Govt backs over 100 startups under Fund of Funds, SIDBI's aid plunges to 20% in FY17

Minister of State for Commerce and Industry CR Chaudhary said in a written reply to Lok Sabha that more than 100 startups in the country have received funding under the government’s Fund of Funds (FFS) corpus with catalysed investment of Rs 517.92 crore.

He added total commitments under FFS stand at Rs 1,050.7 crore to 24 Alternate Investment Funds (AIFs), while drawdown by AIFs is Rs 122.86 crore.

With an aim to generate employment for 18 lakh persons, the Union Cabinet approved the proposal to establish the Fund of Funds for start-ups with a total corpus of Rs 10,000 crore in June 2016. The Rs 10,000 crore FFS for startups is to be released by 2025.

Chaudhary said Rs 500 crore has been released to SIDBI in FY16 and Rs 100 crore in FY17. Besides financial aid, 423 facilitators for Patent and Design and 596 facilitators for Trademark applications have also been empanelled to assist startups in filing of patents and trademarks.

He said patent filing has also been made faster for startups and accordingly, 126 startups have been facilitated. Also, 768 applications have received a rebate of up to 80 per cent on patent fees and have also received legal assistance.

“Trademark facilitation has been extended to 858 startups as of January 2018,” Chaudhary said.

Since the launch of FFS under the Startup India Action Plan, the irregularities between Department of Industrial Policy and Promotion (DIPP) and The Small Industries Development Bank of India (SIDBI) regarding funds allocation have also been pointed out.

In January SIDBI, which had announced to commit Rs 200 crore to three AIFs was later asked by DIPP to commit Rs 1,600 crore in additional funds.

The three AIFs which will receive the funds from Sidbi were Bharat Innovation Fund, JM Financial Fund II, and North Eastern Venture Fund.

During his interview in November, DIPP secretary Ramesh Abhishek said that the government has been able to help more than 14,000 startups in various ways. Almost 4,700 startups have been recognised by DIPP, giving them a host of services, incentives, and facilities. Besides, the government has provided Rs 1,587 Cr in funding to startups.

This has been through Fund of Funds and all the various schemes by the Department of Biotechnology, Department of Science and Technology as well as Ministry of Human Resource.

However, there is a lot of gap between the statements of the government and the ground reality in the startup ecosystem.

According to an RTI application, as on August 31, 2017, Rs 623.50 crore was committed to 17 AIFs. However, only Rs 68.3 crore was disbursed in 72 startups by the 10 AIFs. It also added that the allocated funds by the government were given to SIDBI not directly to startups.

Apart from the funding, the Department of Industrial Policy and Promotion (DIPP) was also planning to waive off angel tax of up to Rs 10 crore for startups incorporated before 2016, according to media reports.

The development was reported by Business Standard via PTI.