The Central government is likely to announce a financial package that ensures additional seed fund and credit guarantee scheme for the financial security for startups. The Department for Promotion of Industry and Internal Trade (DPIIT) will submit a detailed proposal before the government. The ‘Startup India Seed Fund’ will help budding startups in ideation and development. The new credit guarantee scheme has to ensure loans and other financial assistance for startups that got affected by Covid-19. Both schemes aim long-term goals in the startup movement.
With COVID and Lockdown deeply affecting the startups in the country, the demand for a special package was strong. According to the NASSCOM report released last week, within two months of lockdown, 70% of startups reached closure while 40% closed operations due to lack of revenue.
The latest proposal is along the lines of the National Seed Fund announced in the last budget. The central government’s goal to invest more in the Indian startup ecosystem has been accelerated considering the current scenario. The Central Government had also commenced startup evaluation through the Startup India programme. Currently, startups can access funds worth Rs 1,0000 Cr through SIDBI. Already, Rs 3123 Cr has been committed by SIDBI for startups through the Alternative Investment Fund (AIF).
In the previous election, BJP had promised that seed fund worth Rs 20,000 will be allocated for early-stage startups while Rs 50 Lakh Collateral-free loans will be issued for startups.
