Budget 2015 May Unveil Rs.2000 Crore Startup “Fund of Funds” & Incubation Centers


RBI Earmarks Rs. 2000cr to Fund Startups for FY 2014-15

All eyes in the nation are on the finance minister as he gears up to present the annual budget. There seems to be something interesting in store for start-ups in this year’s budget. The finance minister has reportedly designed measures that will boost start-ups by providing them with preferential treatment for government purchases and easier rules to list companies in India. There will also be removal of service tax, excise duty and value-added tax ambiguities on software products. These alterations if executed well, will help overcome all hindrances for new entrepreneurs. Taxation by far has been major concern of start-ups. Besides, the FM also has plans to fund and organize innovation labs, which would be on the lines of those at Harvard and Stanford universities.

Couple of weeks back, rumours were rife that the government has directed RBI to set aside Rs. 2000 crore for startups. It is expected that budget might bring much needed clarity on this.

The insiders from the industry and the government hinted that these plans would be a part of the budget that Jaitley would present on Saturday. Startups were included in the budget just last year. The current government however wants to take it a step further, and bring India forth unto making it one of the world’s top three startup hubs. India will now be rivaling a model followed by countries such as Israel and China, where the government is an effective advocate of the country’s startups with money and friendly policies.

“A startup fund-of-funds will be most helpful in creating a robust seed funding ecosystem and fueling the much-needed innovation ecosystem,” said Arvind Gupta, the head of the Bharatiya Janata Party’s IT division. “We hope for a significant allocation for software products startups as this sector will have one of the biggest transformational impacts on India’s economy over the next 10-15 years.”

Seed investments are useful for start-ups, and young entrepreneurs are highly motivated by them. In a country that has seen a line of companies that have boomed so high such as Flipkart and Zomato, this initiative can only help boost the economy via such interesting and innovative platforms. “Such an initiative will result in more product companies and provide ample options to consumers. Better apps mean better service,” said Jay Pullur, founder of Hyderabad’s Pramati Technologies.

This early-stage funding for various companies will strengthen their roots, providing high scope to blossom. Besides allocating funds, the Modi government also plans to help out the intellectual property-centric companies in multiple industries including IT and biotech in a way that the entrepreneur does not have to deal with the government directly. The government has already roped in technology entrepreneur Amit Ranjan to lead the ‘Innovation labs’ project. This initiative by the government will certainly help start-ups, which are often on budgetary radar to bloom.


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