Budget 2015: What happened to the Rs 10,000 cr startup fund Mr Jaitley?

By Sulekha Nair, Arti Singh   Even as the NDA-government is upbeat on the promotion of local start-up firms to prop up the manufacturing segment in the country under the much-hyped Make in India initiative, the fate of similar initiatives announced in the past have remained unclear. In many cases, funds allocated have remained unspent, industry officials said. [caption id=“attachment_2030177” align=“alignleft” width=“300” class=" “]  Thinkstock image[/caption] For instance, in the NDA-government’s interim budget in 2014, Finance Minister Arun Jaitley announced the creation of a Rs 10,000 crore dedicated startup fund, which promised a lifeline to cash-starved small firms. The idea was to assist start-up companies to attract private capital by providing equity, quasi-equity, soft loans and other risk capital for startups. But industry leaders allege that beyond the budget announcements, the implementation of the scheme has been poor on the ground. “How much has the government disbursed under the fund, so far? Who have benefitted from it? We have no clue about the fund,” Chandrakant Salunkhe, founder and president, Small and Medium Business Development Chamber of India, told Firstpost. Even though the Chamber had a recent meeting with the government representatives on this, there was no clarity on the utilization of the fund, Salunkhe said. According to Salunkhe, till this point, there is no clarity on the fund utilization as yet. “To our understanding, nothing has been allocated so far,” said Rahul Gupta, chairman, SME Chapter, MAIT- the industry body representing India’s IT hardware, training and R&D services sectors. “It is important to have a clear definition of the objective of this fund disbursement. There should be clarity on if it is intended for incubating new SMEs, provide working-capital/marketing assistance etc.,” Gupta said. According to Gupta, even the Rs 10,000 crore fund allocated in the previous budget is inadequate considering the large number of SMEs in the country. According to him, a major portion of this fund should be allocated to IT, electronics and telecom sector. To be sure, there is an increased optimism among the start-ups following the increased attention from the government on this segment. The number of firms tapping the bourses to raise funds has gone up in the recent past, according to Sanchit Gogia, chief analyst and group CEO, Greyhound Research. According to Gogia, around 61 SMEs were listed on the BSE platform for SMEs till July 2014. The number has gone up after the announcement of the fund Gogia said. “The government has to focus on key challenges and provide definitive schemes and programmes to help solve pending matters,” Gogia said, adding areas such as making technology cheaper and accessible to SMEs, enabling ecosystem to facilitate technology transfer and develop strong Information and Communication (ICT) systems should be give priority. Beyond the fact that the fund would be disbursed by the Ministry of Small and Medium Enterprises, nothing more is known of this fund,” said Milind Kamble, president, Dalit Indian Chamber of Commerce and Industry. When a few members of the DICCI approached the ministry to make enquiries, they were told that they were yet to receive it.