After quite a while when Arun Jaitley, finance minister of India allotted a fund of Rs 10,000 crore to startup sector, a development is coming out in the form of allotment of Rs 2000 crore towards boosting the domestic venture sector.
The government’s motive for investing this much huge amount in the startup sector could be putting a slow pace over startup’s favouritism towards foreign sources when it comes to opting for investment or incubation. The logic behind this motive can be easily explained by the article “Young tech startups relocating overseas??” posted by Pixr8, dated January 6 this year. It stated that, as per a leading think tank in the country iSPIRT(Indian Software Product Industry Roundtable), approximately 75% of the young tech startups eyeing the global market may shift overseas to make a new base, reason being better investment opportunities, better regulatory environment and facilities.
According to ET, After initial hesitation over the multi-year nature of the allocation, announced in the Budget for 2014-15, the Reserve Bank of India (RBI) has finally agreed to allot about Rs 2,000 crore in the next financial year to a startup-specific fund, top government officials said.
Managed by Nodal bank, the money will be deployed to investment firms that apply for it. Small Industries Development Bank of India (SIDBI) and ICICI Bank are said to be the top contender where this huge amount will be stored.
A senior SIDBI official said the bank, which manages about 60 investments in VC funds, was being consulted by the government on setting up the startup fund. “With the Minister of State for Finance (Jayant Sinha) being from the investment banking community, work is proceeding at an incredible pace,” this person said.
Recently Pixr8 covered an article, Indian Government ‘Tax exemption’ bonanza coming soon for startups, which explained coming strategies for motivating young startups. According to sources plans like these are all in pipelines to boost budding ventures that may contribute towards the economy of the country. According to that proposal, those startups registering under the domain of science and technology will be certified with bonafide accreditation along with exemption from both service and excise tax till they remain under the some defined threshold value.