Home / FEATURED / Big Story / ‘Big Money For Small Cities’, Modi’s Ambitious ‘Startup Initiative’ Is Ready To Rock

‘Big Money For Small Cities’, Modi’s Ambitious ‘Startup Initiative’ Is Ready To Rock

After facing much criticism for inaction in its first year, the Narendra Modi government’s Startup India programme picked up the pace in 2017.

And for 2018, it has set ambitious targets, from more funding to a state-wise ranking based on startup-related initiatives, and a push for woman entrepreneurship.

For starters, there will be an injection of more money into the Fund of Funds for Startups (FFS) that was set up in January 2016.

By March this year, the department of industrial policy and promotion (DIPP) will plow more money into the FFS, bringing the total investment amount up to Rs2,200 crore ($346 million). So far, the FFS, which invests in startups via the Small Industries Development Bank of India (SIDBI), has received a mere Rs800 crore of the Rs10,000 crore it was promised.

Up to 75 startups have received funding from this corpus to the tune of Rs318 crore, DIPP said.

How far we’ve come
The Startup India programme, launched with much fanfare two years ago, hardly saw any action in its first year, on-boarding just around 500 startups throughout 2016.

However, the latest figures shared by DIPP show that 2017 was a year of strong growth: Up to 6,337 startups were recognised by December 2017, a significant 12-fold increase from a year ago.

How many startups recognised at the start of the programme are still around and how many have been dissolved is not recorded under the initiative.

Besides providing equity funding for mature startups through the FFS, the government also removed some obstacles faced by up-and-coming players by doling out tax benefits and cutting back on red tape, among other things.

Here’s the latest data from DIPP on the various ways in which entrepreneurs have benefited from this programme:

Tax incentives: Over the last two years, the DIPP has extended income tax exemptions to 78 startups. These companies are able to avail a tax holiday for any three consecutive years out of seven years from the date of incorporation.

Protecting patents: Earlier a cumbersome and expensive procedure, securing intellectual property rights has become a time- and cost-efficient process. Not only does the processing of startups’ applications get expedited, 975 beneficiaries have received an 80% rebate from the government on their patent applications.

Startup India Hub: The virtual platform connecting entrepreneurs, investors, mentors, etc., has 22,000 registered users. Since its launch in July 2017, it has resolved upwards of 78,000 queries. New entrepreneurs don’t have to run to 10 different places to find solutions to their problems—from information exchange to guidance, the one-stop shop offers it all. The learning and development module of the Startup India programme, which offers free entrepreneurship courses, has been used by 1,91,000 individuals so far.

Student networks: Startup India’s network includes over 941 tinkering labs in schools, eight research parks, 11 technology business incubators, 15 startup centres, and 50 bio-incubators. The Campus Connect programme conducts direct outreach for aspiring student entrepreneurs across educational institutes, including Shri Ram College of Commerce (SRCC) Delhi, Indian Institute of Technology (IIT), Roorkee, and Institute of Management Technology (IMT), Ghaziabad. By tapping the students young, the government is making sure their ideas don’t flounder just because they don’t know where to go and who to reach out to.

2018: Healthy competition
Prior to the launch of Startup India, a mere four states and union territories (UTs) had startup policies. Now, the number is up to 18, DIPP data show. Consequently, startups, which were earlier concentrated in Bengaluru, the Delhi-National Capital Region (NCR), and Mumbai, are now booming in upcoming hubs like Jaipur, Pune, and Ahmedabad.

There is a lot of buzz in the state startup ecosystem, with states like Rajasthan and Gujarat coming up with angel networks, (and) states like Uttar Pradesh launching dedicated startup funds, as per DIPP. A lot of tier II, III cities are also expected become the hotbeds of innovation in next few years.

In 2018, Startup India is also officially launching a ranking of states and union territories on the basis of their initiatives. DIPP believes that the ranking exercise will trigger a healthy competition, providing a better ecosystem support to startups.

This could go some way in fixing the dearth of female entrepreneurship. Ranking and rewarding states that nurture more woman founders at the local level is likely to promote inclusiveness.

Currently, of the 6,300 startups recognised by Startup India, only 2,488 have a woman as founder, director, or partner. But this is likely to trend up as the government takes more initiatives to support women, such as the recent Global Entrepreneurship Summit. #KhabarLive

About Ahssanuddin Haseeb

Leave a Reply

Your email address will not be published. Required fields are marked *