Government raises fund limits to seed start-ups

About 2,000 ventures have been incubated of which 950 have ‘graduated’

The Department of Science and Technology (DST) may invest up to Rs. 1 crore in every fresh start-up that it will seed from the next financial year, Ashutosh Sharma, Secretary, DST said.

The DST’s outlay for seeding has been increased four-fold—from Rs. 40 crore to Rs.180 crore—in the coming financial year to help fund the increased investment, Mr. Sharma told The Hindu .

Currently, the maximum permissible investment is Rs.50 lakh, Mr. Sharma said.Promoting start-ups has been among the government’s major promises with Prime Minister Narendra Modi frequently asking India’s youth to become more entrepreneurial.

Start-up initiatives

On 16 January, Mr.Modi addressed a massive gathering of entrepreneurs from India and abroad and outlined several initiatives to energise India’s start-up ecosystem including making the profits of fledgling units tax-free for three years, Rs.10,000 crore of government funding over four years, no visits by labour inspectors for three years and quicker and subsidised patent clearances.

Some of these sops found mention in the Union Budget.The DST funds start-ups by routing them through so-called technology business incubators (TBI), which are typically located in universities.

As of 2014 — the latest available report — 68 Science Technology and Entrepreneurship Parks (STEPs) and TBIs are located across India including at the Indian Institutes of Technology, the National Institutes of Technology and state universities such as the Himachal Pradesh University, Shimla and the Adhiyamaan College of Engineering, Hosur. “By 2020, we hope to fund at least 500 impactful start-ups, “said H.K. Mittal, who heads the TBI programme in DST, “and seed 15,000 of them by 2020.”

According to the latest figures from the science ministry, about 2000 ventures have been incubated of which 950 have “graduated,” meaning they have reached a certain size and have a significant support from investors.

Some of the incubators, said Mr.Sharma, who are known to have a successful track record in incubating companies will be deemed “World Class Incubators” and can annually avail of Rs. 10 crore for five years.