Lok Sabha Question No. 2720 (UNSTARRED), answered on 2025-12-16
Subject: Cash  Crunch Faced by Start-ups and MSMEs
Ministry: COMMERCE AND INDUSTRY
Asked by: Shri Tariq Anwar

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

## LOK SABHA

UNSTARRED QUESTION NO. 2720.

TO BE ANSWERED ON TUESDAY, THE 16 TH  DECEMBER, 2025.

## CASH CRUNCH FACED BY START-UPS AND MSMES

## 2720.  SHRI TARIQ ANWAR:

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

- (a) whether  the  Government  has  made  any  assessment  of  the  cash  crunch situation  being  faced  by  start-ups  and  small  and  medium  enterprises  in  the country, if so, the details thereof;
- (b) whether there has been a significant decline in investment in the MSME sector during the Financial year 2023-24, if so, the response of the Government and action taken in this regard;
- (c) the concrete steps taken by the Government to address the funding crunch and "funding winter" in the start-up ecosystem; and
- (d) whether the Government proposes to introduce any new schemes to facilitate credit facility and encourage investment for these enterprises, if so, the details thereof?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री णिणिन प्रसाद ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI JITIN PRASADA)

- (a) to (d): In  India,  Alternative  Investment  Funds  (AIFs),  which  are  privately  pooled investment vehicles, are utilized by various investors to channel venture capital and private equity into startups. As per the Securities and Exchange Board of India  (SEBI)  Annual  Report  2023-24,  the  AIF  market  segment  in  India  has matured significantly. Several factors, including India's thriving startup ecosystem,  supportive  regulatory  framework,  a  steadily  growing  pool  of domestic investors, and unique investment opportunities with potentially higher returns, have fuelled  the growth of AIFs. Specifically, the commitments raised by AIFs have seen three- fold increase, reaching Rs. 11.3 lakh crore at the end of 2023-24 from Rs. 3.7 lakh crore at the end of 2019-20.

The  Government  has  established  the  Fund  of  Funds  for  Startups  (FFS)  to further  catalyze  venture  capital  investments.  It  is  operationalized  by  Small Industries Development Bank of India (SIDBI), which provides capital to SEBIregistered Alternative Investment Funds (AIFs) which in turn invest in startups.

AIFs  supported  under  FFS  are  required  to  invest  at  least  two  times  of  the amount committed under FFS in startups. The entire corpus of Rs. 10,000 crore has  been  committed  to  AIFs  which  have  catalysed  investments  of  Rs. 24,919.5 crore into 1,334 startups under the Scheme as on 31 st  October 2025.

The Government has also set up the Self-Reliant India (SRI) Fund to infuse equity of Rs. 50,000 crore in Micro, Small and Medium Enterprises (MSMEs) having  potential  and  viability  to  grow  larger  with  Rs.  10,000  crore  from  the Government  of  India  and  Rs.  40,000  crore  through  Private  Equity/Venture Capital Funds. Since inception in 2021 till 31 st  October 2025, 671 MSMEs have been assisted with an equity infusion of Rs. 14,927 crore.

The Government has taken several other initiatives and measures to support startups  and  Micro,  Small  and  Medium  Enterprises  (MSMEs)  and  improve access to finance, facilitate credit facility and encourage investment for these enterprises. Details of the measures are placed as Annexure-I.

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## ANNEXURE-I

## ANNEXURE REFERRED TO IN REPLY TO PARTS (a) to (d) OF THE LOK SABHA UNSTARRED QUESTION NO. 2720 FOR ANSWER ON 16.12.2025 .

## Key measures undertaken by the Government to promote the startup ecosystem are as follows:

1. Under the Startup India initiative, 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.
2. SISFS provides financial assistance to seed stage startups through incubators. SISFS is implemented from 1st April 2021. Under the SISFS as well the entire corpus of Rs. 945 crore has been approved to 219 incubators as on 31st October 2025.
3. CGSS is implemented for enabling collateral free loans to startups through eligible financial institutions. CGSS is operationalized by the National Credit Guarantee Trustee Company (NCGTC) Limited and has been operationalized from 1st April 2023.  Under  CGSS,  311  loans  amounting  to  Rs.  755.25  crore  have  been guaranteed for startup borrowers as on 31 st  October 2025.
4. Ministry of MSME implements Credit Guarantee Scheme (CGS) for MSEs through Credit  Guarantee  Fund  Trust  for  Micro  and  Small  Enterprises  (CGTMSE)  to provide  credit  guarantee  for  loans  (revised  to  loans  upto  Rs  10  crore  w.e.f 01.04.2025) to new as well as existing MSEs without collateral security and thirdparty guarantee.
5. Prime  Minister's  Employment  Generation  Programme  provides  Margin  Money subsidy up to 35%, for setting up of new micro enterprises, in the non-farm sector with project cost of Rs. 50 lakh for Manufacturing and Rs. 20 lakh for Services enterprises.
6. PM Vishwakarma Scheme was launched on 17.09.2023 to provide end-to-end holistic support to artisans and craftspeople of 18 traditional trades who work with their hands and tools. The Scheme includes provision of loans up to Rs.3 lakh with interest subvention of max up to 8%.
7. The  Government  also  implements  periodic  exercises  and  programs  including States' Startup Ranking, National Startup Awards, and Innovation Week which play an important role in the holistic development of the startup ecosystem. The Government  also  encourages  and  supports  ecosystem-led  initiatives  such  as Startup Mahakumbh which serve as a vibrant platform for stakeholders to network and  collaborate. Initiatives to improve market access  and  enable  public procurement support startups in growing and scaling up their businesses. These measures  are  complemented  by  regulatory  reforms  and  other  ecosystem development events and programs.
8. The  Atal  Innovation  Mission  (AIM)  of  NITI  Aayog  fosters  innovation  and entrepreneurship  among  India's  youth  through  flagship  programs  like  Atal Tinkering Labs (ATLs), Atal Incubation Centres (AICs) incubation facilities and Atal  Community  Innovation  Centres  (ACIC),  and  the  Community  Innovator Fellowship (CIF). Other Program like International Bilateral Program, Language

Inclusive Program of Innovation (LIPI - Vernacular Innovation Centres), Deeptech Reactor, AIM-WIPO Joint Program, and Human Capital Development under AIM 2.0 mandate are being piloted involving all relevant stakeholders.

9. Under the Ministry of Defence the Scheme for Innovations for Defence Excellence (iDEX) and Acing Development of Innovative Technologies with iDEX (ADITI) are fostering innovation and technology development in defence and aerospace by engaging startups.
10. Under the Department of Science & Technology, the Research, Development, and Innovation (RDI) Scheme has been approved to incentivize private sector participation in research and development (R&D). Further, DST is implementing the  National  Initiative  for  Developing  and  Harnessing  Innovations  (NIDHI)  to promote  innovation  and  entrepreneurship  among  the  youth.  The  initiative comprises NIDHI-PRAYAS (prototype grant support), NIDHI-EIR (Entrepreneurin-Residence  fellowships),  NIDHI-iTBI  (Inclusive  TBIs  in  Tier-II  and  Tier-III regions).
11. The  Anusandhan  National  Research  Foundation  (ANRF)  has  initiated  the program,  Mission  for  Advancement  in  High-impact  Areas  (MAHA)  to  address priority-driven, solution-focused research in mission-mode.
12. The Department of Biotechnology (DBT) has established biotechnology incubation and pre-incubation centres across States & Union Territories (UTs) under  the  BioNEST  (Bioincubators  Nurturing  Entrepreneurship  for  Scaling Technologies)  and  E-YUVA  (Encouraging  Youth  for  Undertaking  Innovative Research Activities) schemes amongst other programmes under Biotechnology Industry Research Assistance Council (BIRAC).
13. Ministry  of  Electronics  and  Information  Technology  (MeitY)  is  undertaking initiatives such as GENESIS (Gen-Next Support for Innovative Startups) Scheme, TIDE 2.0 (Technology Incubation and Development of Entrepreneurs) Scheme, and IndiaAI Mission to promote the startup ecosystem.
14. The  Ministry  of  Skill  Development  and  Entrepreneurship  (MSDE)  through  its autonomous organizations,  namely  National  Institute  for  Entrepreneurship  and Small Business Development (NIESBUD) and Indian Institute of Entrepreneurship (IIE)  has  taken  various  initiatives  to  promote  entrepreneurship  development amongst  all  sections  of  the  society.  These  initiatives  include,  Swavalambini programme, Entrepreneurship Awareness Programmes (EAP), Entrepreneurship Development Programmes (EDP), Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyaan (PMJANMAN), Entrepreneurship Development Centres (EDC) in North East  Region's  Educational  Institutions,  Dharti  Aaba  Janjatiya  Gram  Utkarshh Abhiyan (DAJGUA), Pradhan Mantri Surya Ghar Muft Bijli Yojana Scheme (PM SGMBY Scheme), and Capacity Building Programme for Fair Price Shop Owners.

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