme and take further actions as may be required
34. 10.5 EAC may lay down improved guidelines for selection of incubators under the scheme from time to time

## 11. Selection of Startups

11.1 Each  of  the  incubators  applying  for  the  Startup  India  Seed  Fund  Scheme  will constitute a committee called the Incubator Seed Management Committee (ISMC), consisting of experts who can evaluate and select startups for seed support. The composition of ISMC would be as follows:

- i. Nominee of Incubator (Chairman)
- ii. Representative from State Government's Startup Nodal Team
- iii. Representative of a Venture Capital Fund or Angel Network
- iv. A domain expert from Industry
- v. A domain expert from academia
- vi. Two successful Entrepreneurs
- vii. Any other relevant Stakeholder

The final composition and members of ISMC of each incubator shall be approved by EAC and will be a critical parameter in selection of incubators. 11.2 The  startups  shall  be  selected  through  an  open,  transparent  and  fair  process, comprising, inter-alia: An online  call  for  applications  shall  be  hosted  on  an  ongoing  basis  on  the  Startup

- i. India portal
- ii. Applicants  can  apply  for  seed  fund  to  any  three  incubators  selected  as  disbursing partners for this scheme in order of their preference
- iii. All  applications  received  will  be  shared online  with respective  incubators for further evaluation
- iv. The applicant may be  asked to submit details  on  team  profile,  problem  statement, product/service overview, business model, customer profile, market size, quantum of funds needed, projected utilization plan for funds, etc.
- v.     The incubators shall shortlist applicants as per eligibility criteria given in the guidelines.
- vi.      Eligible applications will be evaluated by ISMC using the following criteria:

|    | Criteria                       | Details                                                                                                                                     | Weightag e (%)   |
|----|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|------------------|
| 1  | Is there a need for this Idea? | Market size, what market gap is it filling, does it solve a real-world problem?                                                             | P                |
| 2  | Feasibility                    | Feasibility and reasonability of the technical claims, methodology used/ to be used for PoC and validation, roadmap for product development | q                |
| 3  | Potential Impact               | Customer demographic & the technology's effect on these, national importance (if any)                                                       | r                |
| 4  | Novelty                        | USP of the technology, associated IP                                                                                                        | s                |
| 5  | Team                           | Strength of the team, Technical and business expertise                                                                                      | t                |
| 6  | Fund Utilization Plan          | Roadmap of money utilization                                                                                                                | u                |
| 7  | Additional Parameters          | Any additional parameters considered appropriate by incubator                                                                               | v                |
| 8  | Presentation                   | Overall assessment                                                                                                                          | w                |
|    |                                |                                                                                                                                             | 100%             |

Weightages for criteria (p, q, r, s, t, u, v, w) may be assigned by each incubator differently

- vii. Incubator may shortlist applicants based on their evaluation for a presentation before ISMC
- viii. ISMC shall  evaluate  applicants  based  on  their  submissions  and  presentations  and select startups for Seed Fund within 45 days of receipt of application
- ix. All incubators shall provide information about progress of evaluation of startups realtime to Startup India portal
- x. Selected  startups  shall  receive  seed  funding  under  the  respective  incubator  that selects  them  as  beneficiaries  as  per  their  preference  shared  during  application  (for example, if  incubators  at  Preference  1  and  Preference  2  both  select  a  startup,  the funding  shall  be  given  by  Preference  1  incubator.  If  Preference  1  incubator  rejects and  Preference  2  incubator  selects,  the  funding  shall  be  given  by  incubator  at Preference 2, and so on.)
- xi. All applicants will be able to track the progress of their application on the Startup India portal on a real-time basis
- xii. Applicants who are rejected will also be notified through email
- xiii. An applicant, if rejected once, may apply afresh
8. 11.3 EAC may lay down improved guidelines for selection of startups under the scheme from time to time
12. The Department shall evaluate the outcome of the scheme by the end of 2024-25, especially with reference to financial, social and economic returns.

(Anil Agrawal) Joint Secretary to the Government of India

The Manager Government of India Press (Bharat Sarkar Press), Mayapuri

## Copy for information to:

1. Chief Secretary/Administrator, All States/UTs
2. CEO, NITI Aayog
3. Secretary, Department of Expenditure
4. Secretary, Department of Economic Affairs
5. Secretary, Ministry of Micro, Small and Medium Enterprises
6. Secretary, Department of Commerce
7. Secretary, Department of Financial Services
8. Secretary, Department of Science and Technology
9. Secretary, Department of Biotechnology
10. Secretary, Department of Electronics and Information Technology
11. Secretary, Ministry of Labour & Employment
12. Secretary, Ministry of Corporate Affairs
13. Secretary, Department of Higher Education
14. Secretary, Department of Agriculture cooperation and Farmers Welfare
15. Secretary, Department of Defence Production
16. CMD, Small Industries Development Bank of India

(Shruti Singh) Director