Bigger support for deeptech under Startup India in the works

The Central government will offer additional financial support under the Startup India Seed Fund Scheme (SISFS) for a longer period of time than what is available today to make it more attractive to startups in deeptech, it is learnt.

The SISFS was launched by the Union Ministry of Commerce and Industry in 2021 to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialisation. A corpus of ₹945 crore was also allocated to be disbursed through selected incubators across India during 2021-25 period. Under the existing scheme, eligible startups can get up to ₹20 lakh as grant for validation of proof-of-concept, or prototype development, or product trials. The grant will be disbursed in milestone-based instalments. Similarly, the startups can also get up to ₹50 lakh of investment for market entry, commercialisation, or scaling up through convertible debentures or debt or debt-linked instruments. The tweaks in the current limit, if any, will get reflected in the second version of SISFS that will follow the current one.

“The quantum of money required for a deeptech startup even at a very young stage is much higher than what is needed for a conventional startup. For instance, ₹50 lakh could be a fantastic amount for a software start up, but for a start-up that make innovative products, it may not be enough,” CS Murali, Chairman of the Entrepreneurship Cell at Foundation for Science Innovation and Development (FSID), Indian Institute of Science (IISc), Bengaluru.

“Instead of giving ₹20-30 lakh, you should give ₹1-2 crore to deeptech startups. Similarly, deeptech firms need more time to determine the success of the company, say 5-10 years rather than 3-4 years,” he adds.

Under the SISFS, an Experts Advisory Committee (EAC) evaluates and selects incubators for allocation of funds under the scheme. These approved incubators shortlist the startups. The scheme has been operationalised from April, 1, 2021.

According to the Commerce Ministry, as on December 31, 2023, total 198 incubators have been selected under the scheme, with a total approved funding of ₹802.98 crore. In turn, the approved incubators selected 1,740 startups with a total approved funding of ₹306.43 crore.