Government to invest Rs. 2,200 crores in electronic startups

Posted on February 13, 2017

The Central Government is planning to invest upto Rs. 2,200 crores on electronic startups, working to develop new technologies, by 2019, using the Electronics Development Fund (EDF), a senior government official said. The Central Government will work with Venture Capitalists (VCs) to create funds to provide risk capital to electronic companies, working to develop new technologies in the domains of nano electronics and IT. The Government will invest 10% of EDF’s capital in each company and the rest will be invested by Venture Capitalists (VCs). Read more on Investments

“One of the major issues that we have had in India is that we have not had big VC funding coming in. Mostly it (big funding) has gone into e – commerce and e – tailing. That is not enough. We need to create IPR also. To create IPR, there are a large number of tech start – ups, people working in nano – technology etcetera but the problem is who will fund them, because it is almost like R&D, until they commercialize”, Income Tax department secretary, Aruna Sundararajan said.

The main objective of the Government’s EDF is to enable startups to get funded by private VCs.

“That will not happen on its own. So the idea is to seed the market. Government putting in 10% doesn’t seem to be a big deal but it is a big deal because that is what builds a certain degree of confidence in the investors who put money into the venture fund”, Ms. Sundararajan explained.

So far, the Government has enabled electronic startups to get funds amounting to Rs. 6,870 crores, out of which the government’s contribution is Rs. 687 crores.

“Our eventual plan is to go up to ₹ 22,000 crores by 2019, out of which the government’s share will be ₹ 2,200 crores”, Ms. Sundararajan said.

Another main objective of the Government’s EDF is to develop the electronics design and manufacturing sector in India so that India’s net electronics imports by 2020 are ‘zero’!

I believe all the sectors in India should receive equal attention and investments from the Government to achieve uniform economic growth and make India a self – reliant superpower in all the fields. Hopefully, this noble initiative taken by the Government of India to encourage private investments in startups, achieves its goal by 2020. The Government of India should take more of such useful steps to promote startups in India. Read more on Startup News