Indian government commits $75m to domestic start-ups
The Indian government has made a fresh INR5 billion ($75 million) commitment to its Startup India campaign, which aims to drive bank financing for early-stage companies while offering workshop and incubator services.
According to a statement, the latest investment will be deployed over the next few years, with INR1.8 billion earmarked for the current financial year. This represents a 450% increase in the Department of Science & Technology's (DST) previous budget for the program this year.
The new capital is being supplied via the National Initiative for Development & Harnessing Innovations (NIDHI), a DST unit focused on nurturing start-ups. Earlier this month, NIDHI launched a support vehicle for prototyping and idea cultivation that will grant up to INR1 million per start-up. It has also recently implemented a seed-stage investment program that offers up to INR10 million per start-up.
So far, DST has helped establish more than 100 technology-focused incubators in academic and R&D institutions, hosting some 2,000 start-ups. Recent activity on this front includes the creation of a INR1 billion incubator last month to support the local oil industry.
Startup India is hoping to benefit from a broader policy shift mooted earlier this year, including recommendations to facilitate venture investment and the launch of a INR100 billion VC fund-of-funds.
Recent momentum has also taken the form of start-up investment tax concessions that effectively eliminate the so-called "angel tax". As a result start-ups will no longer be required to pay income tax on investments from unregistered venture capital funds or high net worth individuals that exceed the company's fair market value.
Meanwhile, the latest Union Budget has provided a tax holiday for Indian start-ups that will eliminate taxes on any profits in three of the first five years of a start-up's life. This coincided with measures to streamline the process of starting a new business and reduce registration time to one day.
According to AVCJ Research, Indian venture investment increased 234% year-on-year during 2015 to about $1.7 billion. This was achieved across 222 disclosed deals, versus 126 disclosed deals in 2014.
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