Startup India campaign’s flaws are beginning to tell

Startup India campaign’s flaws are beginning to tell

Photo: Livemint

Around this time last year, the Narendra Modi government launched the Startup India, Stand Up India campaign. It announced a slew of measures—simplifying regulations, offering some handholding, a few tax breaks, and a fund-of-funds—to rev up the start-up engine and enable entrepreneurship, technological progress and innovation. Twelve months down the line, however, there has been very little forward movement. Only a handful of start-ups have bought into the plan, while the government is still struggling to get the nuts and bolts in place. Unfortunately, this was to be expected, given the fundamental design flaws in the campaign.

Let’s start with the big start-up fund that grabbed all the headlines last year: This Rs10,000 crore war chest, managed by the Small Industries Development Bank of India, or Sidbi, was supposed to invest in venture capital (VC) funds, which in turn would invest in start-ups. However, not a single rupee has been disbursed yet. The problem is not excessive paperwork or red tape. In fact, as Indian Angel Network chairman Saurabh Srivastava points out, Sidbi has already sanctioned some money but this amount hasn’t been withdrawn. This is because the bank only puts in 15% of the total corpus, while it is the VC that has to bring the remaining 85% to the table. And, this year, VCs have struggled to raise that kind of money—as a result, funding has almost halved, according to data analysis firm Tracxn Technologies.

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