To bolster India’s startup ecosystem, Union Minister Piyush Goyal and Minister of State Jangjit Ram convened a high-level meeting to assess the progress of all Startup Funds.
The discussions focused on enabling enhanced access for startup funding and fostering innovation in Tier 2 and Tier 3 cities. This is an attempt to galvanize innovation at grassroot level. Piyush Goyal also highlighted the pivotal role that can potentially be played by key sectors like AI, clean-tech, and emerging technologies in further strengthening of India’s innovation system, in the meeting.
Startup India Seed Fund Scheme or SISFS is a financial assistance scheme launched by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry, in 2021. The scheme aims to help startups across India with early stage funds. These funds are used by startups to develop proof of concept, prototyping, product trials, market entry and commercialization.
An Expert Advisory Committee created by the DPIIT monitors and executes the scheme.
Why Early-Stage funding matters
The seed stage is often the most critical phase in the life cycle of a startup. This vulnerable period demands working capital and sufficient early backing. This is where SISFS comes to play. The embattled companies at this juncture, lack collateral, a strong revenue track record, or investor credibility. These disincentivizes are addressed by Startup India Seed Fund Scheme by reducing financial barriers, fuelling innovation during prototype development period, allowing entrepreneurs to focus on market entering strategies, talent acquisition and tech-development.
Why SISFS?
By mitigating these issues SISFS does not only play the role of a funding scheme but accounts as a catalyst to India’s innovation economy. The scheme is a structural enabler and can be extremely invaluable for the MSME sector to increase their market visibility and fuel growth.
Moreover, the scheme attempts to decentralize innovation by empowering local incubators, which further aligns with the vision of Atmanirbhar Bharat. Its emphasis on Tier2 and Tier 3 cities can bring entrepreneurial energy to previously untapped regions.
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Corpus of 945 crore was divided over 4 years, starting from the financial year 2021-22.
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Startups that are recognized by DPIIT and are not more than 2 years old are eligible under the scheme.
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Any startup with a prior assistance of 10 lakh under any other central or state scheme is not considered as a beneficiary under this scheme.
The EAC has selected eligible incubators to disburse the funds to the startups. Startups can receive up to ₹20 lakh for idea validation or proof of concept and up to ₹50 lakh for product development, market entry, or commercialization (as a convertible debenture, debt, or equity-linked instrument).
The scheme is implemented and managed through an online platform, where both incubators and startups can apply. The four-year scheme has selected 217 incubators as of January 31, 2025. From the approved funding of 917 crore, Rs 493.2 crore has been provided to the startups.
SISFS encourages entrepreneurship, especially in Tier 2 and Tier 3 cities. The scheme, if executed eminently, will promote a culture of innovation by reducing the risk and financial burden for early-stage founders, backing the startups at a critical stage and unlocking the untapped potential at the grassroots level, ensuring inclusive growth and equitable development across the nation.