Lok Sabha Question No. 24 (STARRED), answered on 2021-02-03
Subject: `Startup India Seed Fund` Scheme
Ministry: COMMERCE AND INDUSTRY
Asked by: Magunta Sreenivasulu Reddy, Kuruva Gorantla Madhav

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

## LOK SABHA

STARRED QUESTION NO. 24.

TO BE ANSWERED ON WEDNESDAY, THE 3RD FEBRUARY, 2021.

## STARTUP INDIA SEED FUND SCHEME

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## *24. SHRI MAGUNTA SREENIVASULU REDDY: SHRI KURUVA GORANTLA MADHAV:

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

- (a) whether the Government has spent any funds from Rs. 945 crore corpus fund under the 'Startup India Seed Fund' scheme till date;
- (b) if so, the details thereof;
- (c) whether the Government has provided any other benefits to Startups apart from this scheme under the Atmanirbhar Bharat Package; and
- (d) if so, the details thereof?

## ANSWER वाणिज्य  एवं उद्योग मंत्री (श्री पीयूष गोयल) THE MINISTER OF COMMERCE & INDUSTRY (SHRI  PIYUSH GOYAL)

(a)to(d): A Statement is laid on the Table of the House.

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## STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (d) OF THE LOK SABHA STARRED QUESTION NO. 24 FOR ANSWER ON WEDNESDAY, THE 3 RD FEBRUARY, 2021.

- (a)&(b)       Startup India Seed Fund Scheme (SISFS) has been approved for the period of next four years starting from 2021-22. It will be implemented with effect from 1 st April 2021.  The  Scheme  aims  to  provide  financial  assistance  to  startups  for  proof  of concept, prototype development, product trials, market entry and commercialization. Rs. 945 Crore corpus will be divided over the next 4 years for providing seed funding to eligible startups through eligible incubators across India. The scheme is expected to support about 3600 startups.
- (c)&(d)      A  number  of  measures  announced  under  Atmanirbhar  Bharat  Package  are beneficial for Startups. Some of these benefits are listed at Annexure.

## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PARTS  (c)  &  (d)  OF  THE  LOK  SABHA STARRED QUESTION NO. 24 FOR ANSWER ON 3 RD  FEBRUARY, 2021.

## Benefits under 'Atmanirbhar Bharat' for Startups

## 1)  Reserve Bank of India

## 1.1. Rescheduling of Payments - Term Loans and Working Capital Facilities

- i.  In respect of all term loans (including agricultural term loans, retail and crop loans), all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and  NBFCs (including housing finance companies) ('lending institutions') were permitted to grant a  moratorium  of  three  months  on  payment  of  all  instalments falling  due  between March  1,  2020  and  May  31,  2020.  In  view  of  the  extension  of  lockdown  and continuing disruption on account of COVID-19, all lending institutions were permitted to extend the moratorium by another three months i.e. from June 1, 2020 to August 31, 2020 on payment of all instalments in respect of term loans.
- ii.  In respect of working capital facilities sanctioned in the form of cash credit/overdraft , lending institutions were permitted to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 upto May 31, 2020. Further extension was granted up to 31 st August 2020.
- iii.  An  expert  committee  formed  by  the  Reserve  Bank  of  India  (RBI)  under  the chairmanship of Shri K.V. Kamath made recommendations on the required financial parameters to be factored in the resolution plans under the 'Resolution Framework for  Covid19-related  Stress'  along  with  sector  specific  benchmark  ranges  for  such parameters. The recommendations of the Committee have been broadly accepted by RBI.  Accordingly,  RBI  has  specified  five  specific  financial  ratios  and  the  sectorspecific thresholds for each ratio in respect of 26 sectors to be taken into account while finalising the resolution plans.

## 1.2. Easing of Working Capital Financing

In  respect  of  working  capital  facilities  sanctioned  to  borrowers  facing  stress  on account of the economic fallout of the pandemic, lending institutions may recalculate the  'drawing  power'  by  reducing  the  margins  and/or  by  reassessing  the  working capital  cycle.  Further,  accounts  provided  relief  under  these  instructions  shall  be subject to subsequent supervisory review with regard to their justifiability on account of the economic fallout from COVID-19.

## 2) Measures for businesses including MSMEs Which will include eligible startups

- 2.1 Rs 3 lakh crore Emergency Working Capital Facility for Businesses, including MSMEs.
- 2.2 Rs 20,000 crore Subordinate Debt for Stressed MSMEs.
- 2.3 Rs 50,000 crore Equity infusion for MSMEs through Fund of Funds.

## 2.4     New definition of MSME:

The definition of micro manufacturing and services unit increased to Rs. 1 crore of investment and Rs. 5 crore of turnover. The limit of small unit increased to Rs. 10  crore  of  investment  and  Rs  50  crore  of  turnover.  Similarly,  the  limit  of  a medium  unit  increased  to  Rs  20  crore  of  investment  and  Rs.  100  crore  of turnover.  The  limit  for  medium  manufacturing  and  service  units  was  further increased to Rs. 50 crore of investment and Rs. 250 crore of turnover. It has also been decided that the turnover with respect to exports will not be counted in the limits  of  turnover  for  any  category  of  MSME  units  whether  micro,  small  or medium.

- 2.5 Global  tenders  has  been  disallowed  upto  Rs  200  crore,  giving  preference  to domestic suppliers and boost to startups.
- 2.6 Production-Linked Incentive (PLI) Scheme : For enhancing India's Manufacturing Capabilities and Enhancing Exports - Atmanirbhar Bharat, the PLI Scheme in the 10  key  sectors  were  introduced.  This  will  make  Indian  manufacturers  globally competitive,  attract  investment  in  the  areas  of  core  competency  and  cutting-edge technology;  ensure  efficiencies;  create  economies  of  scale;  enhance  exports  and make India an integral part of the global supply chain. It aims to overall growth in the economy and create huge employment opportunities
- 2.7 Reliefs  through  Employee Provident Fund (EPF) :  Under  Pradhan  Mantri  Garib Kalyan  Package  (PMGKP),  payment  of  12%  of  employer  and  12%  employee contributions  was  made  into  EPF  accounts  of  eligible  establishments.  This  was provided earlier for salary months of March, April and May 2020. This support was extended for  another  3  months  to  salary  months  of  June,  July  and  August  2020. This provisioned assistance of Rs 4,860 crore to 3.67 lakh establishments, for 72.22 lakh employees.
- 2.8 EPF contribution reduced for Business & Workers for 3 months -  Under  this package the statutory rate of EPF contribution of both employer and employee has been reduced to 10 percent of basic wages and dearness allowances from existing rate  of  12  percent  for  all  class  of  establishments  covered  under  the  Employees' Provident Funds & Miscellaneous Provisions Act, 1952. The reduction in statutory rate of contributions from 12% to 10% for wage months May, 2020, June, 2020 and July, 2020 were notified vide dated May 18, 2020. This scheme was applicable for workers  who  were  not  eligible  for  24%  EPF  support  under  PM  Garib  Kalyan Package and its extension. Reduction in rate of EPF contributions from 12% to 10% of basic wages and Dearness allowances was provisioned to benefit both 4.3 crore employees/members  and  employers  of  6.5  lakhs  establishments  to  tide  over  the immediate liquidity crisis during Pandemic situation.

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