Top government schemes for Indian startups and entrepreneurs

“Take up one idea. Make that one idea your life, think of it, dream of it, live on that idea, let the brain, muscles, nerves, and every part of your body be full of that idea and just leave every other idea alone. This is the way to success.”

Narendra Modi

Most people at least once in their lives dream of doing something great, they come up with ideas that can sometimes solve problems for the whole society. But unfortunately, most ideas get dissolved in the air as there is no guidance or exposure for most people.

India has the 2nd largest population which also means we have a vault of intelligent minds that are left untouched. To utilize such wonderful brains the government of India has introduced quite a few schemes in the goodwill of India’s bright minds and entrepreneurs. 

India is progressively establishing a thriving startup environment. The government has established a ministry (department) dedicated to assisting new firms to promote and encourage entrepreneurs. Furthermore, the Central Government of India has launched a slew of initiatives to boost entrepreneurship in India and provide financial assistance to budding firms.

The government of India wants MSME contribution to India’s GDP to reach 50% by 2024, up from the current 29 percent, and to employ 15 crore Indians, up from 11 crores now. This is why the Ministry of Micro, Small, and Medium Enterprises has several numbers of Government initiatives for startups and small enterprises, to provide them with greater resources and a platform for further growth.

Startups and MSMEs are the foundation on which the government’s Atma Nirbhar mission and Make In India goal will thrive – creating more jobs, growing exports, raising the standard of life for millions of Indians, and strengthening India globally.

When it comes to companies, particularly tech businesses, India is one of the fastest-growing ecosystems in the world. Last year, venture capitalists invested a record-breaking $48 billion in Indian companies and expansion plans.

As a result, India is currently in a unique position in which both the government and private investors want Indian entrepreneurs and startups, as well as MSMEs, to flourish and establish a global presence. In this endeavor, the Government of India and the Ministry of Micro, Small, and Medium Enterprises have introduced a number of innovative government programs aimed at empowering startups and MSMEs in India.

1. Startup India Seed Fund

Prime Minister Narendra Modi announced the formation of the ‘Startup India Seed Fund,’ worth Rs 1,000 crores, on January 16, 2021, to assist startups and foster ideas from budding entrepreneurs. PM Modi stated that the government is taking significant steps to ensure that startups in India do not face a lack of capital.

The easy availability of financing is critical for entrepreneurs in the early phases of an enterprise’s growth.

Startups can obtain funding from angel investors and venture capital firms only once they have demonstrated a proof of concept. Similarly, banks only make loans to applicants who have assets to back them up.

It is critical to provide initial capital to firms with unique ideas in order for them to execute proof of concept experiments.

According to the Union Budget for 2022, the reserved fund for the Startup India Seed Fund project is Rs 283.5 crore, which is more than the revised estimate of roughly Rs 100 crore for the fiscal year 2021-22.

Startup India Seed Fund Scheme (SISFS) seeks to support entrepreneurs with proof of concept, prototype development, product trials, market entry, and commercialization.

This would allow these firms to progress to the point where they may seek financing from angel investors or venture capitalists, as well as loans from commercial banks or financial institutions.

2. ATAL Innovation Mission

The Atal Innovation Mission (AIM), NITI Aayog, was established in 2016 as the Government of India’s flagship project to encourage a culture of innovation and entrepreneurship throughout the country.

AIM has taken a comprehensive strategy to this aim, ensuring the development of a problem-solving, inventive attitude in schools and the establishment of an entrepreneurship ecosystem in universities, research institutions, the corporate sector, and the MSME sector. AIM’s projects are currently being monitored and managed methodically through the use of real-time MIS systems and dynamic dashboards. AIM is also having its programmes reviewed by third-party bodies in order to ensure continual improvement. 

The Atal Innovation Mission (AIM) is the Indian government’s flagship programme aimed at instilling a culture of innovation and entrepreneurship across the country. Entrepreneurship should be encouraged at universities and enterprises.

AIM is developing global Atal Incubators (AICs) at the university, NGO, SME, and corporate industrial levels to stimulate and enable the growth and performance of sustainable startups in every sector/state of the country, hence boosting entrepreneurship and job creators in the country, addressing both commercial and social entrepreneurship prospects in India and applicable globally.

3. SAMRIDH Scheme

One of MeitY Startup Hub’s primary focus areas is to enable start-up enterprises to enhance entrepreneurship, economic growth, and employment across the country. The country’s startup environment has profited greatly from the programmes, and the overall drive toward entrepreneurship has spurred many others to establish their own businesses.

The idea behind this proposal is to give startups that already have brilliant solutions and proof of concept for their product more opportunities to improve their product using innovative technologies for the market with a solid business plan, allowing them to easily obtain investments from venture capitalists and angel investors.

On August 25, 2021, Ashwini Vaishnaw, the newly appointed Minister of Electronics, Information, and Technology (MeitY), unveiled the SAMRIDH programme, which stands for Startup Accelerators of MeitY for Product Innovation, Development, and growtH, a little more than a week after announcing that the government will help companies in the early stages.

The SAMRIDH programme is intended to provide cash support to startups while also assisting them in bringing together skill sets that would enable them to expand successfully. The newly formed SAMRIDH initiative aims to focus on the acceleration of around 300 start-ups over the next three years by providing them with client connections, investor connections, and other chances for worldwide expansion.

4. Pradhan Mantri Mudra Yojana

It was started in 2015, and within two years, more than 1.8 crore jobs were created as a result of MUDRA loans and company. More than 67 lakh loans of Rs 48,000 crore have been granted under the MUDRA scheme as of August 14th, 2020.

PM Modi announced the Pradhan Mantri Mudra Yojana, under which Micro Units Development and Refinancing Agency Banks, or MUDRA Banks, make low-interest loans to micro-finance organizations and non-banking financial institutions, which in turn make low-interest loans to startups and MSMEs.

As a result, the Pradhan Mantri Mudra Yojana is a one-of-a-kind fund of funds designed to encourage Indian businesses. The MUDRA initiative allows for loans of up to Rs 10 lakh.

5. Startup India Initiative

Startup India is the Government of India’s flagship project aimed at catalysing startup culture and creating a robust and inclusive ecosystem for innovation and entrepreneurship in India.

On January 16, 2016, India’s Prime Minister inaugurated the Startup India Initiative. The goal is to boost income and employment by giving entrepreneurial spirits wings.

The government provides tax breaks to entrepreneurs under this system, and as of June 3, 2021, approximately 50,000 startups had been recognised under this scheme in a little more than five years. This effort is being maintained by the Department of Industrial Policy and Promotion as a long-term project.

Furthermore, the general age limit for startups has been raised from two to seven years. Furthermore, the age limit for biotechnology enterprises is ten years from the date of establishment. It is one of the greatest government-sponsored startup programmes for businesses because it offers a number of benefits.

6. ASPIRE

ASPIRE- was established to provide a network of technology centres and incubation centres to accelerate entrepreneurship and to support startups for innovation in the agro-industry.

The scheme’s major goals are to:

  1. create new jobs and decrease unemployment
  2. Promote the culture of entrepreneurship in India
  3. District-level economic growth;
  4. Facilitating innovative business solutions for unmet social demands
  5. Promote innovation to boost the competitiveness of the MSME sector

The government has made ongoing attempts to improve the social and economic aspects of life in rural India, and one of the most popular initiatives sanctioned by the Indian government in this regard is ASPIRE. A Scheme for Promoting Innovation, Rural Industries, and Entrepreneurship (ASPIRE) is a Government of India project led by the Ministry of Micro, Small, and Medium Enterprises (MSME).

The aforementioned scheme was developed in 2015 to provide entrepreneurs with the necessary information to start their businesses and become employers. Because rural areas are home to 56 percent of the Indian population, the government has used this initiative to encourage entrepreneurship and innovation in the rural sector.

The ASPIRE scheme seeks to increase employment, reduce poverty, and promote innovation in rural India. The major goal, however, is to develop the agro-business industry. 

The Ministry of Micro, Small, and Medium Enterprises has attempted to stimulate economic development at the grassroots level. The scheme’s initial budget was Rs 62.5 crores for the period 2014-2016.

The ASPIRE scheme seeks to increase employment, reduce poverty, and promote innovation in rural India. The major goal, however, is to develop the agro-business industry. The Ministry of Micro, Small, and Medium Enterprises has attempted to stimulate economic development at the grassroots level. The scheme’s initial budget was Rs 62.5 crores for the period 2014-2016.

7. eBiz Portal

Infosys Technologies Limited (Infosys) is implementing eBiz under the guidance and aegis of the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, and Government of India. 

The goal of eBiz is to improve the country’s business environment by providing quick and easy access to Government-to-Business (G2B) services via an online platform. This will aid in the reduction of unnecessary delays in the different regulatory processes required to start and maintain a firm. 

In January 2013, eBiz launched the first electronic government-to-business (G2B) platform. The portal’s primary goal was to improve and develop the country’s business climate. Infosys created the eBiz Portal under a public-private partnership approach. It was intended to serve as a communication hub for Indian investors and business communities.

The portal had introduced 29+ services in five Indian states, namely Andhra Pradesh, Delhi, Haryana, Maharashtra, and Tamil Nadu. The administration also stated that more services will be added to the scheme over time.

However, after several rounds of discussions about shutting down the eBiz effort since July 2018, it was officially shut down due to low service integration. According to the 2020 updates, the government intends to resurrect eBiz-like platforms.

8. Ministry of Skill Development and Entrepreneurship

The Ministry is in charge of coordinating all Skill Development efforts across the country, bridging the gap between demand and supply of skilled labour, developing the vocational and technical training framework, skill up-gradation, the development of new skills, and innovative thinking not only for existing jobs but also for jobs that will be created.

Previously, the role of supporting entrepreneurship was delegated to various departments and government bodies. In 2014, the Prime Minister chose to allocate an entire ministry to developing this industry, believing that stronger government support was needed for skill development. In addition, the goal is to reach 500 million people by 2022 through gap funding and skill development activities.

In order to accomplish its goal of a “Skilled India,” the Ministry intends to skill on a wide scale at a rapid pace and with high standards.

It is supported in these initiatives by its functional arms, which include the Directorate General of Training (DGT), the National Skill Development Agency (NSDA), the National Council for Vocational Education and Training (NCVET), the National Skill Development Corporation (NSDC), the National Skill Development Fund (NSDF), and 38 Sector Skill Councils (SSCs), as well as 33 National Skill Training Institutes (NSTIs/NSTI(w)), approximately 15000 Industrial Training Institutes (ITIs) The Ministry also plans to collaborate with the current network of Skill Development Centers, colleges, and other field alliances. 

Collaborations with key Central Ministries, State governments, foreign organisations, business, and non-governmental organisations (NGOs) have also been launched for multi-level participation and more impactful Skill Development efforts.

9. Multiplier Grants Scheme (MGS)

The Multiplier Grants Scheme was established by the Department of Electronics and Information Technology (DeitY) (MGS). The purpose of this scheme is to foster collaborative R&D (Research and Creation) involving industry and academics/institutions for the invention of goods and packages.

 According to the plan, if the industry supports the R&D of items that can be marketed at the institutional level, the government will provide financial support that is up to twice as much as the amount provided by the industry. 

MGS fosters and accelerates the development of indigenous products and packaging. The government grants will be limited to a maximum of Rs 2 crores per project, with each project potentially lasting shorter than two years. For industrial groups, the cost would be Rs 4 crores over a three-year period.

The scheme’s primary goals are as follows:

  1. To establish, nurture, and strengthen links between industry and institutes; 
  2. To promote industry-oriented R&D at institutes; 
  3. To encourage and accelerate the development of indigenous products and packages; and
  4. To bridge the gap between R&D / Proof-of-concept and commercialization/globalization.

10. Dairy Processing and Infrastructure Development Fund (DIDF)

The Scheme intends to provide credit assistance to Eligible End Borrowers, which are State Dairy Federations, District Milk Unions, Milk Producers Companies, Multi-State Cooperatives, and NDDB subsidiaries across the country (EEBs). The scheme’s funding duration (2017-18 to 2019-20) will be amended to 2018-19 to 2022-23, and the payback period will be extended up to 2030-31, with a spillover into the first quarter of FY 2031-32.

The National Bank for Agriculture and Rural Development (NABARD) is India’s central development bank. In the Union Budget of 2017-18, the Government of India announced the establishment of the Dairy Processing and Infrastructure Development Fund under NABARD for the long-term benefit of farmers. This fund’s overall capital is Rs 8000 crores over a three-year period (i.e. 2017-18 to 2019-20)

Milk Unions, multi-state milk cooperatives, state dairy federations, milk-producing firms, and NDDB subsidiaries that match the project’s qualifying criteria can borrow from NABARD. The loan component would be 80% (maximum rate), with the ultimate borrower contributing 20%. (minimum rate).

Borrowers will be charged an annual interest rate of 6.5 percent on the loan. The repayment duration will be ten years. The respective state government would be the loan guarantor. Furthermore, if the borrower is unable to contribute his or her fair portion to the plan, the state government would step in.

The agriculture ministry’s departments received a total of Rs 1.31 lakh crore in the 2021 Budget, which was increased to Rs 1.32 lakh crore in the Union Budget of 2022. NABARD will allow the creation of a fund comprised of blended capital raised through the co-investment approach, which will finance farming-related agritech businesses and rural entrepreneurs.

Nirmala Sitharaman, India’s Finance Minister, also stated that the usage of ‘Kisan drones’ will be encouraged in order to assist in proper crop assessment, digitization of land records, and spraying of insecticides and nutrients.

11. Credit Guarantee Fund Trust for Micro and Small Entreprises (CGTMSE)

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was established jointly by the Ministry of Micro, Small, and Medium Enterprises (MSME), the Government of India, and the Small Industries Development Bank of India (SIDBI) to facilitate the flow of institutional credit to Micro and Small Enterprises (MSEs). 

(CGTMSE) was established by the government of India and went into operation on January 1, 2000, to provide zero-collateral business loans to micro-level firms, small-scale industries, and startups. It enables firms to obtain loans at highly discounted interest rates without the need for collateral.

The government, in collaboration with SIDBI (Small Industries Development Bank of India), gives a maximum of Rs 1 crore under this scheme for establishing new firms as well as rehabilitating existing ones. This loan is primarily intended for manufacturing units and can be obtained in the form of working capital or a term loan.

Credit Guarantee Scheme (CGS) was developed to strengthen the credit delivery system and facilitate credit flow to the MSE sector, create access to financing for the unserved, under-served, and impoverished, and make funding available from conventional lenders to new generation entrepreneurs.

During the fiscal year 2020-21, a total of 8.36 lakh guarantees worth Rs. 36,954 crore (CGSI+NBFC+CGSSD) were approved. In addition to the foregoing, CGTMSE has been conducting a unique MoHUA scheme known as “PM SVANidhi,” under which 14.38 lakh guarantees totaling Rs.1,435 crore have been approved. As a result, overall approvals for the fiscal year totaled Rs 38,389 crore.

Furthermore, as of March 31, 2021, a total of 51.4 lakh accounts had been granted guarantee clearance for a total of Rs.2.59 lakh crore (CGSI+NBFC+CGSSD). (This excludes the PMSVANidhi-approved guarantee of 14.38 lakh rupees, totaling to Rs.1,435 crore.)

With an increased and dedicated focus on MSE lending, CGTMSE has undergone transformative reforms since 2017 to broaden the scope of its schemes to previously untapped segments such as partial collateralized loans, retail trade, and among previously untapped lenders such as NBFCs, Small Finance Banks, and Scheduled Co-Operative Bank. 

To attain this magnitude, CGTMSE has utilized technology, and all processes, including NPA marking and claim settlements, are conducted online. It is the trust’s ongoing effort to maintain its technology up to date in order to improve efficiency and provide greater client service and satisfaction.

12. Stand Up India Scheme- For Financing SC/ST and/or Women Entrepreneurs

Stand-Up India is a well-known government of India scheme for financing SC/ST and/or female entrepreneurs. According to the initiative, bank loans ranging from 10 lakhs to 1 crore can be obtained by at least one borrower from a Scheduled Caste (SC) or Scheduled Tribe (ST) and at least one woman from each bank brand in order to establish a greenfield firm. The greenfield firm could be in manufacturing, services, or trading. In the event of non-individual firms, at least 51 percent of the shareholding and controlling shares must be held by an SC/ST or a woman entrepreneur.

The Stand-Up India scheme aims to provide bank loans of up to one crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one female borrower per bank branch for the establishment of a greenfield firm. This business could be in manufacturing, services, agriculture-related operations, or trading. In the event of non-individual firms, at least 51 percent of the shareholding and controlling stake must be held by an SC/ST or female entrepreneur.

13. Drone Shakti

On February 1, 2022, the Indian government launched Drone Shakti, as announced by Union Finance Minister Nirmala Sitharaman. This new program is intended to encourage startups to develop new drone applications, such as drones-as-a-service (DaaS). Furthermore, the finance minister claimed that the government would encourage farmers to adopt drones. 

Sitharaman emphasized farmers’ use of drones to assess the land, spray insecticides, and digitize land records. Furthermore, the government stated that it is fully supportive of the drone technology startup in India. It just launched 100 Kisan Drones in various sections of the country to spray insecticides and other chemicals.

To promote made-in-India drones, the Indian government banned the import of drones with immediate impact. According to the Ministry of Civil Aviation, this does not apply to the import of drones for research and development, defense, or security purposes (MoCA).

According to MoCA, the drone manufacturing industry will get over Rs 5,000 crore in investment over the next three years, which will include drones and drone components. The yearly turnover of the drone manufacturing industry’s sales will increase from Rs 60 crore in FY 2020-21 to Rs 900 crore in FY 2023-24

The Drone Shakti program aims to promote and enable the use of drones as a service through companies. The government’s actions will encourage ‘Drone Shakti’ through various applications and for ‘Drone-As-A-Service (DrAAS).’ The government has also approved the use of drones in agriculture, which includes spraying insecticides and nutrients with drones.

The government’s effort, together with the Production-Linked Incentive (PLI) scheme for drones, is designed to boost domestic drone manufacturing. It will also provide opportunities for skilled teenagers to find work. According to estimates, the Indian drone industry is predicted to develop at a CAGR of 20.9 percent between 2020 and 2026.

14. Sub-Mission on Agricultural Mechanization (SMAM)

In 2014-15, the Ministry of Agriculture and Farmers Welfare launched a Sub-Mission on Agricultural Mechanization (SMAM) with the goal of expanding farm mechanization to small and marginal farmers, as well as to regions and difficult areas with limited farm power availability.

Improved agricultural implements and machinery are essential inputs for modern agriculture that increase crop productivity while reducing human drudgery and cultivation costs. Mechanization also aids in improving the utilization efficiency of other inputs, making it one of the most important segments of the agricultural sector for increasing farmer income and the agricultural economy’s growth.

15. Zero Defect Zero Effect (ZED) Certification Scheme

The scheme is a comprehensive drive to raise MSMEs’ awareness of ZED manufacturing, motivate them to assess their businesses for ZED, and support them. Following a ZED assessment, MSMEs can significantly reduce waste, increase productivity, expand their market as IOPs, become vendors to CPSUs, have more IPRs, develop new products and processes, and so on.

The government of India launched the Zero Defect Zero Effect (ZED) scheme with the goal of raising awareness about ZED manufacturing among MSMEs, motivating them to assess their businesses for ZED, and supporting them.

ZED can be defined as an integrated and holistic certification and assistance scheme that allows Micro, Small, and Medium Enterprises (MSMEs) to work towards improving their processes and move up the ZED maturity evaluation method.

16. Credit Linked Capital Subsidy for Technology Upgradation (CLCSS)

The Scheme’s goal is to facilitate technology upgradation in MSEs by providing a 15% upfront capital subsidy (on institutional finance of up to Rs 1 crore availed by them) for the induction of well-established and improved technology in the 51 approved sub-sectors/products.

In other words, the main goal is to upgrade their plant and machinery with cutting-edge technology, with or without expansion, and also for new MSEs that have established their facilities with appropriate eligible and proven technology that has been duly approved under scheme guidelines.

The revised scheme aims to promote technology advancement by providing a 15% up-front capital subsidy to MSEs, including tiny, khadi, village, and coir industrial units, on institutional finance obtained for the incorporation of well-established and improved technologies in specified sub-sectors/products approved under the scheme.

17. Sub-Mission on Agricultural Mechanization (SMAM)

In 2014-15, the Ministry of Agriculture and Farmers Welfare launched a Sub-Mission on Agricultural Mechanization (SMAM) with the goal of expanding farm mechanisation to small and marginal farmers, as well as to regions and difficult areas with limited farm power availability.

According to the most recent updates, as of April 2, 2022, the Indian government announced that it would provide financial assistance for the full cost of the drones (100%) as well as the contingent expenditure under SMAM.

According to Union Minister Narendra Singh Tomar’s statement in the Rajya Sabha on April 1, 2022, this has already been extended to the Indian Council of Agricultural Research, Krishi Vigyan Kendra (KVK), and State Agricultural Universities (SAUs) for its demonstration on farmer’s fields.

18. Design Clinic Scheme for Design Expertise

The Design Clinic Scheme for Creative Skills is a scheme announced by the Indian government to assist India’s MSME manufacturing sector. The government intends to instill design expertise in MSMEs because it believes that design and innovation are essential for the growth of a brand and that MSMEs should develop a design-centric approach to fuel their startups.

The government of India announced that under this scheme, the government will provide around Rs 60,000 for attending design training and up to Rs 3.75 lakhs, or 75% of the cost of conducting the seminar, where entrepreneurs and their team members can learn about design theories, interact with design veterans, create a network, and put them into practice.

Design Clinic Scheme for MSME Manufacturing Design Expertise

  1. To create a sustainable design ecosystem for the MSME sector through continuous learning and skill development;
  2. To bring the industrial design fraternity closer to the MSME sector;
  3. To develop an institutional foundation for the industry’s design requirements;
  4. To raise awareness of the value of design and to establish design learning in the MSME; and
  5. To increase the competitiveness of local products and services through design

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