Credit Guarantee, Seed Fund Schemes Under Development for Startups Support

Credit Guarantee and Seed Fund Schemes are currently undergoing inter-ministerial consultation, as per Guruprasad Mohapatra, Secretary of DPIIT. At present, the schemes related to seed funds are only available in Gujarat and Kerala. ESOPs related issues are also under development as per the government.

The government of India is currently working on two schemes to support its startups. On Sunday, Guruprasad Mohapatra, Secretary of DPIIT (1), stated that Credit Guarantee and Seed Fund Schemes are currently undergoing inter-ministerial consultation. The process will soon work out the outlines of the schemes.

He added that both schemes require the finance ministry approvals before seeking the Union Cabinet’s nod. At present, the seed fund scheme is only present in Gujarat and Kerala. India’s central government ministries also have these schemes, but now the move is to put these schemes to a pan India.

As per the secretary, there will be a compilation in the credit guarantee scheme. The banks will get the collections to use it as a leverage for startup lending. It will also provide comfort to banks before they lend. It would be given as a credit and not a venture. 

Ministry of Finance to Work on ESOPs Issues

The secretary added some issues related to the ESOPs (employee stock option plans) raised by several startups. The problems are currently under review by the revenue department. 

On September 3, Piyush Goyal, Commerce, and Industry Minister had urged startups to draw ESOPs. The holistic reports with the issues is sent for the consultations with the Ministry of Finance. India’s government has recently allowed startups to issues ESOPs for up to 10 years from their registration. Previously, the limit of the matters for shares was only until five years.

On September 11, DPIIT released the startup ranking state wise. In the state startup ranking, Gujarat and Andaman Nicobar Island were announced as best performers while Karnataka and Kerala were top performers. 

Notably, the department has also initiated the next state and UT ranking process for its startup ecosystem.