On the occasion of India’s Independence Day, Prime Minister of India Narendra Modi announced the ambitious “Start-up India, Stand up India” campaign in order to inspire more Indians into entrepreneurship. The campaign aims to promote bank financing for startups by the underprivileged besides helping in job creation.
“We are looking at systems for enabling start-ups. We must be number one in start-ups… Start-up India; Stand up India,” he said, urging all bank branches to fund at least one start-up of tribals and dalits.
Following the PM’s announcement, Finance minister Arun Jaitley launched the India Aspiration Fund (IAF) to be set up as a ‘fund of funds’ under the the Small Industries Development Bank of India (SIDBI) with an aim to boost the startup ecosystem in the country. This unique investment program will invest in various VC funds for meeting the equity requirement of MSME (Micro, Small and Medium Enterprises) start-ups. Hence, instead of directly funding in startups, the IAF will help the Venture Capitalists to come up with newer investment ideas and protocols. LIC, India’s largest insurance company will be a co-investor in the IAF. Apart from infusing crores of funding into SMEs, this will also help create lakh of new jobs.
In a statement, SIDBI described the objective of IAF to “catalyze tens of thousands of crores of equity investment into start-ups and MSMEs (micro and small enterprises), creating employment for lakhs of persons, mostly educated youth, over the next four to five years,”
Earlier this year, the government had directed the Reserve Bank of India (RBI) to set aside, Rs. 2000 crore for startups in the financial year 2014- 2015, in a bid to bring back all the desi entrepreneurs from overseas and help them move to Indian shores. According to the SIDBI chairman and managing director Kshatrapati Shivaji, a portion out of this corpus, Rs. 753 crore has already been committed under IAF to various VCs, which include IvyCap Ventures (Rs 60 crore), Blume Ventures (upto Rs 30 crore) and Carpediem Capital Partners (Rs 20 crore).
Several veteran entrepreneurs have been roped in to manage IAF: Harkesh Mittal, Secretary, Technology Development Board, Manipal Global Education Chairman TV Mohandas Pai, Info Edge founder Sanjeev Bhikchandani, former Nasscom chairman Kiran Karnik and Indian Angel Network co-founder Saurabh Srivastava . They will assist in devising strategies to optimally utilize this fund.
Another innovative loan program had been launched for SMEs in February, namely SIDBI Make in India Loan for Small Enterprises (SMILE) with a budget of 10,000 crore. SMILE will offer quasi-equity and term based short term loans to Indian SMEs which will have less stringent rules and regulations while focussing on the 25 sectors under PM Modi’s Make in India vision.
Together, these two Govt. initiated programs will help to create more than 20 lakh direct and indirect jobs in the country.
“India is expected to surpass the UK in terms of number of startups launched and would be behind only to the US. There is need for more funds that focus on startups and growth stage MSMEs.”, says Minister of State for Finance Jayant Sinha.
With a budget allocation of Rs 12,000 crore, owing to these two new investment and loan programs for assisting startups and SMEs, India is poised to become a hotspot for start-ups! The growth of the start-up ecosystem in the recent years has been accelerated by factors such as massive funding, consolidation activities, evolving technology and a burgeoning domestic market.
Making big bets on Indian innovation has become a global point of interest. Many foreign investors like Tiger Global Management, Yuri Milner-led DST Global, Japanese telecom giant Softbank, Sequoia Capital are heavily investing in Indian startups.
Says Mr. Saurabh Arora, CEO, Lybrate, “I believe that Narendra Modi government’s recent announcement of the Start-up India; Stand up India’ campaign and the India Aspiration Fund (IAF) by FM Arun Jaitley will give a major push to the entire start-up ecosystem. The government has realized that start-ups are going to contribute majorly in the economic development of the country. This move will encourage more entrepreneurs to come in the forefront.”
What better news on “World Entrepreneur Day!”
Here is a small infographic for all the budding entrepreneurs out there!
Source: Trak.in and Economic Times