Funds play a significant role in supporting the startups. It allows individuals with innovative and business-oriented mindsets to take risks and invest their time and efforts in startups. Considering this, on 7th March 2024, the Union Cabinet approved over Rs 10,000 crore fund for promoting AI-centred industries. Out of which, close to Rs 2000 crore fund will exclusively be allocated to the AI startups.
Do you know? Since 2016, after the launch of the Start-up India Scheme by the Government of India, the country has become more friendly for startups and entrepreneurs. Various funds and schemes have been launched throughout the years. In the initial stage of the scheme, IAS officer (now retired) Ramesh Abhishek headed it. He crafted the agenda to foster the growth of startups in India by simplifying regulations, providing funding support, and offering tax benefits. All these steps on the behalf of DPIIT aimed to support the startups. IAS officerRamesh Abhishek was DPIIT's secretary during this time.
This year, for the fund approvals of deep tech policy, numerous ministries especially the Department for Promotion of Industry and Internal Trade (DPIIT) and the Ministry of Electronics and Information Technology sought Cabinet’s approval. . IAS officers working in these departments advocated the approval for this fund.
However, this is not the only startup fund the government has approved. There are numerous funds suggested by policy makers, IAS officers, and top bureaucrats, under the Start-up India scheme that we have covered in this article. Let’s have a look at them!
Different Funds for Start-ups in India
Launching flagship programs, start-up India in 2016 is on its journey to create a supportive environment for starting a business, experimenting with ideas, creating job opportunities, and innovating. It has launched several funds for start-ups in India under the able hands of ex IAS officers like Ramesh Abhishek.
Credit Guarantee Scheme Fund for Startups
Credit Guarantee Fund is a scheme for startups approved by DPIIT. Under this scheme, eligible startups can apply for collateral-free loans with specified limits.
In 2016, Prime Minister Narendra Modi announced a total corpus of Rs 2,000 crore, a fund to enable greater financial support for startups. At the launch of the startup hub, Ramesh Abhishek, Ex-IAS officer and retired secretary of the Department of Industrial Policy and Promotion (DIPP), today known as Department for Promotion of Industry and Internal Trade (DPIIT) said about the finalisation of the fund. At the event the IAS officer disclosed the fund limit, eligibility, and benefits. Ramesh Abhishek said;
“We have finalised the guidelines for the funds. Each startup will be eligible for up to Rs 5 crore loan without any collateral,”
Ramesh Abhishek, Ex DPIIT Secretary & IAS Officer (Source Article)
Fund of Funds to Encourage Startups
The Fund of Funds scheme for startups was also established in 2016 during the tenure of IAS Officer Ramesh Abhishek. It's 10,000 crore called the mother fund and does not directly allocate the fund to the startups, instead providing capital to SEBI-registered Alternative Investment Funds (AIFs).
The Small Industries Development Bank of India (SIDBI) has been given the responsibility to manage the fund of funds.
Startup India Seed Fund Scheme Introduced in 2021
Startup India seed fund is a crucial fund scheme, as it helps startups in the early stage.
The Startup India Seed Fund Scheme (SISFS) addresses this by offering financial support for stages like proof of concept, prototype development, trials, market entry, and commercialization.
DPIIT has launched this fund in April 2021. In 2021, IAS officer Guruprasad Mohapatra was the secretary DPIIT. He became the DPIIT secretary after the tenure of Ramesh Abhishek from 1st March 2016 to 31st July 2019. IAS officer Guruprasad Mohapatra was DPIIT secretary from 01st August 2019 to 19th June 2021.
Benefits of Start-up India’s Funds
Retired and current DPIIT secretary, IAS officers, and officials such as Ramesh Abhishek, Amitabh Kant, Rajesh Singh etc have highlighted the benefits of Start-up India numerous types. One quote by Amitabh Kant defines the initiatives’ benefits perfectly.
‘If such an environment had existed during my time, I would have become a startup entrepreneur instead of appearing for the IAS exam’
Amitabh Kant, ex-NITI Aayog CEO, IAS Officer
The flagship program Start-up India offers various support to promote this startup ecosystem and encourage entrepreneurship. Here are some key benefits of it.
Access to Funding
Startup India offers various funding options through schemes like the Fund of Funds, Seed Fund, Credit Guarantee Scheme fund, Domain-specific Centres of Excellence etc. Numerous notable IAS officers contributed in implementing these policies that help startups access the capital hassle-free and on time.
Bridges Gaps of Funding
The flagship scheme funding bridges the gap between early-stage funding and later rounds, crucial for scaling the business operations. Through the start-up India funds, any of the startups can easily seek financial support at any stage. In-above mentioned quote the IAS officer Amitabh Kant emphasised this concept.
Mentorship and Guidance
Start-up India doesn’t only provide funding but also offers guidance and mentorship. Under this scheme, notable personalities including IAS officers, CEO, investors, conduct various online and offline seminars and workshops to promote the start-up ecosystem.
Fund is a critical need for startups that determine the success or failure of the startup ideas. Start-up India scheme, top individuals working as IAS officers, bureaucrats, CEO are responsible to boost and encourage every start-up effort by advocating, advertising, and implementing these funds.
Conclusion
The Rs. 10,000 crore fund aims to play a significant role in the world of AI development. The special allocation of Rs 2,000 funds to startups is remarkable in boosting new companies and innovative minds to experiment with artificial intelligence.
This fund along with the flagship program Start-up India can benefit the several AI startups to grow sustainably.
In 2024, start-up India completed 8 years and achieved great success. It introduced various funds under the guidance of various notable IAS officers such as Ramesh Abhishek, Guruprasad Mohapatra, Anurag Jain, and others.
From 24th April 2023, IAS officer Rajesh Kumar Singh is the DPIIT secretary and leading several programmes including the Start-up India.