Draft:Startup India Seed Fund Scheme

The Startup India Seed Fund Scheme (SISFS) is an Indian government initiative aimed at fostering innovation and supporting startups at their early stages. Launched by the Ministry of Commerce and Industry of India, the scheme is part of the larger "Startup India" campaign, which seeks to promote entrepreneurship and create a robust ecosystem for startups in the country. The program provides financial assistance to eligible startups, helping them transform their innovative ideas into viable business ventures.

Background
Many startups face challenges during their nascent stages, such as funding constraints and lack of resources. Recognizing these obstacles and the need to bolster the startup ecosystem, the Indian government introduced the Startup India initiative in January 2016. The initiative aims to create a conducive environment for startups, enabling them to thrive and contribute significantly to the country's economic growth.

Launch of the Startup India Seed Fund Scheme
The Startup India Seed Fund Scheme was launched on January 16, 2021, by Central Government of India under the aegis of the Startup India program. The primary objective of the scheme is to provide financial support to startups during their early stages, typically known as the seed stage. By assisting startups in this critical phase, the government hopes to encourage innovative ideas and fuel entrepreneurship across various sectors.

Government Recognition and Financial Support
Under the SISFS, a total of ₹945 crore was approved to be allocated for a four-year period spanning from 2021 to 2025. Of this amount, ₹611 crore, approximately two-thirds of the total budget, has already been assigned by the Department for Promotion of Industry and Internal Trade (DPIIT) to fund eligible startups and incubators.

The initiative has gained significant traction, with about 160 incubators receiving funds from the DPIIT. These incubators, in turn, are responsible for disbursing the financial support to over 1,000 selected startups across India. The primary objective of this disbursement process is to fuel the growth and development of innovative startups and ideas throughout the country.

Moreover, the scheme is geared towards supporting a substantial number of entrepreneurs, aiming to benefit more than 3,600 innovators through the backing of 300 incubators.

In a notable recognition of the valuable contributions made by the Center for Innovation, Entrepreneurship and Design (CIED) at the Islamic University of Science & Technology (IUST) in nurturing a culture of entrepreneurship and innovation among the youth, the DPIIT has approved financial support of ₹5 crore to IUST. This financial assistance is specifically designated to bolster startups in the region of Jammu and Kashmir.

In the 2023-24 financial year, the Department for Promotion of Industry & Internal Trade (Startup India Section), operating under the Union Ministry of Commerce and Industry, has allocated a seed fund of ₹63 lakh (non-recurring), which includes the management fee, to the Atal Incubation Centre-Sri Krishnadevaraya University Confederation, based in Anantapur. This disbursement was made as part of the Startup India Seed Fund Scheme, aimed at promoting and supporting startups in the country.

In June 2023, Four startups, three from Nagaland and one from Assam, have each been granted a loan of Rs 10 lakh under the SISFS.

Key objectives
The Startup India Seed Fund Scheme is designed to achieve several key objectives:


 * 1) Financial Support: The scheme aims to provide financial support to startups in their early stages to meet various expenses, including proof-of-concept, prototype development, market validation, and other activities necessary for the startup's growth.
 * 2) Encouraging Innovation: By supporting innovative ideas, the government seeks to nurture a culture of creativity and problem-solving within the startup community.
 * 3) Job Creation: Startups play a significant role in generating employment opportunities. The scheme aims to foster the growth of startups, leading to job creation and boosting economic development.
 * 4) Reducing Dependence on External Funding: By offering seed funding, the government intends to reduce startups' dependence on external investors and enhance their ability to sustain themselves.
 * 5) Regional Development: The scheme aims to promote entrepreneurship and innovation in Tier-II and Tier-III cities, fostering regional development and decentralization of economic activity.

Eligibility criteria
To avail benefits under the Startup India Seed Fund Scheme, startups are required to meet certain eligibility criteria:


 * Recognition: The startup must be recognized as an eligible business entity under the Startup India program. The process involves a self-declaration or recommendation from an incubator.
 * Age of the Startup: The startup should be within its first two years of incorporation.
 * Business Nature: The scheme is open to startups from all sectors, including technology, manufacturing, agriculture, healthcare, and others.
 * Indian Entity: The startup must be registered as a legal entity in India.
 * Innovative Product or Service: The startup should be working on an innovative product, process, or service with significant potential for commercialization and scalability.