Navigating Government Schemes for Startup Funding

Startup India is a major program designed by the government of India that helps startups and entrepreneurs. Its main goal is to build a strong environment that supports and protects new businesses, creates many job opportunities, and boosts the country's economic growth. Alongside this, the Indian government also introduced the Atma Nirbhar Bharat mission and the Make in India program to turn India into a leading center for manufacturing and design exports.  

Today, India is home to the third-largest startup community in the world, with over 100 unicorns (startups valued at over $1 billion) and more than 60,000 startups. This success is due in part to the government’s support, which includes various schemes and resources to help startups with funding and other needs. For example, the Startup India Action Plan offers benefits like tax breaks, low-interest loans, skill development programs, and priority in public contracts. This article will explore some of the many schemes the Indian government has launched to support startups.  

What is a Startup? 

A "startup" is simply a new business that focuses on coming up with fresh ideas and solving problems that people or markets need. There’s no official legal definition, but startups are usually known for being innovative and aiming to grow quickly. 

Startups are often started by entrepreneurs who want to create something new, like a product or service. These businesses usually spend a lot of money and don't make much profit at first, so they often need to get funding from different sources.  

Examples of successful startups in India include Paytm, Zomato, Ola, and Groww.  

Note:

This is a basic idea of what a startup is. Different government schemes may have their own specific rules for who qualifies.   

Top 7 Government Schemes for Startups in India  

There are many government programs in India to help startups, but here are the top 7 most popular ones. These schemes are well-known and widely used by entrepreneurs.  

1. ASPIRE – A Scheme for Promoting Innovation, Rural Industries, and Entrepreneurship  

ASPIRE aims to boost entrepreneurship and innovation, especially in rural areas and agriculture. It helps by funding technology and business incubators with up to INR 100 lakhs or covering the full cost of plant and machinery (excluding land and infrastructure). The goal is to create jobs and support new businesses in agriculture. By providing essential resources and knowledge, ASPIRE helps entrepreneurs start their own ventures and contribute to local economic growth.  

- Benefits: Provides funding for business incubators and technology centers.    

- Eligibility: Focuses on rural and agricultural industries.  

- Special Initiatives: Supports employment and enterprise growth in rural areas.  

2. Pradhan Mantri Mudra Yojana  

The Pradhan Mantri Mudra Yojana supports small businesses in India through the Micro Units Development and Refinance Agency Ltd. (MUDRA). MUDRA helps banks and microfinance institutions provide loans up to INR 10 lakhs to micro businesses. These loans are categorized into three types—Shishu, Kishore, and Tarun—based on the business's growth stage and funding needs. No collateral is required, making it easier for small businesses to get funding. The scheme benefits street vendors, store owners, and service providers by offering loans for various needs, including working capital and travel vehicles. It aims to boost income and job creation.  

- Benefits: No collateral required, loans up to INR 10 lakhs.    

- Eligibility: Non-corporate, non-farm micro and small enterprises.    

- Special Initiatives: Supports a wide range of businesses including street vendors and traders.  

3. Support for International Patent Protection in Electronics and Information Technology (SIP-EIT)  

The SIP-EIT scheme helps Indian technology startups and small businesses pay for international patents. Launched by the Department of Electronics and Information Technology (DeiTY), this program encourages innovation and helps build a global presence. It provides financial aid to the electronics and ICT sectors for filing patents. Businesses can apply at any stage of their patent process. The scheme reimburses up to 50% of the patent costs or INR 15 lakh per invention, whichever is lower.  

- Benefits: Financial support for international patents.  

- Eligibility: Technology startups and MSMEs in India.  

- Special Initiatives: Focus on electronics and ICT sectors.  

4. Multiplier Grants Scheme (MGS)  

The Multiplier Grants Scheme (MGS), introduced by DeitY, aims to boost collaboration between industries and top academic or government research institutions. The goal is to develop new products and technologies and help them move from initial ideas to global markets. Under this scheme, if a company funds research for products that can be sold, the government will match the funding up to twice the amount provided by the company. An individual company can get up to 2 crores per project, lasting less than 2 years. For a group of companies, the grant can be up to 4 crores for projects up to 3 years.  

  - Benefits: Government matches funding, supports R&D.  

- Eligibility: Companies working with research institutions.  

- Special Initiatives: Up to 2 crores for individuals, 4 crores for consortia.  

5. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)   

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is set up by the Government of India and SIDBI to help small businesses get loans. This scheme makes it easier for startups and small businesses to access funds by providing loans with no need for collateral and at lower interest rates. It covers loans up to Rs. 200 lakhs for eligible businesses, whether they are involved in service or manufacturing. The funds are managed and distributed by SIDBI.  

- Benefits: Easy access to loans without collateral.  

- Eligibility: For startups and small businesses.  

- Special Initiatives: Loans up to Rs. 200 lakhs for service or manufacturing sectors.    

6. Single Point Registration Scheme (SPRS)  

The Single Point Registration Scheme (SPRS) is run by the National Small Industries Corporation (NSIC) to support Micro and Small Enterprises (MSEs). This scheme helps small businesses participate in government purchases without needing to pay an Earnest Money Deposit (EMD), which is usually required to show commitment. With SPRS registration, MSEs get benefits like easier tender participation, free tender documents, and special advantages in procurement. Additionally, 358 types of goods are reserved for MSEs, and the government ensures that 25% of annual purchases by central ministries and public sector units come from these small businesses.   

- Benefits: Easier tender access, no EMD requirement, reserved product categories.  

- Eligibility: Small and Micro Enterprises.  

- Special Initiatives: 25% of government purchases from MSEs.  

7. Zero Defect Zero Effect (ZED) Scheme  

The ZED scheme helps manufacturers make high-quality products with no defects. It supports small and medium businesses (MSMEs) by offering tools, technology, and financial aid to improve their manufacturing processes. The scheme includes a certification process to show a company’s commitment to quality and helps businesses move up in the program’s maturity model.   

- Benefits: Provides tools, technology, and financial support for quality improvement.  

- Eligibility: Open to MSMEs and startups.  

- Special Initiatives: Offers certification and a maturity assessment model.  

Conclusion  

The schemes we talked about help both new and established businesses, and they also motivate people like students and future leaders to start their own companies. The goal is to help Indian talent come up with new ideas and turn them into successful businesses, contributing to a self-reliant India. These programs have been effective, and India now ranks third in the world for the number of startups.