Government Plans Increased Budget Allocation for Startups in 2024-25 to Promote Innovation

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Government Mulls Increased Budget Allocation for Startups to Foster Innovation

Team FS

10/Jun/2024

Key Points:

The government considers increasing budget allocation for startups in the forthcoming 2024-25 Budget to foster innovation and entrepreneurship in the country.
The current seed fund scheme, with a corpus of Rs 945 crore, is set to end in 2025, prompting the ministry to propose a new scheme to support startups at various growth stages.
A dedicated policy for deep tech startups is also expected, highlighting the government's focus on promoting innovations rooted in advanced scientific and technological breakthroughs.

In a bid to stimulate innovation and entrepreneurship across the country, the Commerce and Industry Ministry is gearing up to propose increased funding for startups in the forthcoming Budget for the fiscal year 2024-25, scheduled to be announced by the new government in July. This move comes as part of a broader strategy to promote a vibrant startup ecosystem and address the capital needs of early-stage enterprises.

The cornerstone of this initiative is the Seed Fund Scheme, launched in April 2021 with a corpus of Rs 945 crore. Designed to provide crucial financial assistance to startups, the scheme focused on supporting activities such as proof of concept, prototype development, product trials, market entry, and commercialization. With its scheduled conclusion in 2025, the ministry is considering advocating for a new scheme built on similar principles to sustain the momentum of startup growth.

Recognizing the pivotal role of startups in driving economic growth and job creation, officials stress the importance of ensuring easy access to capital, especially during the nascent stages of enterprise development. For startups with promising business ideas, securing adequate capital at the outset often determines their success or failure. Therefore, initiatives aimed at facilitating capital infusion into the startup ecosystem are essential for nurturing entrepreneurial talent and fostering innovation-led growth.

Currently, India boasts over 1.17 lakh government-registered startups, which enjoy various benefits including income tax exemptions. These startups have collectively generated over 12.42 lakh direct jobs, underscoring their significance in the broader economic landscape. By providing targeted support and incentives, policymakers aim to empower startups to scale their operations, create more employment opportunities, and contribute to overall economic prosperity.

In line with these objectives, the Commerce Ministry is expected to introduce a dedicated policy framework for deep tech startups. Deep technology, characterized by innovations rooted in advanced scientific and technological breakthroughs, holds immense potential to address some of the most pressing societal challenges. By fostering an environment conducive to deep tech innovation, policymakers aim to harness the transformative power of technology to drive inclusive growth and sustainable development.

The emphasis on promoting startups has been a focal point of the government's agenda, exemplified by the launch of the Startup India initiative on January 16, 2016. This comprehensive action plan outlined various schemes and incentives aimed at creating a dynamic and supportive ecosystem for startups. Key components of the action plan include simplification and handholding, funding support and incentives, and fostering industry-academia partnerships and incubation programs.

In conclusion, the Commerce Ministry's efforts to secure increased funding for startups in the upcoming budget underscore the government's commitment to fostering innovation and entrepreneurship. By building on the success of existing initiatives like the Seed Fund Scheme and proposing new measures to support deep tech startups, policymakers aim to unleash the full potential of India's entrepreneurial ecosystem and drive sustainable growth in the years to come.

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Government Mulls Increased Budget Allocation for Startups to Foster Innovation

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