The fund that was launched as a part of ‘Startup India’ initiative with an initial corpus of $305 Mn has now been allocated just $15 Mn for the current financial year. It reportedly finds no place in the upcoming fiscal year.
The fund was launched to catalyse tens of thousands of crores of equity investment into startups and MSMEs (micro and small enterprises), creating employment for lakhs of persons, mostly educated youth, over the next four to five years. It was launched with an idea to invest in VC funds for meeting the equity requirement of MSME startups.
$115 Mn (INR 753 Cr.) of the total $305 Mn (INR 2,000 Cr.) Seed capital was already sanctioned for the equity fund and disbursements started right after the launch.
The IAF when launched, was to be managed by an investment committee which included Harkesh Mittal, Secretary, Technology Development Board; TV Mohandas Pai, Manipal Global Education Chairman; Info Edge founder Sanjeev Bhikchandani; former Nasscom chairman Kiran Karnik, and Indian Angel Network co-founder Saurabh Srivastava.
The Modi Government has been ardently working with its ‘Startup India’ plan since January 2015, when it first began pushing the Indian startup ecosystem and its showrunners. If 2015 was all about ‘Start Up India, Stand Up India,’ followed by the formation of the Fund of Funds of INR 10,000 Cr, 2016 saw implementation the GST (Goods and Services Tax), followed by the demonetisation drive in order to further drive India towards demonetisation.
Amongst other developments in the recently released Union Budget, profit-linked deductions have been changed for startups from three out of five years to three out of seven years, a measure which has been hailed majorly in the startup community.