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Government Schemes for Starting New Business in India

Government Schemes for Starting New Business in India

India is creating a strong start-up ecosystem progressively. The government has established a Ministry (department) to aid new companies to promote and encourage entrepreneurs. The governing party has created several initiatives to promote entrepreneurship in India and to financially support developing start-ups. The Union Government of India has explicitly created schemes to encourage and promote businesses in India. These schemes fall into the Union Government Business Schemes category in India.

The business and startups help in the economic development and growth of the nation and gain recognition at the global level. Currently, many businesses are coming up with innovation in the market. Turning innovative business ideas into reality has taken the startup ecosystem and the economy to the next level. But starting a business or startup is not easy as there are lots of registration and tax compliances that make it difficult for the business owners to start or run a business. To reduce the compliance burden the government has come up with schemes for ease of doing business.

Government schemes for starting new Business in India are implemented with the assistance of different government ministries, financial institutions, joint ventures, government enterprises, and banks.

Here is a list of Government Schemes for Starting a New Business in India

  • Rashtriya Krishi Vikas Yojana

On November 1st, 2017, the Government upgraded the Agriculture Related Approaches and the Allied Sector (RKVY) with Rashtriya Krishi Vikas Yojana. The purpose of this plan is to promote agricultural entrepreneurship and agriculture. This is supported by giving financial assistance and fostering the incubation environment for the farming firm to enhance agricultural operations.

The Ministry for Agriculture finances start-ups for 2020-21 under the innovation and agri-priority component of RKVY. Startups can include a range of businesses such as agro-production, digital farming, mechanisms for agriculture, fishing, milk, and artificial intelligence. The system offers the advantages of agri-enterprise orientation, RKVY – RAFTAAR Agri-Business Incubator seed-stage financing, and Agri-entrepreneur Idea/Pre-Seed Stage finance.

This initiative encourages individuals to set up an agricultural business or to become agricultural entrepreneurs. The incubators offered under this system will allow farmers to innovate in agricultural activity and associated agricultural services across the various stages of their company life cycle.

  • ASPIRE (A Scheme for Promotion of Innovation, Rural Industries, and Entrepreneurship)

ASPIRE was created to set up incubation centers as well as technology center networks for accelerating enterprise and promoting innovation start-ups in agribusiness. This initiative supports and promotes entrepreneurs and start-ups in the agricultural sector through the provision of incubation equipment, money, and a technological network. The components of ASPIRE are funds managed by Small Industries Development Bank of India (SIDBI), Technology Business Incubators, and Business Incubators.

SIDBI, Coir, Khadi industries, etc handle the funds under this plan, as these initiatives are an important livelihood for millions of Indian people. Livelihood Business Incubators generate local jobs and reduce unemployment. Incubators are focusing on growing technological network centers. In the management of this complete scheme, SIDBI plays an essential function and supports the other components of this scheme that in turn helps to create money by expanding job possibilities.

  • MUDRA (Micro Units Development and Refinance Agency Bank) or Mudra Loan

It is set up under the guidelines of the Pradhan Mantri MUDRA Scheme (PMMY). The Mudra Bank aims to build micro-unit systems and provide microfinance institutions with refinancing. The loans will be made for businesses and start-ups. Small companies, small-scale companies, farmers, start-ups, individuals, store owners, retailers, restaurants, bakeries, etc. Mudra loans are granted.

The mudra loans are not fixed interest rates, they are depending on RBI policy, which takes a quarterly decision. In general, interest rates range from 8.40% to 12.45% for 1 to 5 years. There are 3 products under the MUDRA scheme:

Shishu: Rs.50, 000

Kishor: Rs.50, 000 to Rs.5, 00, 00

Tarun: Rs.5, 00,000 up to Rs.10, 00,000

  • Multiplier Grants Scheme

This scheme encourages R&D development in the country. The goal of these schemes is to encourage collaborative R&D for the product and packaging development between industry and academia or R&D institutes. This system promotes R&D in institutes devoted to the industry. It bridges the gap between R&D and product/package marketing. The plan also provides the government financial support for that product, if the industry supports R&D for the creation of a product that can be marketed at the institution level. Financial assistance from the government will be up to double the amount the industry provides.

  • Support for International Patent Protection in Electronics & Information Technology (SIP-EIT)

SIP-EIT offers MSMEs and Technology Startup Units financial assistance in the areas of patents. This plan helps MSMEs to promote innovation and acknowledge the values and competencies of a worldwide international patent in an international patent filing method. The initiative helps MSMEs and technology startups protect their unique work internationally by patenting it. It is an effort of the Electronics & IT Department, MEITY, and the Government of India to provide financial aid for MSMEs and start-up technology units for the filing of foreign patents. It helps also capture development possibilities in the technology and electronics industry of information communication.

  • Credit Guarantee Scheme for Startups (CGSS)

Credit Guarantee Scheme for Startups functions under the trusteeship management of the National Credit Guarantee Trustee Company. The government of India has introduced this plan to encourage the startup business. It is not easy for an entrepreneur to set up a business/company. The two main challenges they encounter are insufficient finance and the banks’ risky view. The Government created the initiative to alleviate the problems it faced. The initiative is launched to allow startups to receive collateral-free financing for their businesses with a contribution of Rs.2000 crore. This scheme provides guarantee protection for the specified credit facility duration. For this scheme. All qualified recipients get a maximum credit guarantee of Rs.5 crore that covers support such as working capital, debentures, term loans, capital ventures, etc.

  • Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT SME)

The CGT SME is one of the Indian Ministry of MSME’s largest initiating loans to start-ups. Under this plan of government, qualified start-ups and MSMEs are granted a guaranteed loan of up to 1 crore. The loan has been dispersed through a trust known by the Department of MSME and Small Industry Development Bank of India, Crédit Guarantee Fund Trust for Micro or Small Enterprises (CGTMSE) (SIDBI).

  • Financial Support to MSMEs in ZED Certification Scheme

The ZED or Zero Defect and Zero Effect task is designed to promote the production of goods with high quality and zero defects, in the context of current and new fabrication units. The focus is on enabling firms to take advantage of world-class production methods and to employ technology to ensure their goods are the finest in the class.

Both financial support, technology, and instruments to ensure that their goods have no defects should be provided by the government. Both MSMEs and startups can register to ZED.

  • Credit Linked Capital Subsidy for Technology Upgradation (CLCSS)

Govt. is clear that technology can help Indian start-ups and MSMEs compete with international rivals. The Credit Linked Capital Subsidy (CLCSS) government system is being established for MSMEs to improve their technology and deploy state-of-the-art technological platforms for their businesses. Govt offers 15% subsidies for investment in startups and MSMEs in India to Rs 1 crore, under CLcSS. This government plan covers more than 7,500 products/services

  • Design Clinic for Design Expertise to MSMEs

Design and innovation for every industry are essential and each start-up and MSME needs a design-based strategy to tackle specialized challenges. The MSME Ministry has developed a Design Clinic to promote and inspire small companies to experiment and test innovative designs for their goods. This scheme of government will offer up to Rs 60,000 for the participation of design seminars and up to Rs 3.75 lakh or 75% of the seminar expenses, in which the entrepreneurs and/or their team may study and apply and learn more about design theories. Through this program, entrepreneurs can learn about current trends and practices in design, connect and network with other designers, entrepreneurs.

Govt. of India and MSME Ministry has started Startup India (www.startupindia.gov.in), an extensive platform that offers new and current entrepreneurs a large amount of information and tools, for start-ups, companies, and MSMEs.

Entrepreneurs can learn more about patents, the laws of copyright, best practices in recruitment, market research reporting, and more on all startup loan schemes.

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Written by Hardik Tokas

Hardik Tokas is a law graduate from GGSIPU, Delhi. He is an analytical thinker, an active team player who is proactive in legal research and writing, and has highly motivated enthusiasm for business, start-ups, and entrepreneurship. He has the vision to deliver excellent support to the visionary entrepreneurs and educate them in all legal compliances of applicable laws considering their business level and long term growth. He is a goal-oriented professional and a valuable member of the organization.

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