The Indian government is actively working towards creating a strong startup ecosystem in the country through various initiatives. One such initiative is the establishment of a dedicated ministry or department that supports and promotes new businesses.
In addition, the Central Government of India has introduced multiple startup schemes to provide financial assistance to emerging startups and foster entrepreneurship in the country. These schemes aim to bolster the growth of startups by providing them with the necessary resources and support to thrive in the competitive business environment.
“Take up one idea. Make that one idea your life, think of it, dream of it, live on that idea, let the brain, muscles, nerve, every part of your body be full of that idea and just leave every other idea alone. This is the way to success.”
- Mr Narendra Modi, Prime Minister of India
Here is a list of government schemes launched to develop and encourage entrepreneurship in India.
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The 4th of July 2020 has been quite a historic day for the Indian startups and the gear that the startups of India have got after that day because it is on the same day that the Prime Minister of India, Narendra Modi has announced the launch of the "Aatmanirbhar Bharat App Innovation Challenge".
In addition to this, the Indian government has also launched several government schemes for startups in India, which aim to provide financial assistance, mentorship, and support to the budding entrepreneurs of the country. These schemes include the Startup India Scheme, Standup India Scheme, and many more.
With this launch, PM Modi urged the startups of India to come together and develop ‘Made in India’ applications that will facilitate not only the people of India but the whole world. In his tweet, PM urged all the tech and startup community to come forward and develop world-class mobile applications under the challenge.
Launched on 16th January, 2016, the Startup India Initiative has rolled out several programs with the objective of supporting entrepreneurs, building a robust startup ecosystem and transforming India into a country of job creators instead of job seekers. These programs are managed by a dedicated Startup India Team, which reports to the Department for Industrial Policy and Promotion (DPIIT).
Under the Startup India initiative, eligible companies can get recognised as Startups by DPIIT, in order to access a host of tax benefits, easier compliance, IPR fast-tracking & more. Over 96,000 startups are registered with the Department for Promotion of Industry and Internal Trade (DPIIT) till March 2023.
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The Startup Leadership Program, as the name indicates, is built to empower outstanding founders and innovators. Launched in 2016 in India, SLP is designed as a "highly selective 6-month world-class training program and lifetime network".
This startup initiative first began in Boston in 2006, and has spread its wings in over 14 countries and 28+ cities, and has helped 2000+ startups, influenced 3600+ entrepreneurs, and has raised around $2.4 bn+ in funds to date. In addition to programs like SLP, there are also various government initiatives that offer help for business start-ups.
The government has made continuous efforts to improve the social and economic aspects of life in rural areas of India and one of the most popular schemes that the Indian government has sanctioned in this regard is ASPIRE. A Scheme for Promotion of Innovation, Rural Industries and Entrepreneurship (ASPIRE) is a Government of India initiative, promoted by the Ministry of Micro, Small and Medium Enterprises (MSME).
The mentioned scheme was launched in 2015 to offer proper knowledge to the entrepreneurs to start with their business and emerge as employers. Since 56% of the Indian population lives in rural areas, the government has promoted entrepreneurship and innovation in the rural sector with this scheme. The ASPIRE scheme aims at increasing employment, reducing poverty, and encouraging innovation in rural India.
However, the main idea is to promote the agro-business industry. The Ministry of Medium and Small Enterprises has tried to boost economic development at the grassroots level. The total budget of the scheme initially was INR 200 crores for the period of 2014-2016.
Micro Units Development Refinance Agency (MUDRA) banks have been created to enhance credit facilities and boost the growth of small businesses in rural areas. The government has introduced this scheme to support small businesses in India. In 2015, the government allocated INR 10,000 crores to promote startup culture in the country.
The MUDRA banks provide startup loans of up to INR 10 lakhs to small enterprises, and businesses, which are non-corporate, and non-farm small/micro-enterprises. MUDRA comes under Pradhan Mantri Mudra Yojana (PMMY) which was launched on 8 April 2015.
The loans have been categorized as— Shishu (up to Rs 50,000), Kishore (between Rs 50,000 and Rs 5 lakh) and Tarun ( Rs 10 lakh)."As of March 24, 2023, about Rs 23.2 lakh crore has been sanctioned in 40.82 crore loan accounts," stated Finance Minister Nirmala Sitharaman." Additionally, there are various other initiatives and programs that offer startup support from government.
Chunauti, the pandemic-influenced scheme, is a government of India initiative named CHUNAUTI'(Challenge Hunt Under NGIS for Advanced Uninhibited Technology Intervention), to invite Startups to develop solutions for problems amid pandemic. Launched in August 2020, Chunauti is a start-up challenge initiative under the Next Generation Incubation Scheme (NGIS).
The government has chosen a budget of over INR 95 crores over a period of 3 years for this program. This programme aims to identify around 300 startups working in identified areas.
The startups selected through the challenge would be provided incubation support, mentorship, all relevant facilities, as well as funding support such as cloud credits from leading third-party service providers, seed funding of up to INR 25 lakhs, as well as INR 10,000 in monthly monetary support to each intern (startup in pre-incubation) for a period of six months to help them evolve their business plan and solution around the proposed idea.
With the objective to build a strong Eco-system for nurturing innovation and Startups in the country, these initiatives are introduced. The government is also taking steps to reduce the hurdles in the path of the startups. India seems to be going towards the era of entrepreneurship, as India ranks 63 in ease of doing business around the world.
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Qualcomm, the mobile chipset manufacturing giant has partnered with the Centre for Development of Advanced Computing (C-DAC) to conduct the Qualcomm Semiconductor Mentorship Program (QSMP) 2022 for startups that are working in the Indian semiconductor space. C-DAC is the research and development organisation of the Ministry of Electronics and Information Technology (MeitY).
Qualcomm India is planning to provide mentorship, technical training, and industry outreach opportunities to the Indian startups that hail from the semiconductor space with this program. As per the news dated April 30, 2022, Qualcomm India will shortlist around 10 Indian startups for QSMP 2022. Each of these startups will be paired with a Qualcomm India leader for mentorship on product planning and development.
Digital India Bhashini was an initiative that PM Narendra Modi announced along with a slew of other initiatives like Digital India GENESIS and Indiastack.global, to boost the Indian startups, as he inaugurated the Digital India week 2022 in Gandhinagar on July 4, 2022.
The Digital India Bhashini scheme aims to help the Indians with easy access to the internet and digital services in vernacular languages.
Digital India GENESIS is another scheme that Modi launched on July 4, 2022. The "GENESIS" in the scheme implies "Gen-next Support for Innovative Startups". This is a government of India scheme that is launched to empower the national deep-tech startups.
The total budget of this programme and the Digital India Bhashini is disclosed, which is around Rs 750 crore.
The government of India launched a startup challenge on March 12, 2022, which was announced by Union Minister Hardeep Singh Puri, where selected startups of India will get a grant of Rs 20 lakhs in three tranches of Rs. 5 lakh, Rs. 7 lakh and Rs. 8 lakh respectively on fulfilling certain conditions/ milestones of work as per their project proposal.
While announcing the water startup initiative at an event in New Delhi, under Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0, Minister Puri declared that this initiative the water sector startups and lead them towards growth "through innovation and design that will drive sustainable economic growth and generate employment opportunities."
The task of promoting entrepreneurship was earlier given to different departments and government agencies. In 2014, the Prime Minister decided to dedicate an entire ministry to building this sector as he felt that skill development required greater push from the government's side.
Furthermore, the idea is to reach 500 million people by the year 2022 through gap-funding and skill development initiatives. These schemes include the National Apprenticeship Promotion Scheme (NAPS), MUDRA loans under the Pradhan Mantri MUDRA Yojana (PMMY), Deendayal Antyodaya Yojana National Rural Livelihoods Mission (DAY-NRLM) / Deendayal Antyodaya Yojana
National Urban Livelihoods Mission (DAY-NULM), Mahatma Gandhi National Employment.
In the budget session of 2016, the Indian government announced the Atal Innovation Mission (AIM) is a flagship initiative set up by the NITI Aayog; the name coming from Atal Bihari Vajpayee, the former Prime Minister of India.
Atal Innovation Mission was established to create a promotional platform involving academicians and draw upon national and international experiences to foster a culture of innovation, research, and development. The government allocated AIM around INR 150 crores in the year 2015.
AIM's goals include building 10,000 Atal Tinkering Labs (ATLs) and 101 Atal Incubation Centers (AICs), as well as sponsoring 200 businesses through the Atal New India Challenges until March 2023.
eBiz was the first electronic government-to-business(G2B) portal, which was founded in January 2013. The main purpose of the portal was to transform and develop a conducive business environment in the country. eBiz Portal was developed by Infosys in a public-private partnership model. It was designed as a communication centre for investors and business communities in India.
The portal had launched 29+ services in over 5 states of India, viz., Andhra Pradesh, Delhi, Haryana, Maharashtra, and Tamil Nadu. The government also announced that it will add more services to the scheme with time. However, after rounds of talks about the shutting down of the eBiz initiative since July 2018, it was finally shut down on account of low service integration. The government is again planning to revive eBiz-like portals, according to the 2020 updates.
As of March 2023, GeM had over 63,000 government buyer organisations, over 6 crore sellers and service providers offering a wide range of products and services. Currently, government departments, ministries, public sector units, state governments, and central armed police forces are allowed to carry out transactions through this portal.
National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India. The Government of India announced the creation of the Dairy Processing and Infrastructure Development Fund under NABARD in the Union Budget of 2017-18 for the sustained benefit of farmers. The total corpus for this fund is INR 8000 crores over a period of 3 years (i.e. 2017-18 to 2019-20)
Milk Unions, multi-state milk cooperatives, state dairy federations, milk-producing companies, and NDDB subsidiaries meeting the eligibility criteria under the project can borrow loans from NABARD. The loan component would be 80% (maximum rate) with the end borrower's contribution at 20 % (minimum rate). Borrowers shall get the loan at an interest rate of 6.5% per annum. The period of repayment will be 10 years. The respective state government will be the guarantor of loan repayment. Moreover, if the borrower is not able to contribute his or her share in the scheme, the state government shall step in.
The departments that come under the agriculture ministry were allocated a total of Rs 1.31 lakh crore in the 2021 Budget, which has been increased to Rs 1.32 lakh crore in the Union Budget of 2022. A fund consisting of blended capital that will be raised under the co-investment model will be facilitated via NABARD, which will finance the agritech startups and rural enterprises that are relevant to farming. The Finance Minister of India, Nirmala Sitharaman further added that the use of ‘Kisan drones’ will see a new encouragement to facilitate effective crop assessment, digitization of land records, and the spraying of insecticides and nutrients.
The Department of Electronics and Information Technology (DeiTY) has launched a scheme entitled “Support for International Patent Protection in E&IT (SIP-EIT)”. This scheme provides financial support to MSMEs and Technology Startups for international patent filing.
The SIP-EIT scheme offers several features and benefits to applicants in the Information Communication Technologies and Electronics sector who are seeking financial support for international patent filing.
Under this scheme, a maximum reimbursement limit of INR 15 lakhs per invention or 50% of the total charges incurred in filing and processing a patent application, whichever is lesser, is provided. This can help reduce the financial burden on applicants and encourage innovation in these industries.
Another advantage of the SEP-EIT scheme is that it can be applied at any stage of international patent filing, providing flexibility to the applicant.
Department of Electronics and Information Technology (DeitY) started the Multiplier Grants Scheme (MGS). This scheme aims to encourage collaborative Research & Development (R&D) between industry and academics/institutions for the development of products and packages.
Under the scheme, if the industry supports the R&D of products that can be commercialized at the institutional level, the government shall provide financial support which will be up to twice the amount provided by the industry. MGS promotes and expedites the development of aboriginal products and packages. The government grants would be limited to a maximum amount of INR 2 crores per project and the duration of each project could considerably be less than 2 years. It would be INR 4 crores and 3 years for industry associations.
While the Multiplier Grants Scheme is developed keeping entrepreneurs and start-ups in mind, various business industries can be eligible based on their intentions.
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE ) was set up by the government of India and had been put into effect from 1st January 2000 onwards to provide business loans to micro-level businesses, small-scale industries, and startups with zero collateral.
It allows businesses to avail of loans at highly subsidized interest rates without requiring security. By working along with SIDBI (Small Industries Development Bank of India), the government provides a maximum amount of up to INR 100 lakhs under this scheme for boosting new enterprises as well as rehabilitating the existing ones. Primarily meant for manufacturing units, this loan can be availed in the form of working capital or a term loan.
On March 30, 2023, the Credit Guarantee Fund Trust for Micro and Small Businesses (CGTMSE) corpus was injected with a value of Rs. 8,000 crores. The CGTMSE has announced recommendations for lowering the annual guarantee cost for loans up to Rs. 1 crore from a maximum of 2% per year to as low as 0.37% per year.
The Software Technology Park (STP) of India was set up in 1991 as an autonomous society under the Ministry of Electronics and Information Technology (MeitY). It is a totally export-oriented scheme for the development and export of computer software. This includes the export of professional services using communication links or media.
The scheme is unique in its nature as it focuses on only one sector, i.e., computer software. The scheme integrates the government concept of "100% Export Oriented Units" (EOU), "Export Processing Zones" (EPZ), and the concept of Science Parks or Technology Parks operating elsewhere in the world. The sales in the Domestic Tariff Area (DTA) shall be permissible for up to 50% of the export in value terms. STP gives total depreciation on capital goods over a period of five years.
Small Farmer’s Agri-Business Consortium (SFAC) has launched the Venture Capital Assistance (VCA) scheme for the welfare of farmer-entrepreneurs and to develop their agri-business.
The scheme is approved by the banks and financial institutions regulated by the RBI. It intends to provide assistance in the form of term loans to farmers so that the latter can meet the capital requirements for their project's implementation. VCA promotes the training and nurturing of agri-entrepreneurs.
The quantum of the loan will be 26% (40% for hilly regions) of the promoter’s equity. The maximum amount of loan provided under this scheme will be INR 50 lakhs. For the North-East region, hill states(Uttarakhand, Jammu and Kashmir) in all these cases in any part of the country where the project is promoted by a registered farmer producer organisation, the quantum of venture capital are lower than 40% of the promoter's equity, Rs 50.00 lakhs. In March 2023 Finance Minister Sitharaman launches a fund to encourage agri startups, increases the credit target to 20L cr. In addition to the VCA scheme, there are several other government schemes for startups in India that aim to provide financial assistance, resources, and support to budding entrepreneurs.
To build reliance on non-conventional sources of power, the government of India has decided to set up 40,000 MWp of Grid-Interactive Rooftop Solar PV Plants in the next five years. These rooftop solar PV plants will be set up in residential, commercial, industrial, and institutional sectors in the country and shall range from 1 kWp to 500 kWp in terms of capacity.
Such rooftop plants are economically viable since they can produce electricity using solar energy at about INR 7 per kWh without any subsidy. The government also provides a subsidy of 15% on these plants to the associations or individual companies, making the scheme even more lucrative.
NewGen IEDC is an initiative launched by the National Science and Technology Entrepreneurship Development Board under the Department of Science and Technology, Government of India. The initiative aims to inculcate the spirit of innovation and entrepreneurship among the Indian youth. It also endeavours to support and encourage entrepreneurship through guidance, mentorship, and support.
NewGen IEDC is a five-year programme that would be implemented in educational institutions. It will support up to 20 new projects. Financial assistance would be provided to the selected institutions for the establishment of NewGen IEDC, including non-recurring (as one-time establishment costs) of up to Rs. 25 lakhs and recurring expenditures (Project Development Cost, Travel, Training, and Contingencies, etc.) of up to Rs. 10 lakhs for five full operational years.
The Single Point Registration Scheme (SPRS) was launched in 2003. It is managed by the National Small Industries Corporation (NSIC). NSIC registers all Micro & Small Enterprises (MSEs) in India under the Single Point Registration Scheme to enable them to participate in government purchases.
Enterprises are classified as Micro, Small, or Medium based on the limit of investment. Both Micro and small businesses have varied criteria and registration requirements under SPRS. Micro Businesses - Rs 3000 for up to Rs 100 lakh in revenue. Small Businesses - Rs 5000 for a turnover of up to Rs 100 lakh. Micro Businesses - Rs 3000+ Rs 1500 for every additional Rs 100 lakh in revenue.
M-SIPS was announced in July 2012 by the government of India has approved a special incentive package to promote large-scale manufacturing in the Electronic System Design and Manufacturing (ESDM) sector. The scheme is called the Modified Special Incentive Package Scheme (M-SIPS).
Under M-SIPS, the Indian government will provide a subsidy of 20% on capital investments in special economic zones (SEZs) and 25% on capital investments in non-SEZs for individual companies. It also provides the reimbursement of CVD/excise on capital equipment for non-SEZ units. It provides Incentives for a period of 5 years from the date of approval of the application. Reimbursement of central taxes and duties is also provided for high technology and high capital investment units.
Stand-Up India was launched by the government of India on 5 April 2016 for financing SC/ST and/or women entrepreneurs. According to the scheme, bank loans between 10 lakhs to 1 crore can be borrowed by at least one Scheduled Cast (SC) or Scheduled Tribe (ST) borrower and at least one woman per bank brand to set up a greenfield enterprise. The greenfield enterprise may be based out of manufacturing, services or the trading sector. In the case of non-individual enterprises, it is mandatory that an SC/ST or a woman entrepreneur holds at least 51% of the shareholding and controlling stakes.
Achievements (as on March 21, 2023)Rs. 40,710 crore has been sanctioned under Stand Up India Scheme to 180,636 accounts and 33,152 crore has been sanctioned to women under Stand Up Indin Scheme.
The government of India launched the famous Extramural Research (EMR) funding scheme via SERB to help academic institutions, research laboratories, and other R&D organizations carry out their basic research in all frontier areas of Science and Engineering. Founded just after the establishment of the Science and Engineering Research Council (SERC), this scheme is one of the oldest on the list and still quite a relevant one even after more than four decades of its existence.
This scheme encourages emerging and eminent scientists in the field of science and engineering for an individual-centric competitive mode of research funding. Only the name Extramural Research (EMR) has now been renamed to Core Research Grant (CRG) because the scheme provides core research support to active researchers.
The High Risk and High Reward Research is a scheme launched by the Indian government to support and invite new proposals and ideas that have the potential to usher a paradigm-shifting influence on the Science and Technology domains. This funding focuses on the new proposals, which might be conceptually new and risky but are expected to have a paradigm-shifting influence on the S&T, in terms of formulating new hypotheses or scientific breakthroughs, which might help in the emergence of new technologies.
Typically, financing is granted for three years. In rare situations, as determined by the expert committee, the period might be up to 5 years. This sort of project has no budget constraints. Besides overhead funds, the research grant covers equipment, consumables, contingencies, and travel.
The revival of the operations of existing biomass power and other small hydropower projects, which were affected due to unforeseen circumstances, is essential, which is why the government of India decided upon the Refinance Scheme in collaboration with the Indian Renewable Energy Development Agency Ltd. (IREDA) and The National Clean Energy Fund (NCEF).
The scheme aims to revive the operations of the existing biomass power and small hydropower projects by cutting down the cost of funds for these projects and providing refinance at concessional rates of interest, with funds sourced from the National Clean Energy Fund (NCEF).
The Dairy Entrepreneurship Development Scheme (DEDS) scheme was started in December 2004 with an outlay of Rs. 25 Crore. It is a scheme implemented by the Department of Animal Husbandry, dairying, and fisheries to generate self-employment opportunities in the dairy sector.
These opportunities in the mentioned sector will comprise activities like the enhancement of milk production, procurement, preservation, transportation, processing, and marketing of milk by providing back-ended capital subsidies for bankable projects.
The scheme has been implemented by the National Bank for Agriculture and Rural Development (NABARD).
The government of India launched Drone Shakti, as voiced by the Union Finance Minister Nirmala Sitharaman on February 1, 2022. This new initiative is designed to motivate startups to introduce diverse applications for drones, including drones-as-a-service (DaaS). Furthermore, the finance minister also stated that the government would encourage the use of drones by farmers. Sitharaman focused on the farmers' use of these drones to survey the lands and spray insecticides along with digitising land records.
Besides, the government also asserted to stand in full support of the drone technology startup in India. It recently flagged off 100 Kisan Drones in diverse parts of the country to spray pesticides and more. In order to promote made-in-India drones, the government of India banned the import of drones with immediate effect. This however exempts the import of drones for research and development, defence, and security purposes, as per the Ministry of Civil Aviation (MoCA).
The drone manufacturing industry, as estimated by MoCA, is expected to receive an investment of over Rs 5,000 crore over the next 3 years, which will include drones and drone components. The annual turnover of the sales of the drone manufacturing industry, which was valued at Rs 60 crore during FY 2020-21, will shoot over to Rs 900 crore during FY 2023-24. More than one company within a Group of Companies may file separate applications under this PLI scheme and the same shall be evaluated independently.
The Zero Defect Zero Effect (ZED) scheme was launched on April 28, 2022, by the government of India with a vision of creating proper awareness about ZED manufacturing among the MSMEs and motivating them the assessment of their enterprise for ZED and support them.
ZED can be summed up as an integrated and holistic certification and handholding scheme that extends an opportunity to the Micro, Small and Medium Enterprises (MSMEs) to strive to continuously improve their processes and move up the ZED maturity assessment model.
The Sub-Mission on Agricultural Mechanization (SMAM) is a government initiative that was launched by the Government of India in 2014-2015, aiming to increase the reach of farm mechanisation, especially to the small and marginal farmers and in other such areas where the availability of farm power is low. According to the recent updates, as per the reports dated April 2, 2022, the Indian government has announced that it would extend the financial assistance of the full cost of the drones (100%) together with the contingent expenditure under SMAM.
This has already been extended to the Institutions of Indian Council of Agricultural Research, Krishi Vigyan Kendra (KVK), and State Agricultural Universities (SAUs) for its demonstration on the farmer’s fields, as per the statement of Union Minister Narendra Singh Tomar in the Rajya Sabha went on April 1, 2022.
Credit Linked Capital Subsidy for Technology Upgradation, which is popularly known as the acronym, CLCSS, is a government of India scheme to upgrade technology. It was launched on 1st October, 2013.
Under CLCSS the Indian government provides cash for the Indian companies upfront to upgrade/modernize their equipment or techniques. This scheme mainly empowers Micro and Small Scale Enterprises (MSMEs). In 2023 with this scheme, an eligible MSME can avail of a credit amount ranging from ₹1 lakh to ₹5 crores. Available from both traditional institutional lenders and NBFCs, a business owner can get this MSME loan at a yearly interest rate of 8.50%.
The Design Clinic Scheme for Design Expertise is a scheme declared by the Indian government to support the MSME manufacturing sector of India. As the government deems that design and innovation are critical to the growth of a brand and feels that the MSMEs should develop a design-centric approach to fuel their startups, it aims to infuse design expertise in them.
Under this scheme, the government of India announced to extend around Rs 60,000 for attending design seminars and up to Rs 3.75 lakhs or 75% of the cost that would be needed in conducting the seminar, where the entrepreneurs and their teams can learn about design theories, interact with design veterans, build a network, and put them into practice.
The government is not only promoting these schemes to help the present group of startups benefit from them but also motivating the budding entrepreneurs, startups, and students from all domains, who tend to be independent and lead the vision of Atmanirbhar Bharat forward. These initiatives have been introduced for the development of the Indian startup ecosystem, and they reflect the government's commitment to fostering innovation and entrepreneurship in the country.
With the help of government schemes for startups, the country now seems to be heading towards the golden era of entrepreneurship, where if things go as planned, India may host as many successful startups as the USA or any other leading nation by 2030. The government's support and initiatives for startups in India have created an environment of innovation and growth, and this has encouraged more and more people to pursue their entrepreneurial dreams.
Some of the popular government investment schemes that are benefitting the startup ecosystem of India are:
Businesses help a country grow and startups can also be defined as businesses in their very nascent stages. Therefore, if a country nourishes its startup businesses, then they are bound to boost the economy of the whole country only if they are successful. These startups, after considerable growth, will not only help their founders and those associated with the company acquire wealth, but also help the company get a financial boost and drive other businesses, and entrepreneurs to be towards success.
If you are a business professional or an individual with dreams of starting up your business and are looking for ideas regarding "how to start a startup?", then here are some basic things you need to focus on:
Protecting a tech-based startup today is essential as it is important to protect any other startups because losing out on a startup opportunity is simply something that no one wants. So, here is a list of ideas that will help you secure your tech-based startup:
Some of the major MSME schemes for entrepreneurs in India include:
