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Government Support to Start-ups

  • Categories
    Yojana/Kurukshetra
  • Published
    16th Dec, 2020

The key objectives of the Government are as follows:

  • Spur entrepreneurial activity to accelerate job creation
  • Create enabling environment by reducing regulatory burden and introducing new policies
  • Build capacity through infrastructure creation and training
  • Provide funding support and fiscal incentives
  • Facilitate all members of the Startup ecosystem to connect and collaborate

Institutional and Financial support for Rural Start-ups

  • As per Startup Genome, Bengaluru and Delhi are among the top 40 startup ecosystems in the world.
  • Incubation Centres- Through the Atal Innovation Mission (AIM), around 47 incubation centres have been funded so far. While many of these incubation centres are in Tier 2-3 cities, only a few are in rural areas.

Fund of Funds - Ex. SIDBI StartUp Fund

  • Venture Capital Funds: In 2019, NABARD started its own venture growth equity fund, NABVENTURE5 Fund.
  • Seed Fund: A National Seed Fund was announced in Budget 2020-21 to support ideation and development of early stage start-ups.

Elements that feed the Rural Startup Ecosystem

  • Education: Education and vocational skilling need to be integrated, a practice followed by many countries. We need to train rural youth in basic English language skills.
  • Job creation through encouragement of tech-enabled businesses in rural areas.

Way Forward:

Given the nascent stage of rural start-ups in India, we may be better off by providing funding and infrastructure support using public resources.

  1. Incubation/acceleration of rural start-ups
  2. Creation of a National Rural Seed-cum-Impact fund to invest in start-ups benefiting large number of farmers/rural population.
  3. Creation of a National Agri/Rural Start-ups Fund- make direct investments in agri/food/rural start-ups at all stages (early, mid and late).
  4. Creation of a National Rural Fund of Funds-would make indirect investments in third party AIFs that would in turn invest in agri/food/ rural start-ups at the seed (post incubation/acceleration) to early stages.
  5. Creation of a National Venture Debt Fund

Conclusion

  • Rural areas have lot of untapped entrepreneurial potential. Agriculture and rural businesses are the areas of maximum social impact but remain underinvested in India from an equity/Start-up investment standpoint.
  • Internet penetration in rural area will result in rise of super apps/constellation of apps which will change the face of rural banking, shopping, trading, ecommerce etc.
  • This is the most opportune time for India to emerge as a 'land of rural start-up entrepreneurs' because as Mahatma Gandhi put it so evocatively, "India lives in her villages".
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