Launched on 16 January 2016, ‘Startup India’ campaign is based on an action plan aimed at promoting bank financing for startup ventures to boost entrepreneurship and encourage start ups with jobs creation. It is however proving to be a failure as till date Centre has released only Rs 600 crore out of the total allocated amount of Rs 2,500 crore.
The StartUp India campaign would complete 2 years of its launch on January 16, 2018. According to the latest report, till date, some 5,350 startups have been recognised in the country with over 40,000 employees working in these start-ups. Surprisingly, the worst is that the agency that was designated by the Centre to disburse funds to start-ups has released only Rs 337 crore out of Rs 600 crore to only 75 start-ups in 2 years.
Notably, the Small Industries Development Bank of India (SIDBI) was tasked to manage the disbursement of funding to the alternative investment fund (AIF) registered under the market regulator SEBI.
Under ‘funds of fund’ provision, the AIFs were authorised to identify start-ups for fund disbursement. “Till date, a total amount of Rs 600 crore has been released to SIDBI for the FFS (fund of funds for Startups), while Rs. 605.7 crore has been committed by SIDBI and Rs 90.62 crore disbursed to 17 alternative investment funds, who in turn have invested Rs 337.02 crore in 75 startups,” said CR Chaudhary, Minister of State for Commerce and Industry, in reply to a question in the Parliament. According to the information given by the government in the Parliament, SIDBI issued Rs 500 crore in 2015-16 and only Rs 100 crore in 2016-17. The total amount issued by the Centre is just 6 per cent of the total ‘committed’ funding. In 2015, the government had set up a Rs 10,000 crore fund of funds under the Startup India Action Plan that was be distributed among startups in four years, which means an allocation of Rs 2,500 crore every year.
The StartUp India campaign was started to provide financial support of budding entrepreneurs to create employment opportunities and when the start-ups would not get the funds, it wouldn’t be possible for them to sustain leading to failure of the whole programme.
Additionally, the centre has also failed to provide tax relief to new startup ventures as it was reported earlier that only 39 startups qualified for tax benefit 18onths after launch of StartUp India initiative.
In August, it was reported that among all vast Indian startup ecosystem only 2100 startups have been recognized as ‘Startups’ by agency DIPP.