Despite having a host of initiatives for startups taken by the Indian government, the entrepreneurship quotient has barely changed on the ground. Under the government’s Funds of Funds initiative, while Small Industries Development Bank of India (SIDBI) is supposed to disburse INR 10K Cr by 2025, the organisation has committed only $170.57 Mn (INR 1,136 Cr) to 25 VC Funds, who in turn have invested only $85.44 Mn (INR. 569 Cr) in 120 startups so far.
While the Fund of Funds intended to create 18 Lakh jobs, as per SIDBI’s circular, these startups have generated 6,515 jobs including 1,184 jobs for women. Clearly, the policy implementation is not on the track, as expected.
One of the major reasons behind the gloomy picture is that most of the states initially were not on the same page and even after three-years of the Startup India policy initiative, many of the states are still in the process of rolling their startup policies out.
Amid low funding flow, DIPP monitoring committee has finally taken the matter with SIDBI, asking the latter to take the necessary measures that could increase the release of funding under Fund of Funds.
Taking further measures, the Indian government has finally scrapped the angel tax given that the funding is less than INR 10 Cr. However, with laying a series of barriers such as the “bureaucratic measures”, further amendments in Section 50 of Income Tax Act redefining Fair Market Value ( FMV), the road for stakeholders, startups and investors just got bumpier and needs immediate attention from the government’s end.
Let’s take a look at the last month’s startup policy developments!