With over 8,765 recognised startups by DIPP (Department of Industrial Policy and Promotion), the industry body has been asking SIDBI (Small Industries Development Bank of India) to speed up the disbursal process and change the process.
In a report, The Indian Express quoted a senior government official as stating that for the past year, in the meetings of the monitoring committee for the Startup India scheme, DIPP has been asking SIDBI to take steps that can increase the release of funds.
“The previous monitoring committee meeting took place on December 4 last year where it was suggested that SIDBI should consider changing the manner and methods in which they are disbursing the amount under the scheme so that a greater offtake can take place,” he added.
As per the minutes of the scheme’s monitoring committee meeting of December 4, accessed by the Indian Express, “DIPP expressed concern at the under-utilisation and (the) slow pace of disbursement of funds.” The minutes added: “(The) DIPP asked SIDBI to highlight challenges and consider steps (change in the manner of utilisation) that could be taken to allow greater offtake of funds.”
The DIPP has set targets to facilitate and support 1,000 startups by March 2019.
The committee asked DIPP to furnish reasons for the lag in funding, the committee suggested the department to “take concerted measures to ensure genuine entrepreneurs are provided all the support to flourish and create jobs”.
However, in an April 6 circular, SIDBI claimed that it has committed $170.57 Mn (INR 1,136 Cr) to 25 VC Funds, who in turn have invested $85.44 Mn (INR. 569 Cr) in 120 startups. It also claimed that these startups have generated 6,515 jobs including 1,184 jobs for women.
DIPP has released $76.9 Mn (INR 500 Cr) to SIDBI in FY16 and $15.3 Mn (INR 100 Cr) in FY17.
The official added that a “significant amount of disbursement to startups has been done in the past couple of months after feedback was taken from VC funds on lower offtake”.
Initiated by the Indian government, Fund Of Funds for Indian startups has a corpus of $1.54 Bn (INR 10K Cr) to provide funding support for the development and growth of innovation-driven startups. Over the 14th and 15th Finance Commission, the fund will be raised and the tenure of the AIF supported under FFS will be initially up to 12 years.
However, it must be noted that SIDBI alone can’t fuel the funding to startups, as it is done by the AIFs which receive funding from SIDBI. Further, the eligibility is cleared by a board of inter-ministerial Committee.