India to launch state-backed $1b innovation fund

Building on the principle that innovation can deliver a better quality of life to the lower class, the government will launch India Inclusive Innovation with an initial capital of INR5 billion ($97 million). The Finance Ministry is reportedly considering a INR1 billion capital injection and talks are also underway with local and overseas investors, including banks, government agencies and the International Finance Corp (IFC).

The fund will target enterprises that provide products and services to citizens at the bottom of the economic pyramid, looking particular at the agriculture, water, energy and healthcare sectors.

"We need to provide money to those who have ideas but no seed capital," said Sam Pitroda, adviser to the prime minister on public information, infrastructure and innovation, at an industry event on January 16.

The fund will be privately owned and the government's holding would not be more than 20%. It is expected to generate returns of about 10-12%, much smaller than the industry standard of around 18-20%.

Pitroda said he was hopeful that the finance minister would give more details in his forthcomign budget report, scheduled to be delivered after elections in five states between the end of January and early March.

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