The Centre’s Credit Guarantee Fund (CGF) to boost startup growth in the country by providing funding facilities is yet to be operational, minister of state of commerce and industry, C. R. Chaudhary said in a written reply to a question in the Lok Sabha.
The fund, which was announced by Prime Minister Narendra Modi at the Start-up Action Plan in 2016 had received cabinet approval in 2017 with an initial corpus of INR 2,000 Cr ($285.2 Mn) and is managed by Department of Industrial Policy and Promotion (DIPP).
At the time of creating the corpus, DIPP Secretary Ramesh Abhishek had said that about 7,500 startups will benefit from this initiative. Also, it will generate an additional funding of INR 15,000 Cr ($2.13 Bn) he had added in 2017.
Under the scheme, DIPP-recognised startups will be eligible for loans of upto INR 5 Cr ($713K) without any collateral. However the fund is yet to fund a single startup till date.
According to the Startupindia status report, the DIPP has recognised 14,036 startups as of November 2018. As many as 8,993 startups were recognised in 2018 alone.
In 2016, in line with the Start-up India Action Plan, the government had also approved the establishment of ‘Fund of Funds for Startups’ (FFS) at SIDBI with a corpus of INR 10,000 Cr ($1.4 Bn) for various Alternative Investment Funds (AIFs).
As of November 2018, around 170 startups had been funded from the FFS. The central government had also committed $223 Mn under the FFS, which is expected to make a corpus of $2.2 Bn available for startups.
The Startup India Initiative was launched in January 2016 as a flagship initiative of the Government of India, to help develop the startup ecosystem which will, in turn, drive sustainable economic growth and also generate large scale employment opportunities.
Under the 19-Point Startup India action plan, the government will help startups by launching incubation centres, easier patent filing, tax exemptions, ease of setting-up of business, FFS funds, and faster exit mechanism among others.
As a part of this initiative, the central government also launched the Startup India Virtual Hub to resolve queries and provide handholding support to startups.
In a bid to develop the startup ecosystem, DIPP has also started the state startup ranking index. In 2018 the rankings rated Gujarat as the best performing state followed by Karnataka, Rajasthan, Odisha and Kerala.
Recently on December 7, 2018, the DIPP also hosted the Startup India Global Venture Capital Summit 2018 in Goa which witnessed participation from global investors, financiers, and venture capitalists.