Key Government Schemes for Startups in India

Do you at times feel that you have a great business idea which you can convert in a big business but you don’t have enough funds to start-off with? If the answer is “Yes” then government of India provides you solution for this. They offer various government schemes for startups in India to promote entrepreneurship and employment in India

The initiative could offer benefit in terms of tax exemptions, easing the process of registration, funding the startups etc. The initiative could be from central government as well as state government. For schemes offered by central government one can apply online through startup India portal while for state run programs, application may be made through respective state portal as applicable.

Let’s understand popular government schemes to assist the startups financially

1. Atal Innovation Mission (AIM)

Atal Innovation Mission launched by Niti Ayog for the purpose of promoting innovation in Indian industry.

Benefits:

• Financing up to INR 10 crore for a period of 5 years to each Atal Incubation Centre (AIC) in subject specific areas such as agriculture, health, transport education etc.
• Provides access to investors, mentors, networking opportunities etc.

Key Eligibility Criteria

• Applicant to have at least 10,000 sq. ft area to qualify for financial support under this scheme
• Emerging organisations having innovative solutions in health, agriculture, transportation, education etc.

2. Startup India Initiative

Government introduced Startup India Initiative to encourage new business by addressing common challenges that new/potential entrepreneurs face like tax burden, compliance burden, lack of mentorship etc.

Benefit(s):

Tax holiday i.e.100% tax rebate for 3 consecutive years within first 10 years of incorporation.

Key Eligibility Criteria:

1. Entities registered as Private Company, Partnership Firm, LLP within last 10 years
2. Annual turnover should not exceed INR 10 crore in any year since incorporation
3. Focus should be on innovation, development or improvement of product, process or services
4. Company should not be form by splitting or restructuring of an existing company

3. Startup India Seed Fund Scheme (SISFS)

The Startup India Seed Fund Scheme (SISFS) launched by the Department for Promotion of Industry and Internal Trade (DPIIT) in April 2021 with a budget of INR 945 Crore.

The purpose of this scheme is to provide financial assistance to startups for Proof of Concept, prototype development, product trials and market-entry.

This scheme supports the business till the stage wherein it can raise funds from angel investors, venture capitalists, banks etc.

Benefits:

• Up to INR 20 lakh milestone-based funding for Proof of Concept, Prototype Development or product trials
• Up to INR 50 lakhs for market entry, commercialization and scaling up.

Key Eligibility Criteria:

1. The entity must not have received funds of more than INR 10 lakhs from any other central or state govt. schemes.
2. Startup incorporated within last 2 years.
3. Indian promoter’s shareholding should be at least 51%

4. Credit Guarantee Scheme for Startups

The scheme was launched by the DPIIT, Ministry of Commerce and Industry, Government of India through National Credit Guarantee Trustee Company Limited (NCGTC) on debt facilities extended by banks to Startups.

NCGTC provides transaction-based guarantee cover to Banks. Additionally, banks can obtain collateral security from the borrower. Further, NCGTC guarantee limits to outstanding limit less the value of collateral security.

Under this scheme, guarantee fee @ 2% per annum on sanction amount is chargeable. For units in North-eastern Region and woman entrepreneurs, the guarantee fee is 1.50% per annum.

Benefit(s):

Guarantee of up to INR 10 crores per borrower

Key Eligibility Criteria:

• Startups that have reached the stage of stable revenue stream are eligible to apply
• Banks will verify as well as certify for the purpose of credit guarantee cover
• Real Estate Projects not covered under this scheme
• Startup should neither be in default towards any institution or nor an NPA as per RBI guidelines

5. Startup India Scheme

Startup India Scheme is to finance SC/ST and/or women entrepreneurs.

The objective is to provide at least one loan to SC/ST and at least one loan to woman entrepreneur, per bank branch, wherein the loan size is between INR 10 lakhs to INR 1 crore, under this scheme.

Benefit(s)

Bank loan between INR 10 lakhs to INR 1 crore for working capital and term loan.

Key Eligibility Criteria

• The loan is given to setup greenfield enterprise that may be in manufacturing, services, Agri-allied activities or trading sector.
• Startup should be owned by SC/ST and/or Women entrepreneur. Further, in case of non-individual entity, at least 51% shareholding should be with SC/ST/Women entrepreneur.
• SC/ST/Women entrepreneur must be above 18 years in age.

We at Onlinecorpserv.com have a team of expert to guide you through the process.  Hence, you can contact us for any government schemes for startups in India. We are happy to help you.