The government has authorized the Rs 945-crore Startup India Seed Fund Scheme (SISFS) for the period 2021-25 to provide early-stage funding to startups for “proof of concept, prototype development, product trials, market entry and commercialization,” implementing body Department for Promotion of Industry and Internal Trade (DPIIT) mentioned in its notification. Startups across sectors registered with the DPIIT and incorporated not more than two years ago at the time of applying for the scheme will be eligible for securing capital. The funding will be disbursed by means of chosen incubators assisted by the central government or state governments.
“We are on course to implement the scheme wef 1 April ‘21,” DPIIT Joint Secretary Anil Agrawal tweeted on Friday. Prime Minister Narendra Modi had earlier this month announced the seed fund at the Startup India’s international summit Prarambh. In his address, PM Modi had mentioned that the government is taking actions to make certain that there is no shortage of capital for startups and that the government will also support startups to raise debt capital ahead by supplying the assure.
Apart from the two-year incorporation window, DPIIT mentioned that preference would be provided to startups providing options in sectors which includes social influence, waste management, water management, monetary inclusion, education, agriculture, meals processing, biotechnology, healthcare, power, mobility, defence, space, railways, oil and gas, textiles, and so on. Also, eligible startups should really not have received more than Rs 10 lakh of monetary assistance beneath any other Central or State Government scheme and that founders should really have at least 51 per cent stake at the time of application to the incubator for the scheme.
Also study: Budget 2021 Expectations: ‘Govt should extend PLI scheme to MSMEs, enhance 25% public procurement limit’
The chosen incubators will disburse up to Rs 20 lakhs as grant to startups for their validation of proof of idea, or prototype improvement, or item trials. This grant will be disbursed in milestone-based installments that can be connected to the improvement of prototype, item testing, developing a item prepared for industry launch, and so on. Further, up to Rs 50 lakhs will be provided to startups for industry entry, commercialization, or scaling up by means of convertible debentures or debt or debt-linked instruments.
The government also announced eligibility criteria for incubators assisted by the central government or state governments to participate in the scheme that incorporated at least two years of operability on the date of applying for the scheme, capacity to seat at least 25 men and women, at least 5 startups undergoing incubation at the time of application of the scheme. The scheme will be executed and monitored by an Experts Advisory Committee (EAC) to be set-up by DPIIT. EAC will evaluate incubators to provide grants of up to Rs 5 crore in milestone-based 3 or more installments.