The department for promotion of industry and internal trade (DPIIT) on Friday held a meeting with 75 alternate investment funds (AIF) that are fed by the government’s Fund of Funds Scheme (FFS) to discuss capital mobilisation efforts for startups, as the government seeks to have a thriving startup ecosystem in every district of the country by 2025 and turn their focus to manufacturing.
Startups have exploded since 2016 when the Startup India initiative was launched. From 400 in 2016, their number has gone up to 158,803. The government now wants to support them to focus on manufacturing. “There are a large number of service providers who are innovating but products are what we are looking forward to. There are a lot of startups coming up there. The mission is to become a product nation,” DPIIT secretary Amardeep Singh Bhatia said.
He said a number of big companies have come forward for this and have signed MoUs to involve startups in solving their problems and become incubators for them.
“We have reached out to top listed companies. During this year we want to create a momentum for manufacturing incubators,” DPIIT joint secretary Sanjiv said.
Bhatia said the department is also looking at greater integration between Indian startups and international markets. “What we want is for our startups to tie up with international companies where they can outsource their problems to our startups. We want that linkage,” he said.
When asked about the kind of collaborations that can happen with foreign countries, he said some of these nations have large sovereign and investible funds and some of these funds would like to look for investment opportunities in Indian startups.
Singh said the focus of the government is to have a thriving startup ecosystem in every district of India by 2025. “In 2016, startups existed in only 120 districts. This has expanded to over 750 districts today, with aspirations to cover all districts by 2025,” he added. India has 788 districts.
Officials said representatives of some of the prominent AIFs under the Fund of Funds Scheme attended the meeting. The Startup India initiative has three flagship schemes: FFS, Startup India Seed Fund Scheme (SISFS), and Credit Guarantee Scheme for Startups (CGSS).
So far, Rs 21,000 crore has been mobilised through these schemes. FFS has been established to catalyze venture capital investments and is operationalised by Small Industries Development Bank of India (SIDBI), which provides capital to Securities and Exchange Board of India (SEBI)-registered AIFs which in turn invest in StartUps.
AIFs supported under FFS are required to invest at least two times of the amount committed under FFS in StartUps. As on October 31, 2024, Rs 20,572.14 crore has been invested by FFS supported AIFs in StartUps.
SISFS provides financial assistance to seed stage StartUps through incubators and Rs 454.04 crore has been approved so far by selected incubators to startups. CGSS that enables collateral free loans to startups and has facilitated loans amounting to Rs 555.24 crore.