Government Schemes For Startups in India

The Union Ministry of Commerce and Industry launched Startup India on 16th January, 2016. This scheme was introduced to provide a comprehensive support system for new businesses, aspiring entrepreneurs, and MSMEs. These initiatives serve a multi-faceted purpose, offering essential seed funding, professional mentorship, and significant tax benefits to reduce the initial hurdles of starting a venture. These programs have been instrumental in transforming India into the world’s third-largest startup ecosystem, empowering innovators across sectors like technology, healthcare, and education to scale their ideas into sustainable enterprises.

Government support for startups and entrepreneurs is foundational to India’s vision of becoming a global economic powerhouse. Below is a detailed breakdown of the key schemes available to help you launch and scale your venture: 

1. Startup India Action Plan (DPIIT)

This is the flagship initiative of the Startup India Scheme, designed to build a strong ecosystem for nurturing innovation.

• Objective: To provide tax exemptions, easier compliance, and IPR fast-tracking to budding entrepreneurs.

• Funding Amount: Includes various benefits like an 80% rebate on patent filings and income tax exemptions for 3 years.

• Eligibility: Entities incorporated as Private Limited, LLP, or Partnership firms, less than 10 years old, with an annual turnover not exceeding ₹100 Crores.

• Applying Body: Department for Promotion of Industry and Internal Trade (DPIIT).
   

2. Atal Innovation Mission (AIM)

The AIM focuses on creating a culture of innovation and entrepreneurship at all levels, from schools to high-end research.

• Objective: To establish Atal Tinkering Labs (ATLs) in schools and Atal Incubation Centres (AICs) for startups.

• Funding Amount: Grants up to ₹20 Lakhs for ATLs and up to ₹10 Crores for AICs.

• Eligibility: Schools, universities, NGOs, and startups with innovative, research-driven products.

• Applying Body: NITI Aayog.
   

3. MUDRA Loan (Shishu, Kishor, Tarun)

The Mudra Loan is aimed at funding the "unfunded" by providing low-cost credit to micro-enterprises.

• Objective: To provide formal credit to non-corporate, non-farm small/micro-enterprises.

• Funding Amount:

  • Shishu: Loans up to ₹50,000.

  • Kishor: Loans between ₹50,000 and ₹5 Lakhs.

  • Tarun: Loans between ₹5 Lakhs and ₹10 Lakhs.

• Eligibility: Small business owners, shopkeepers, and service providers (Age 18–65).

• Applying Body: MUDRA Ltd (through Commercial Banks, NBFCs, and MFIs).
   

4. CGTMSE – Credit Guarantee Scheme

The CGTMSE facilitates credit flow to MSMEs by providing guarantees to lenders in case of default.

• Objective: To enable collateral-free credit for the micro and small enterprise sector.

• Funding Amount: Maximum guarantee cover up to ₹5 Crores (for MSMEs) and up to ₹10 Crores (for specific startup frameworks).

• Eligibility: New and existing Micro and Small Enterprises (MSEs).

• Applying Body: Credit Guarantee Fund Trust for Micro and Small Enterprises.
   

5. SISFS – Startup India Seed Fund Scheme

The SISFS provides early-stage capital for startups that are often unable to secure bank loans or VC funding.

• Objective: To provide financial assistance for proof of concept, prototype development, and market entry.

• Funding Amount: Up to ₹20 Lakhs as a grant (for validation) and up to ₹50 Lakhs via convertible debentures/debt (for commercialisation).

• Eligibility: DPIIT-recognised startups incorporated less than 2 years ago at the time of application.

• Applying Body: DPIIT (implemented through selected Incubators).
   

6. Stand Up India

The Stand Up India Scheme is designed to promote entrepreneurship among women and marginalised communities.

• Objective: To leverage the institutional credit system to reach underserved sectors of the population.

• Funding Amount: Composite loans ranging from ₹10 Lakhs to ₹1 Crore.

• Eligibility: Women and SC/ST entrepreneurs setting up a "greenfield" (first-time) enterprise.

• Applying Body: Department of Financial Services (DFS) through Scheduled Commercial Banks.
   

7. National SC-ST Hub

This initiative focuses on professional support and capacity building for entrepreneurs from marginalised backgrounds.

• Objective: To help SC/ST entrepreneurs participate effectively in public procurement and government tenders.

• Funding Amount: Subsidies on fees for bank loan processing, market access support, and skill development training.

• Eligibility: MSMEs owned by individuals belonging to Scheduled Castes or Scheduled Tribes.

• Applying Body: Ministry of Micro, Small and Medium Enterprises (MSME).
   

8. Fund of Funds for Startups (FFS)

The FFS does not invest directly in startups but acts as a catalyst by providing capital to venture funds.

• Objective: To provide equity support to startups and encourage a vibrant domestic venture capital market.

• Funding Amount: A total corpus of ₹10,000 Crores distributed to SEBI-registered Alternative Investment Funds (AIFs).

• Eligibility: DPIIT-recognised startups seeking equity investment through registered AIFs.

• Applying Body: SIDBI (Small Industries Development Bank of India).
   

9. Software Technology Park (STP)

The STP scheme is a 100% export-oriented scheme for the development and export of computer software.

• Objective: To provide statutory and promotional services to IT/ITeS exporters.

• Funding Amount: Duty-free imports of capital goods and 100% foreign equity permission.

• Eligibility: Entities involved in software development or IT-enabled services for export purposes.

• Applying Body: Software Technology Parks of India (STPI) under MeitY.

Navigating the application process for government support is structured to ensure that only legitimate, innovative ventures receive assistance. Follow these steps to obtain your startup business loan:

1. Register on the Startup India Portal: Begin by creating a profile on the official startupindia.gov.in website. This platform acts as a central hub for the entire ecosystem.

2. Obtain DPIIT Recognition: Apply for formal recognition from the Department for Promotion of Industry and Internal Trade. This is a mandatory prerequisite for accessing most fiscal benefits.

3. Choose a Relevant Scheme: Identify the specific program that fits your needs, such as the Startup India Seed Fund for early-stage capital or the Credit Guarantee Scheme for debt.

4. Prepare Documentation: Collate essential records, including your Certificate of Incorporation, PAN card, a compelling pitch deck, and detailed three-to-five-year financial projections.

5. Submit the Application: Finalise your request through the respective scheme’s dedicated portal or approach a designated nationalised/private bank for credit-linked programs.

The Indian government provides significant fiscal incentives to help startups preserve capital and reinvest in growth. To avail of these, an entity must be a DPIIT-recognised startup. Key benefits include:

• Income Tax Exemption (Section 80-IAC): Eligible startups can apply for a tax holiday for three consecutive financial years out of their first ten years of incorporation.

• Capital Gains Exemption (Section 54EE): This allows entrepreneurs to reinvest long-term capital gains from the sale of assets into specified government funds, exempting them from tax up to ₹50 Lakhs.

• Angel Tax Exemption (Section 56): Recognised startups are exempt from tax on investments received above the fair market value (FMV) under Section 56(2)(viib) of the Income Tax Act.
   

While these tax breaks assist with cash flow, many ventures still require a startup business loan to manage day-to-day operations or scale infrastructure rapidly.

The evolution of India into a global innovation powerhouse is largely fueled by these strategic government initiatives. By leveraging DPIIT recognition and specific credit schemes, entrepreneurs can significantly lower the barriers to entry and accelerate their growth trajectory. However, government processing times can vary, and immediate capital is often necessary to seize market opportunities. If you require quick, flexible financing without the wait, you can apply for a business loan via Bajaj Markets. The platform offers a seamless digital experience, helping you secure the funds needed to turn your startup vision into a reality.