BUSINESS MANAGEMENT & START UPS

UNIT – 5 Government Initiatives For Startups In India

Introduction

The Startup India initiative was announced by Hon’ble Prime Minister Narendra Modi of
India on 15th August, 2015. The flagship initiative aims to build a strong eco-system for
nurturing innovation and Startups in the country that will drive sustainable economic growth
and generate large scale employment opportunities. Further to this, an Action Plan for Startup
India was unveiled by Prime Minister of India on 16th January, 2016. The Action Plan
comprises of 19 action items spanning across areas such as “Simplification and
handholding”, “Funding support and incentives” and “Industry-academia partnership and
incubation”.

Benefits/ Objectives Provided Under Startup India

1. Simple process : The government of India has launched a mobile app and a website for
easy registration for startups. Anyone interested in setting up a startup can fill up a simple
form on the website and upload certain documents. The entire process is completely online.

2. Reduction in cost : The government also provides lists of facilitators of patents and
trademarks. They will provide high-quality Intellectual Property Right Services including fast
examination of patents at lower fees. The government will bear all facilitator fees and the
startup will bear only the statutory fees. They will enjoy 80% reduction in the cost of filing
patents.

3. Easy access to Funds: A 10,000 crore rupees fund is set-up by government to provide
funds to the startups as venture capital. The government is also giving guarantee to the
lenders to encourage banks and other financial institutions for providing venture capital.

4. Tax holiday for 3 Years: Startups will be exempted from income tax for 3 years provided
they get a certification from Inter-Ministerial Board (IMB).

5. Apply for tenders: Startups can apply for government tenders. They are exempted from
the “prior experience/turnover” criteria applicable for normal companies answering to
government tenders.

6. R & D facilities: Seven new Research Parks will be set up to provide facilities to startups
in the R&D sector

7. No time-consuming compliances: Various compliances have been simplified for startups

to save time and money. Startups shall be allowed to self-certify compliance (through the
Startup mobile app) with 9 labour and 3 environment laws.

8. Tax saving for investors: People investing their capital gains in the venture funds setup
by the government will get exemption from capital gains. This will help startups to attract
more investors.

9. Choose your investor: After this plan, the startups will have an option to choose between
the VCs, giving them the liberty to choose their investors.

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10. Easy exit: In case of exit – A startup can close its business within 90 days from the date
of application of winding up

11. Meet other entrepreneurs: The government has proposed to hold 2 startup fests
annually both nationally and internationally to enable the various stakeholders of a startup to
meet. This will provide huge networking opportunities. Startups are being highly encouraged
by the government. The benefits enjoyed by them are immense, which is why more people
are setting up startups.

Startup India Initiatives

1. Pradhan Mantri Mudra Yojana (PMMY)

Micro Units Development Refinance Agency (MUDRA) banks have been created to enhance
credit facilities and boost the growth of small businesses in rural areas. The government has
introduced this scheme to support small businesses in India. In 2015, the government
allocated INR 10,000 crores to promote startup culture in the country. The MUDRA banks
provide startup loans of up to INR 10 lakhs to small enterprises, and businesses, which are
non-corporate, and non-farm small/micro-enterprises. MUDRA comes under Pradhan Mantri
Mudra Yojana (PMMY) which was launched on 8 April 2015. The loans have been
categorized as Tarun, Kishore, and Shishu. The assets are created through the bank’s finance
and there is no collateral security.

2. Credit Guarantee Fund Trust for Micro and Small Entreprises (CGTMSE)

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE ) was set
up by the government of India and had been put into effect from 1st January 2000 onwards to
provide business loans to micro-level businesses, small-scale industries, and startups with
zero collateral. It allows businesses to avail of loans at highly subsidized interest rates
without requiring security. By working along with SIDBI (Small Industries Development
Bank of India), the government provides a maximum amount of up to INR 100 lakhs under
this scheme for boosting new enterprises as well as rehabilitating the existing ones. Primarily
meant for manufacturing units, this loan can be availed in the form of working capital or a
term loan.

3. Zero Defect Zero Effect (ZED) Certification Scheme

The Zero Defect Zero Effect (ZED) scheme has been launched by the government of India
with a vision of creating proper awareness about ZED manufacturing among the MSMEs and
motivating them the assessment of their enterprise for ZED and supporting them. ZED can be
summed up as an integrated and holistic certification and handholding scheme that extends an
opportunity to the Micro, Small and Medium Enterprises (MSMEs) to strive to continuously
improve their processes and move up the ZED maturity assessment model.

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4. Credit Linked Capital Subsidy for Technology Upgradation (CLCSS)

Credit Linked Capital Subsidy for Technology Upgradation, which is popularly known as the
acronym, CLCSS, is a government of India scheme to upgrade technology. Under CLCSS the
Indian government provides cash for the Indian companies upfront to upgrade/modernize
their equipment or techniques. This scheme mainly empowers Micro and Small Scale
Enterprises (MSMEs).

5. Design Clinic Scheme for Design Expertise

The Design Clinic Scheme for Design Expertise is a scheme declared by the Indian
government to support the MSME manufacturing sector of India. As the government deems
that design and innovation are critical to the growth of a brand and feels that the MSMEs
should develop a design-centric approach to fuel their startups, it aims to infuse design
expertise in them. Under this scheme, the government of India announced to extend around
Rs 60,000 for attending design seminars and up to Rs 3.75 lakhs or 75% of the cost that
would be needed in conducting the seminar, where the entrepreneurs and their teams can
learn about design theories, interact with design veterans, build a network, and put them into
practice.

❖ Seed Capital / Fund

Meaning

Seed capital is the initial fund or money which is required by a budding entrepreneur to start
a new business venture. ‘Seed‘ here refers to the business which is at the beginning stage.
‘Capital‘ refers to the money or funds required at the very beginning of a business.

Sources of Startup Seed Capital

1. Friends and Family: The easiest way of raising fund for a startup is through family or
friends since they are familiar with the budding entrepreneur and his/her idea. However, one
must be careful while opting this source, as losing money may spoil relations with the lender.
For Example; A father withdraws his fixed deposit for seed funding his son’s startup
business.

2. Bootstrapping: Savings is a vital source of raising initial funds for a startup. Even the
investors hesitate to put in their money in a new business which lacks self-raised capital.For
Example; A person withdraws the amount from his bank’s savings account to start his
business.

3. Loans or Lines of Credit: To avail small borrowings from external sources, a budding
entrepreneur may go for loans or lines of credit from commercial banks. However, this source
may require to keep personal collateral with the lender for security.For Example; A budding
entrepreneur approaches a bank to get a business line of credit to meet the working capital
needs of the organization.

4. Small Business Grants: If one is lucky enough, he/she may get a small business grant
from central, state or local government or big business entities. The funds so acquired need

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not be repaid by the budding entrepreneur. For Example; In the USA, any female
entrepreneur owning a startup business in the fields of design, art, music or fashion may be
awarded a grant of $15000 by the Girlboss Foundation.

5.Microloans: These are small business loans offered by an individual or a group of

individuals at a slightly lower interest rate for startups. For Example; A person approaches
another individual who provides money on a monthly interest of 1%, for availing the initial
capital for the new business unit.

6. Angel Investors: An angel investor is the one who can invest between 10K to 100K in a
new business venture only if the budding entrepreneur can convince the angel of the business
idea and its profitability. Remember, they keep control over the operations and actively
participate in the decision making of the business. For Example; A person with a startup
business in the field of robotics convinces and acquires fund from angel investors looking
forward to investing in a similar idea.

7.Venture Capital: Though it is the source of high capital, i.e. more than one million, it
should be avoided in the initial stage of the business. The venture capital investors look
forward to owning a share in equity along with control and decision-making power. For
Example; One of India’s leading online furniture brand Pepperfry.com acquired USD 100
million for expansion of its business in Tier III and Tier IV cities through venture capital
from Goldman Sachs and Zodius Technology Fund.

8. Incubators: The budding entrepreneur may avail the initial capital from incubators who
not only provide funds but also give the required training and helps develop a network for the
business. Accelerators are another similar source of funds, the only difference being that the
accelerators support the company to take a significant transformational step. For
Example; UnLtd India acts as a business incubator for the entrepreneurs engaged in social
startups in India.

9. Bartering: Another good option for small business organizations is the exchange of some
commodity, i.e. any goods or services for other products or services. For Example; An
interior designer wanted to purchase the latest laptop for her startup but lacks the required
money for it. The owner of an electronics store agrees to give her the laptop in exchange for
the interior designing services for his premises.

10. Form a Partnership: Some of the well-established business organizations invest in the
new business units and initiating a partnership with them since they find these startups to be
of high potential. For Example; A running Thai restaurant owner provides initial funding to
an upcoming Italian cafe in the nearby locality to earn a dual profit. Thus, both the parties
enter into a partnership deed.

11. Crowdfunding: The last one is the acquisition of initial funds from a massive group of
individuals who get attracted to the budding entrepreneur’s business idea through
crowdfunding websites or social media. For Example; One of the most popular crowdfunded
business was SkyBell Video Doorbell. It successfully collected $600000 in 30 days on
Indiegogo for their idea of sending a live video of the person on the front gate, who rings the
doorbell.

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Advantages of Seed Capital for Start-ups

• Investors Willing to Take Risk: The most significant advantage of seed capital is
that the investors are ready to take the high risk of failure involved in the startup
business.
• Usually, No-Debt Financing: Most of the times, the budding entrepreneur is not
overburdened by the debts or liability. Instead, he/she needs to give away some share
in equity to the investors.
• High Growth Prospectives: The seed capital provides financial leverage to the
startups for grabbing new opportunities and accelerate growth.
• Flexible Business Agreements: The terms of a seed funding business agreement are
negotiable and flexible, which is not the case in venture capital and bank borrowings.
• Angels Share Knowledge and Experience: In sources like an angel investor, venture
capital, incubator, partnership and accelerator, the investor takes an interest in the
business. He/she also share relevant knowledge and information with the budding
entrepreneur.
• No Monthly Fees: Many of the investors (except in case of loans and borrowings) are
interested in the ownership of the new venture rather than charging interest or
monthly fees.
• Builds Relationship, Network and Community: Some sources of funds like angel
investors, crowdfunding and incubators allow the budding entrepreneur to access their
business networks and community to build public relations.

Disadvantages of Seed Capital for Start-ups

• May Lead to Diversions: Acquisition of funds for business is a time consuming, and
tedious work with diverts the entrepreneur’s attention from the underlying business
operations towards fulfilling seed capital requirement.
• Loss of Control and High Interference: An investors, especially the angel investors,
exercise control over the company’s decision making and operations, in the sake of
providing guidance. This excessive involvement of the investors trouble the
entrepreneurs a lot.
• Giving Up Equity: The budding entrepreneurs by opting for means like angel
investors, venture capitalists and incubators may land up giving away a share of
business ownership in the form of equity and limiting the future profits for himself or
herself.
• Interpreting Seed Capital Acquisition as Success: Some budding entrepreneurs
falsely consider the acquisition of funds as their most significant achievement. Thus,
going into a relaxation mode when they need to perform in making their business a
success.
• Costly Affair Due to High-Risk Involvement: Since startups involve a high risk of
failure and loss, the investors provide funds at a high rate of interest or in exchange
for a significant business share.
• Sometimes Investors Lack Expertise: In the practice of creating a diversified
portfolio, the investors sometimes put their money in less-known business, thus
increasing the risk of loss.
• Limits Future Profits: Since some sources of capital acquisition demand giving up
of a portion of business ownership by issuing equity shares to the investor, the
budding entrepreneur needs to share all future profits with such investors.

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• Investments May Not Stay Lifelong: The investors purposefully pool in their money
in a new venture. They aim at making profits, and when the business reaches a
saturation point, they tend to withdraw their investments.

❖ ASPIRE Scheme

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

an initiative of Government of India and promoted by the Ministry of Micro, Small and
Medium Enterprises (MSME). It was launched to set up incubation centres and network of
technology centres for enhancing entrepreneurship across India. It seeks to promote start-ups
for innovation in the agro-industry.

In India, the majority of the population is dependent on the agriculture industry even to this
day. The Government introduced many schemes with innovative initiatives, yet poverty and
unemployment problems prevail across the country. To curb this, the Government launched
this scheme to generate employment and set up enterprises in the agriculture industry.
ASPIRE was launched in 2015 to provide knowledge to the entrepreneurs for starting up their
businesses and becoming job providers. It was introduced to create new jobs and promote
start-up enterprises for innovation in rural areas and traditional agro-industries.

Objectives of ASPIRE Scheme

• Creation of new jobs and reducing unemployment
• Promote entrepreneurship. There should be enough job providers in India for all the
job seekers.
• Training to the youth of skill development for entrepreneurship to set up their own
businesses.
• Promote a much needed economic development at the district level as well.
• One of the most important objectives of the ASPIRE scheme is to add value to the
agricultural produce by automating agricultural activities.
• The monetary aid provided by the government under ASPIRE Yojana can be utilized
for plants and machinery items.
• Recycling of agricultural harvest waste, both pre and post harvest.
• Networking of business resources and credit facilitation is also one of the main
objectives of ASPIRE Yojana.

Eligibility for ASPIRE Scheme

The following are eligible for obtaining the benefits under ASPIRE-

• Any entrepreneur who intends to set up start-ups.

• Any technical/university/research institutes including those in the field of rural and
agro-based industry.
• All MSMEs with Entrepreneurs Memorandum Registration.
• Any institute/agency under the Government of India or any State Government in the
field of technology, business management, rural development and entrepreneur
development or any body corporate under Public-Private Partnership (PPP) mode can
set up Livelihood Business Incubation (LBI).

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• Any existing incubation centres operating under different Ministries and Departments
of Government of India and institutions which include National/Regional level
institutions of Government of India or any State Government for setting up centres
dedicated to incubation and enterprise creation in the area of agro-based industries.
• Any new incubation centres to be set up by eligible private institutions including
industry associations along with academic institutions, universities, government
entities, R&D laboratories and technology parks.

The application for this scheme is to be submitted to the Aspire Scheme Steering Committee
of the Ministry of MSME. Scheme Steering Committee is responsible for coordination,
overall policy and management support.

Components of ASPIRE Scheme

The components of this scheme are-

Livelihood Business Incubation (LBI)

The main objective of Livelihood Business Incubation is setting up business incubators to

incubate, provide skill development training to youth, impart entrepreneurship and facilitate
funding for empowering the entrepreneurs to set up their business enterprises. The main focus
of these incubators is creating jobs at the local level and reducing unemployment. These
incubators create a favourable ecosystem for the development of entrepreneurship in the
country. The LBI’s create enterprises on a large scale by taking up those commercial
activities which are already established.

Technology Business Incubation (TBI)

Technology Business Incubators are an effective economic development tool. TBI promotes
the growth of an enterprise through the application of technology, innovation and supporting
economic development strategies for small business development. They also encourage
growth in local economies and provide mechanisms for technology transfer.
The TBI’s mainly focus on those technologies that require support for commercialisation and
future proliferation. The programmes under TBI include support and setting up incubation
centres, incubation of ideas, creation of business enterprises out of innovative ideas and
accelerator programmes for incubators.

Start-up Promotion through Small Industries Development Bank of India (SIDBI)

The Small Industries Development Bank of India (SIDBI) enables ideas/innovations that
have creativity and scalability to come ahead and convert these into commercially viable
enterprises within a specified period with specific outcomes through innovative means of
finance. The innovative means of finance of SIDBI include equity, quasi-equity, venture
capital fund, angel fund, challenge fund, impact fund, etc. A fund of funds is also created
under SIDBI for achieving the purpose of converting ideas/innovations into commercially
viable enterprises.

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Funding Pattern Of ASPIRE

The budget of 2014-2015 allocated a corpus of Rs.200 crore to ASPIRE. The budget of 2019
proposed to set up 80 LBI and 20 TBI in 2019-20 under this scheme. The allocation of the
corpus of this scheme are as follows-

Sl.No Items Amount

Creation, maintenance and updation of the database of the

1 Rs.2 crore
Technology Centres network

Capacity Building, including Engagement of Consultants,

Rs.17.75
2 Surveys, Awards, Exposure Visits, Studies, Monitoring and
crore
Evaluation, etc.

Fund for setting up of Incubation Centres by NSIC, Coir Board,

Rs.62.50
3 KVIC or any other institution or agency of the Government of
crore
India/State Government

Rs.61.50
4 Fund for setting up of Technology Incubation Centres (TBI)
crore

Administrative cost @ 10% of the item mentioned in the 3rd row Rs.6.25
5
of this table above crore

Rs.60
6 Fund of Funds for Start-ups to be managed by SIDBI
crore

❖ The Samridhi Fund

Small Industries Development Bank of India (SIDBI)The Samridhi Fund is an approx. ₹430
crore social venture capital fund. SIDBI has envisaged the creation of the Samridhi Fund to
provide capital to social enterprises which can deliver both financial and social returns, in
Bihar, Uttar Pradesh, Madhya Pradesh, Odisha , Chattisgarh, Jharkhand, Rajasthan and West
Bengal.
Scheme Benefits & Highlights

• Investments will typically be in growth stage companies undertaking expansions

which already have a sound business model or innovative business model or products
and technologies which have the potential of achieving considerable scale.
• Samridhi can provide growth capital to enterprises through a variety of funding
instruments, viz., Equity and Convertible Instruments.
• Samridhi typically provides capital in the range of INR 5-25 crore. In exceptional
cases, Samridhi may invest amounts outside this range, especially when strong
developmental impact can be generated.
• Target sectors includes, but are not be limited to:

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o Water & Sanitation

o Affordable Healthcare
o Agriculture & Allied services
o Clean Energy
o Financial Inclusion (Including MFI’s)
o Education
o Skill Building, etc.

Process

The funding process typically takes 3-6 months, and involves the following stages:

- Go/No Go Decision – based on preliminary review by SVCL and a presentation by the

company, a decision will be made by the Investment Committee (IC)

- Detailed appraisal by SVCL team

- Final Investment Committee Decision

- Due Diligence and Documentation

Eligibility

The conditions neccessary for getting funded are as follow:

• Be economically viable
• Provide access to markets for the poor
• Be socially relevant and impact the poor as customers, producers or employees
• Increase the flow of capital to the above mentioned states
• Focus on Environment, Social and Governance matters.

The enterprises must have plans to expand operations in any or all of the following
states – Bihar, Chhattisgarh, Odisha, Uttar Pradesh, West Bengal, Madhya Pradesh,
Jharkhand and Rajasthan.

• Samridhi will not invest in any of the following businesses or activities:

• Illegal or banned activities, including child labour.
• Businesses dealing with hazardous chemicals, asbestos, pesticides and wastes; ozone
depleting substances; and endangered or protected wildlife or wildlife products.
• Arms and ammunition
• Companies which have been proven to be involved in fraud and corruption.

Documents Required

Companies seeking funding from Samridhi should provide a detailed information

memorandum containing background of the company and the promoters and investors,
past financials, business plan, financial projections etc.

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What Is The MUDRA Scheme?

Mudra is a refinancing scheme, offered to banks and microfinancing institutions. This scheme
is an entirely-owned subsidiary of SIDBI and provides banks and microfinancing institutions
with refinancing facilities against the loans they have provided to small businesses to
promote the development of these micro-units. This scheme is primarily aimed at MSME
units across the country. It was established with the sole purpose of funding and saving small
entrepreneurs from abuse by money lenders and helping 1.5 crore new entrepreneurs in
developing small businesses.

The Mudra scheme offers loans that do not need collateral. Under this arrangement there is
no fixed rate of interest on the loans availed. Interest is charged at the base rate plus 1–7%.
This can also be higher, depending on the risk involved and the profile of the customer.

Loans of up to Rs.10 lakhs are available through Commercial Banks, RRBS, Cooperative
Banks, NBFC, MFI, etc. to eligible companies. The borrowers can approach nearby branches
of the lending institutions or apply online for loans under the MUDRA scheme. MUDRA has
three loan schemes under it – Sishu loan up to Rs. 50,000, Kishore loan up to Rs. 5 lakhs and
Tarun loan up to Rs. 10 lakh

Advantages Of The MUDRA Loan Scheme

• There is no collateral needed for this loan, so you can borrow without losing any
personal or business property.
• In the event of default, the government assumes responsibility for paying the loan.
• This loan is most beneficial to entrepreneurs looking to set up their micro
enterprise.
• You can use this loan to fund, develop and expand your company with up to Rs.10
lakh funding.
• The MUDRA Yojana scheme is available for small businesses in both urban and
rural areas.
• Women borrowers can get better benefits due to lesser interest rates.
• The tenor of the loan may be extended to even 7 years, or you may choose to
repay your loan within a shorter period of time.
• Helps you to meet the working capital needs of your company.
• Being part of the Pradhan Mantri Jan-Dhan Yojana, this loan also allows you to
take advantage of the overdraft facility balance of up to Rs.5000.
• One can also apply for a MUDRA debit card that provides them with hassle-free
instant access to funds.

What Are Some Salient Features Of The MUDRA Yojana Scheme?

• The loan scheme comes in 3 schemes - Shishu, Kishore and Tarun schemes . The
loan amount is capped at Rs.50,000, Rs.5 lakh and Rs.10 lakh for each scheme
respectively.
• The scheme offers very affordable and reasonable interest rates, approximately
8.40 – 12.45%.

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• A nominal processing fee may be charged, as per the MUDRA Yojana details
specified in your lender’s loan fine print. Most lenders generally waive off the fee
for the ‘Shishu’ category.
• The repayment tenure for this loan is fixed based on your cash flow capacity and
the declared assets. A few lenders place a cap of 5 years on the loan tenure. You
can also avail refinance from MUDRA for a maximum of 36 months.

Which are the sectors that are covered under the MUDRA Yojana scheme?

• Transport: for purchase of vehicles such as rickshaws, 3 wheelers, small goods

vehicles, taxis, etc.
• Personal services like men’s saloons, beauty parlours, gymnasiums, boutiques, dry
cleaning, medicine shops, tailoring shops, etc.
• Food products production and packing facilities like papad making, jam making,
sweet shops, ice cream making, canteen services, etc.
• Agriculture and allied services like pisciculture, poultry, livestock, Agro-
processing, bee keeping, rearing, etc.
• Textile: Handloom, khadi activity traditional embroidery, vehicle accessories, etc.
• Business: Traders, shopkeepers, service enterprises, non-farm income activities,
etc.

What are the important credit schemes under the Pradhan Mantri MUDRA Yojana?

The MUDRA Yojana has a few different schemes under different categories.

Micro-credit scheme: Micro-enterprises, self-help groups and joint-liability groups can get
up to Rs.1 lakh through micro-finance institutions.

Women Enterprise Program: This program, also known as the Mahila Uddyami Yojana,
offers interest rate concessions of up to 0.25% on loans to women business owners at
affordable rates.

Refinance scheme for Banks: This scheme allows borrowers such as commercial banks,
regional rural banks, and scheduled cooperative banks to refinance loans up to Rs.10 lakh if
they have provided micro-enterprises credit based on requirements.

Mudra Card overdraft: This card provides beneficiaries to make the most of overdraft
facilities in addition to allowing debit transactions and withdrawals from ATMs. It also
makes a mechanism for cash-credit to access working capital financing.

Credit Guarantee Fund: This fund was created to provide finance to increase accessibility
and ease of lending to micro units.

Equipment Finance Scheme: This scheme provides limited equipment finance with an
emphasis on enabling businessmen to buy and update their machinery.

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How To Apply For MUDRA Scheme?

The MUDRA scheme offers a very simple way of applying to the finance scheme. To
make it easier, the scheme is streamlined into 3 categories:

• Shishu: Start-ups seeking a loan up to an amount of Rs. 50,000 can apply for a loan
under this classification. The rate of interest would be 10–12%.
• Kishor: Unestablished business units seeking a loan amount of Rs. 50,000 up to Rs.5
lakhs can apply for a loan in this category and will have to bear an interest rate of 14–
17%.
• Tarun: Established businesses looking for expansion of their existing unit can apply
for a loan under this category with funding of up to INR 10lacs. The interest rate
ranges above 16%.

The loan processing is as below:

• The applicant prepares a business proposal

• Select the category (Shishu, Kishor, Tarun) under which he wants to apply
• Visit a private or public bank where you can apply for a Mudra loan
• Submit a completed loan application form together with recent passport size
photographs, identity proof and proof of address
• Complete any other formalities required by the bank

❖ Atal Innovation Mission

Where there is entrepreneurship, there is innovation, and together, these two constitute a
formidable force in shaping the economy of a country. It creates jobs, products, processes and
fosters a sense of teamwork, creativity, vision and ambition. India boasts a massive force in
terms of labor, and with this in mind, the Government of India brought forth an initiative
called the Atal Innovation Mission, which aims to promote the culture of entrepreneurship
and innovation across the country. It was set up by the National Institution for Transforming
India, also called NITI Aayog.

Objectives of the Atal Innovation Mission

• The focus is on innovation, and hence the policies and plans will be developed around
that idea for the various sectors.
• Provides a platform for and establishes collaboration opportunities for various
stakeholders.
• To act as an umbrella structure, encompassing and overseeing the entire innovation
ecosystem of the country.

AIM Framework

The Atal Innovation Mission has introduced a few major programs in line with its vision of
entrepreneurship promotion as well as the promotion of innovation.

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1. Atal Tinkering Labs (ATL)

• To promote creativity and innovation in the minds of school children.

• Children as young as 12 years of age gain access to technological innovation.
• The concepts of Science, Technology, Engineering and Maths are taught through
various tools and equipment of the like.
• ATL Community Day, School of the Month Challenge, ATL Festival, Tinkering and
Innovation Marathon are some of the programmes under ATL.
• Financial aid of Rs. 20 lakh is given to each school a. One time establishment cost of
Rs. 10 lakh. b. The operation cost of Rs. 10 lakh over a period of five years.

2. Atal Incubation Centres (AIC)

• Promotes and encourages innovative startups to become more scalable, sustainable

and more stable.
• To set up world-class incubators in all the 110 smart cities as well as the top 5
educational institutes in each state so as to give rise to successful, sustainable startups
in every state.
• Incubators will be equipped with the necessary infrastructure, experts as mentors in
their respective fields, ability to access seed capital etc.
• Up to Rs. 10 crore will be available in the form of financial aid over a period of 5
years in order to cover the capital expenditure and operational expenses so as to
establish the AIC.

3. Atal New India Challenge

• To promote the design and development of innovation-driven products based on

cutting edge technologies.
• Areas of focus are specific areas of importance on a national basis – a. Energy storage
b. Climate-smart precision agriculture c. Universal drinking water d. Railways e.
Predictive Maintenance of Rolling Stock f. Smart mobility and Electric mobility g.
Waste management recycling and reuse
• Selected applicants of the Atal New India Challenge will be eligible for a grant of Rs.
1 crore, on a milestone basis.
• For the Atal Grand Challenge, a grant of Rs. 30 crore is available.

4. Mentor of Change Programme

• To guide and mentor students at the ATLs and AICs set up all over the country with a
vision to enable them to develop the skills of strategic thinking, creation and
innovation.
• Mentors are required to spend at least 2 hours a week in these labs.
• Areas of focus include:-
• a. Technical Know-how – The knowledge of being able to use technology in an
efficient and effective manner.
• b. Innovation and Design – The ability to design and create products on a solution-
based approach.
• c. Inspiration – Self-motivation, leadership, critical thinking etc.

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5. Atal Community Innovation Centre

• The main aim is to cater to the underserved/unserved regions of India so as to foster a

spirit of entrepreneurship as well as creativity and innovation.
• The Community Innovation Centres are set up in areas that lack infrastructure and
facilities, areas that have an unfavorable environment for creativity and innovation.
• The areas include the underserved/unserved regions of Tier I cities, Tier II and Tier
III cities, J & K, smart cities, North East region, Aspirational Districts, Rural and
Tribal areas.

6. Atal Research & Innovation for Small Enterprises (ARISE)

• To promote research and innovation and increase the competitiveness of Indian

startups and small enterprises including Micro, Small and Medium Enterprises.
• Key objective – Provide a steady stream of innovative products of which the first
potential buyers will be the Central Government Ministries/Departments.
• This programme is driven by ISRO (Indian Space Research Organisation) and four
ministries:- a. Ministry of Food Processing Industries b. Ministry of Housing and
Urban Affairs c. Ministry of Health and Family Welfare d. Ministry of Defence
• For startups to develop a minimum usable prototype, Rs. 50 lakh in the form of
financial assistance/grant has been specifically earmarked and set aside.
• Instils collaboration with various ministries in order to catalyse research, innovation
and find solutions to certain sector-related problems.

❖ MSME Multiplier Grants Scheme

India is a land of possibilities, particularly in terms of trade and business. There is a lot of
untapped potential that can be realised with the correct tools. Over 50 startup programmes
have been created by the Indian government. The Government of India aims to aid the
country’s start-up mission with its initiatives addressing young entrepreneurs and small and
medium enterprises. The Department of Electronics and Information Technology (DeitY) is
taking a step in that direction. The Department of Electronics and Information Technology
(DeitY) established the Multiplier Grants Scheme. The scheme aims to bridge the gap
between research and development and commercialisation.

Objectives of the Multiplier Grants Scheme

• Establish, nurture, and deepen ties between industry and research institutes;
• To encourage institutes to do industry-oriented research and development;
• Encourage and speed up the development of indigenous goods and services.
• Close the gap between R&D and proof-of-concept, as well as commercialisation and
globalisation.

Benefits of the Multiplier Grants Scheme

The following are the benefits that the Government of India expects to derive from the
Multiplier Grants Scheme:

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• Academic and government R&D labs would be focused toward market-oriented

R&D. Moreover, this would also improve the relevance of education and training to
meet market demands. The industry would be aided in mobilizing technological
know-how and skills.
• In terms of cost-competitive indigenous new products, the sector would be able to
respond rapidly to market demands.
• Incentives in the form of royalty sharing may aid in the recruitment and retention of
qualified personnel in academia and government R&D labs.
• Close collaboration between industry, academia, and R&D labs may result in a rise in
the number of entrepreneurs.

What is the Process for Grants?

Idea Generation and Submission of the Project Proposal

In order for collaborative research to take place, the idea for it must come from the industry
or an industrial consortia.

Academic institutions or R&D bodies that want to conduct industry-specific research must
submit a project application to the Department of Electronics and Information Technology.
The Academic institutions or R&D bodies must submit it jointly with the industry or industry
consortia under the Multiplier Grants Scheme.

Details regarding the Project Proposal

• The plan is intended to promote electronic and information technology innovation.

• The proposal should include innovative concepts for modules, goods, packages, and
services.
• Should have additionally developed a concrete plan from the prototype phase to the
commercialization package to be selected for the Multiplier Grants Scheme.
• The proposal’s concept must be focused on one core area of operation in that industry.

Project Investigator

The nominated institute or project investigator should have the necessary knowledge and
track record in that subject in order to ensure credibility and guarantee results.

Ascertaining the R&D Capabilities

Institutions participating in collaborative research under the Multiplier Grants Scheme must
have the required R&D capabilities, which are determined by the following factors: –

• What is the quality of the professional courses they teach at the ICTE?
(B.Sc./M.Sc./Ph.D.)
• Do they have any previous research or project experience?
• Are there any articles they’ve published?
• Is there any industry collaboration going on?
• Do they meet the requirement of the institution having been in operation for at least 5
years?

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Market Research

The product should be technically and financially feasible as a result of this innovation. The
proposals should include the following information on the market survey of the
modules/products/packages/services that will be developed:-

• Recognize your target market.

• Recognizing customer behavior and purchasing potential.
• Supply-demand chain
• SWOT Analysis (Strengths, Weaknesses, Opportunities and Threat)
• Pricing for new products/services is being evaluated.

❖ CGTMSE – Credit Guarantee Fund Trust for Micro and Small Enterprises

A special protection is given to the Micro, Small and Medium enterprises via the MSME Act,
2006. These are small-scale industries which require immunity and special protection to
flourish. These industries form the very backbone of our Indian Economy. One of the
government-sponsored schemes for MSMEs is the CGTMSE (Credit Guarantee Fund Trust
for Micro and Small Enterprises). In this article, we will learn more about this fund.

What is the CGTMSE? The whole idea behind this trust is to provide financial assistance to
these industries without any third party guarantee/ or collateral. These schemes provide the
assurance to the lenders that in case of default by them a guarantee cover will be provided by
trust in the ratio of 50/75/80/85 percent of the amount so given.

The objectives of this fund are:

1. To check the financial viability of the project of these companies

2. To give term loans and composite credit schemes

As per this scheme, a loan of up to Rs. 200 lakhs can be given to MSMEs. A special
preference is given to the women entrepreneurs who are eligible for this scheme. Loans are
also provided to borrowers who are located in the Northeastern States of India including
Sikkim and Jammu and Kashmir.

What are the fees charged by the CGTMSE?

The fees charged by the trust fund is a percentage of 1% p.a of the amount so sanctioned:

1. 0.75% – for credit of up to Rs. 5 Lakhs

2. 0.85% for credit above Rs. 5 Lakhs but up to Rs. 100 Lakh

The credit guarantee available under this scheme is 75/80% of the amount so given to a
maximum cap of Rs. 62.5 Lakh / 65 Lakh for a credit facility of up to Rs. 50 Lakhs. The
percentage guarantee is 85% for micro-enterprises for a sum of up to Rs. 5 lakhs. The
percentage of guarantee is 50% of the amount so sanctioned for a credit of above Rs. 50
Lakhs with a maximum limit of Rs. 100 Lakhs. The tenure of the guarantee is a block of 5
years.

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What is the extent of the cover given by CGTMSE?

The extent of cover is up to 80% for –

1. Micro and small enterprise which are operated and owned by women entrepreneurs.
2. All credits or loans given to the North eastern states of India including the state of
Sikkim.

In case of default, the trust will settle the claim up to 75% or 80% of the amount no repaid up
to the limit cap of Rs. 50 Lakhs. For the amounts above Rs. 50 Lakhs to Rs. 200 Lakhs the
guarantee cover is reduce to 50%.

Which enterprises can avail the CGTMSE fund?

The enterprises which are eligible for this scheme are : New as well as existing Micro, Small
and Medium enterprises who are engaged in the process of;

a. manufacturing activity

b. service activity, except:

i. Retail Trade

ii. Educational Institutions

iii. Self Help Groups

iv. Training Institutions.

It is now available for selected NBFC’s also.

Which banks are associated with the CGTMSE scheme?

The banks which can work as eligible lenders are:

1. Schedules Commercial Banks, which may be either Public or Private Sector or a

Foreign bank.
2. NABARD has classified some Regional Rural Banks under the “Sustainable Viable”
category. These banks can act as a Eligible Bankers.
3. There are 133 eligible lending institutions registered as MLI’s of the TRUST. (Till
May 31, 2015) which comprises of:

a. 26 Public Sector Banks

b. 21 Private Sector Banks

c. 73 Regional Rural Banks

d. 4 Foreign Banks

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e. Delhi Financial Corporation

f. Kerala Financial Corporation

g. Jammu & Kashmir Development Finance Corporation Ltd.

h. Export-Import Bank of India

i. The Tamil Nadu Industrial Investment Corporation Ltd.

j. National Small Industries Corporation (NSIC), North Eastern Development Finance

Corporation (NEDFI)

k. Small Industries Development Bank of India (SIDBI)

How can one opt for this scheme?

The procedure to opt for this scheme is explained below:

1. The first and the foremost step to avail this scheme is to prepare a proper Business
Plan including all the details financial and otherwise. The business model should be
such that it explains out the viability of the project.
2. After the business model is constructed, the decision regarding which lender bank to
approach is to be taken. Once that is done the application along with the business
model is to be submitted to the bank.
3. The bank will check and verify all the details of the application and the model of the
project so submitted.
4. After verification, the bank will further send the application to the CGFTMSE Fund
where the application will be scrutinized again. If it is approved the Fund will instruct
the bank to release funds for the business.

After the approval comes through the business will have to pay the borrowers will have to
pay the CGTMSE guarantee and service fee.

❖ Software Technology Parks of India (STPI)

Introduction:

Software Technology Parks of India was set up in 1991 as an autonomous society under the
Ministry of Electronics and Information Technology (MeitY). STPI’s main objective has
been the promotion of software exports from the country. STPI acts as ‘single-window in
providing services to the software exporters. The services rendered by STPI for the software
exporting community have been statutory services, data communications services, incubation
facilities, training and value-added services. STPI has played a key developmental role in the
promotion of software exports with a special focus on SMEs and startup units.

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STPI Centres

Services:

The main services rendered by STPI for the IT/ITES/ESDM industry are statutory services,
incubation facilities, data communications services which inter-alia are as under:

• Statutory Services

STPI has been implementing the Software Technology Park (STP) scheme and the
Electronics Hardware Technology Park (EHTP) scheme for the promotion of IT/ITES
industry. The phenomenal success of the IT-ITES industry has been possible, inter-
alia, due to pivotal role played by the STP Scheme. STP Scheme is a unique scheme,
designed to promote the software industry and growth of startups and SMEs without
any locational constraints.

During the FY 2020-21, IT/ITES export made by STPI registered units are Rs.
4,96,313 crores and Electronics Hardware export of Rs. 6,946 crores under EHTP
scheme.
• Incubation Services

STPI is offering business and technology incubation with ultra-modern office

facilities to small units and entrepreneurs. Plug-n-Play facilities for startups enable
short gestation period, lower capital expenditure, and empower entrepreneurs to start
their own operations and grow in a competitive environment. Moreover, these
incubatees are treated under preferred category to propel the growth in R&D, product
development, and IPR generation.
Incubation services of STPI include:
o Ready to work-office space with reliable internet connectivity at attractive
tariffs.
o Associated services (e.g. phone, VC/conference rooms, back office etc.) on
usage basis
o Opportunities for participation in events and promotion through STPI websites
o Access to tools, labs, mentoring, marketing etc. where available
• Datacom Services

One of the STPI’s remarkable contributions to the software-exporting sector is

provision of High-Speed Data Communication (HSDC) services. STPI has designed
and developed state-of-the-art HSDC network called SoftNET for software exporters.
Local access to international gateways is provided through point-to-point and point-
to-multipoint microwave radios which has overcome the last mile problem and
enabled STPI to maintain an uptime more than 99%.
• Consultancy Services

STPI’s strong domain knowledge, technology capabilities and process knowledge

have laid foundation for offering following services:
o Technology consulting and project management services to various national
and international organizations
o Providing services for building state-of-the-art communication network
infrastructure, network management systems, data centres & network

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operation centres etc. for various state governments & central government
departments
o Providing operation and maintenance support for networks ranging from
enterprise to e-governance
• STPI Co-Location Services

With the increased expectations from citizens for online services and the number of
automation projects being launched by the Government and private as well as
corporate clients, the Data Centre requirements are growing exponentially. To fulfil
this requirement, STPI is setting up state-of-the-art Tier-III standard Data Centre at its
various Centres across India. These Data Centre will cater to the need of Govt. / PSUs
/ Institutions/ Industries and other agencies alike. Presently, STPI has five Tier-III
Data Centres located in Chennai, Vijayawada, Bhubaneshwar, Bangalore and Mohali.
With a total area of 47,962 sq. ft., including the server farm area of 19,774 sq. ft.
which facilitates 579 racks for the businesses of various sizes.

❖ The Venture Capital Assistance Scheme

Ministry of Agriculture and Farmers Welfare

Venture Capital Assistance is financial support in the form of an interest free loan provided
by SFAC to qualifying projects to meet shortfall in the capital requirement for
implementation of the project.

Benefits

• Help in assisting agripreneurs to make investments in setting up agribusiness projects

through financial participation
• Provides financial support for preparation of bankable Detailed Project Reports
(DPRs) through Project Development Facility (PDF).

Eligibility

• Farmers
• Producer Groups
• Partnership/Proprietary Firms
• Self Help Groups
• Companies
• Agripreneurs
• units in agriexport zones
• Agriculture graduates Individually or in groups for setting up agribusiness projects.

Application Procedure

One can only apply online, offline application forms will not be accepted. Also, below are the
checklist before applying for the scheme.

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Sno. Checklist

Promoter’s request letter addressed to the Managing Director SFAC, New Delhi on
1
original letterhead of firm/company

2 Sanction letter of Sanctioning authority addressed to recommending branch

Bank’s approved Appraisal/Process note bearing signature of sanctioning authority with

3
terms of sanction of term loan

4 Up-to-date statement of account of Term loan and Cash Credit (if sanctioned)

Equity Certificate:
a)C.A. certificate in case of Partnership or Proprietorship firms.
5
b)Form-2(PAS-3), FORM-5(SH-7) and other documents in lieu of FORM-23 filed with
ROC for

6 Farmer’s list/backward linkage duly supported by agreement

7 Affidavit of promoters that they have not availed VCA in the past

8 Unsecured loans raised by the promoters (If any). CA Certificate to be enclosed

9 Copy of last Bank's inspection report

Bank’s confirmation that they will not release primary & collateral security without
10
SFAC consent

11 Justification for margin on working capital taken in the project cost

Documents required to get enrolled in Venture Capital Scheme

• A letter addressing to Managing Director of SFAC is required. It is a promoter’s

request to get financial assistance which is to be given on the letterhead of the
company or firm.
• Sanction letter of the Sanctioning authority addressed to recommending branch.
• The bank’s approved appraisal or process note with a signature of the sanctioning
authority with the terms of sanction of the term loan.
• Up-to-date statement of account of the Term Loan and Cash Credit
• Equity Certificate: It can be a C.A. certificate in case of Proprietorship firms or
Partnership Firms, or form-2(PAS-3), FORM-5(SH-7), and other documents in place
of FORM-23 filed with ROC.
• The Farmer’s a list/ backward linkage duly supported by the agreement.
• Affidavit of promoters that they have not availed VCA in the past.
• If the loan is unsecured, in that case, it is a must to enclose the loan application with
C.A certificate.
• Submitting the copy of last Bank’s inspection report.

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• Bank’s confirmation that they will not release primary & collateral security without
SFAC consent
• Justification for margin on working capital taken in the project cost

Quantum of the loan

The Quantum of the loan for the venture capital assistance is offered based on the cost of the
project. Here are the minimum and the maximum amount loan eligibility.

• The quantum of loan will be 26% of the promoter’s equity.

• The maximum amount of loan provided under this scheme will be Rs.50 lakhs.
• The loan for the projects placed in the north-eastern parts of the hilly region is as
follows.

• The quantum of loan will be 40% of the promoter’s equity.

• The maximum amount of loan provided under this scheme will be Rs.50 lakhs.

Terms and conditions of Venture Capital Scheme:

The following are the conditions to be satisfied to avail loan under this scheme.

• The project must be in the agriculture sector or any other sector related to agriculture
practices.
• The project must give the assured market to the producer or farmers.
• The project must be sanctioned by the banks or financial institutions for the grant of
loan to the project.
• The project should encourage the farmers in yielding high-value crops for the increase
in the income of the farmer.

Steps to apply for Venture Capital Scheme

• The applicant has to visit the official portal of the SFAC, Government of India
• Click on the “ Venture Capital Assistance Scheme (VCA)” tab which is visible on the
homepage of the portal.
• On the same page, select “Online submission of venture capital assistance scheme
Form” from the list of options to apply for the scheme through online mode.
• On the next page, click on the “Apply for New venture capital assistance scheme
Application” link.
• Click on the “Start Filing Application Form” button, then the application forms the
venture capital assistance scheme will open up.

❖ Single Point Registration Scheme

Ministry of Micro Small & Medium Enterprises

The Government is the single largest buyer of a variety of goods. With a view to increase the
share of purchases from the small-scale sector, the Government Stores Purchase Programme
was launched in 1955-56. NSIC registers Micro & small Enterprises (MSEs) under Single
Point Registration scheme (SPRS) for participation in Government Purchases.

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Benefits of Single Point Registration Scheme

1. Issue of the Tender Sets free of cost.

2. Exemption from payment of Earnest Money Deposit (EMD).
3. In tender participating MSEs quoting price within price band of L1+15 per cent shall
also be allowed to supply a portion upto 25% of requirement by bringing down their
price to L1 Price , where L1 is non MSEs.
4. Consortia facility for Tender Marketing.

Eligibility

• All Micro & Small Enterprises having EM Part-II (Optional)/ Udyog Aadhaar
Memorandum (UAM) are eligible for registration with NSIC under its Single Point
Registration Scheme (SPRS).
• Micro & Small Enterprises who have already commenced their commercial
production but not completed one year of existence.

REGISTRATION PROCESS

1. Please visit Udyam Registration website for obtaining Udyam Registration Number.
2. MSEs have to register themselves in MSME Data Bank using UAM No. and PAN, to
get themselves registered for Single Point Registration.
3. Each step has to be filled & every step has saved and continues option. This way form
can be refilled and reviewed at any moment using PAN and UAM combination.
4. It is requested to go through Check-List and Download section to get to know about
required forms, annexure and documents.
5. It is always advisable to kindly place all required forms, annexure and documents on
your desktop in a folder for fast uploading.
6. Fees will be charged on the basis of Unit Enterprise category (Micro or Small).
7. Third party inspection is also involved for store item inspection. Units are requested
to kindly choose inspection agency according to their domain expertise and
jurisdiction.
8. Final Certificate will be available online and respective NSIC office will send
physical certificate copy by post.
9. For any communications, the registration number of certificate may be quoted.
10. Contact our NSIC field offices for any query by visiting
https://nsic.co.in/Corporate/SearchBranch.aspx

❖ Modified Special Incentive Package Scheme (MSIPS)

M-SIPS provides a subsidy to invest in the expenditure of electronic goods manufacturing.

Indian Government launched this scheme in July 2012.

Initially, it was accepting applications till 26th July 2015. However, our Government decided
on 30th January 2017 to extend this scheme’s tenure till 2018.

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Objectives

• Attract investment in the Electronics System Design & Manufacturing.

• Boosting the production of electronics goods by developing electronic manufacturing

units.

• Making India self-sufficient to fulfil India’s domestic demand for electronic items.

• Employment generation.

What Are the Benefits of Modified Special Incentive Package Scheme?

• Investors will receive a 20% capital subsidy for investing in Special Economic Zones
(SEZs).
• They will receive a 25% of the same for units out of Special Economic Zones.
• Incentives will be available for 44 categories of products across the value chain.
Those include raw materials from the assembly, testing, and packaging. In addition,
the product verticles also comprise raw material for chips, accessories and
components.
• These incentives will be available for the next 10 years of the approval of the
application.
• This scheme also provides reimbursement of excise for capital assets for the non-SEZ
units.
• Hi-tech and giant asset investment units will also receive central duties and taxes
reimbursement.

Who Are Eligible for Modified Special Incentive Package Scheme?

• Investors must invest a minimum of ₹ 1 crore for accessories manufacturing to apply

for this scheme. Additionally, a minimum ₹ 5000 crores threshold should be for
semiconductor fabrication units.
• The units must be in the industrial area notified by the Central or State Government.

How to Apply for Modified Special Incentive Package Scheme?

The applicants must submit their application forms under M-SIPS online on the official portal
of e-MSIPS. The Department of Electronics and Information Technology will approve the
qualified application within 120 days of submission.

The application fee structure as per project costs for this scheme are as follows -

Project Cost Initial application fee (INR)

Below 10 crores ₹ 10,000
10 to 100 crores ₹ 25,000
100 to 1000 crores ₹ 50,000
Over 1000 crores ₹ 1,00,000

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Note: Application fees are non-refundable after submitting the application.

The applicants must provide the following details in their application -

• Applicant details
• Financial Closure Details
• Electronic Manufacturing Cluster Details
• Initial Application Fee Details (you must pay the fee in demand draft)
• Project Proposal

Modified Special Incentive Package Scheme successfully strengthened “Make in India” and
“Digital India” programs.

❖ Self Employment and Talent Utilization – SETU Scheme

SETU stands for Self Employment and Talent Utilization. Talent Utilization is the
mechanism by which the individuals get appropriate technology or means.It helps to fully
utilize the inner potential of the individuals. Talent utilization is extremely important for any
economy. Hence, if proper utilization doesn’t take place properly, it will lead to inefficiency.

In order to promote and enhance the level of Self Employment and Talent
Utilization, Government has announced the setting up of a Self- Employment and Talent
Utilisation (SETU) mechanism.Presenting the General Budget 2015-16 in the Lok Sabha, the
Union Finance Minister Shri Arun Jaitley stated that SETU will be a Techno-Financial,
Incubation and Facilitation Programme.It will help to support all aspects of start-up
businesses, and other self-employment activities, particularly in technology-driven areas.
They have set up Rs.1000 crore in Niti Aayog for SETU.

Advantages of Self Employment and Talent Utilization – SETU Scheme

1. Working from Home : Self Employment is one of the means by which work from home is
increasing. Also, if you are self-employed you will have the benefit of balance work and
personal life in a very flexible way. You can take care of children and work on your project at
the same time.

2. Own Boss: Most of the people don’t like to work under someone’s supervision. This also
leads to unemployment. This becomes one of the reasons for a person to opt for self-
employment.

3. Less Expenditure: Salary comprises a major part of any organization’s expenditure. In

case of Self Employment, there is no need to pay a salary to anyone. Hence, working for
yourself means you can manage your own salary. Moreover, it helps to reduce expenses like
travel to work, life insurance, etc.

4. Reduction in Unemployment: There are various reasons because of which many

individuals sit idle and become part of the unemployed workforce. One of the major reasons
was the lack of finance to start a new business.Through SETU, finance is easily available for
young entrepreneurs. It also helps to eradicate unemployment and poverty on a large scale.

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5. Work-life Balance: Self-employment provides a better work-life balance, as one can

manage one’s own schedule and workload more flexible.

6. Work at any place and time: Being self-employed gives you the power of choosing your
own workspace. You don’t always have to stay at home. When you want some fresh air, you
can work from a favourite cafe or any other favourable location.

Disadvantages of Self Employment and Talent Utilization – SETU Scheme

1. Increase in Risk: It is your responsibility to make sure you always have work to do. This
means you may sometimes be without work and income. Though under this scheme, the
individuals get a loan at a cheaper rate. But during the recession period, that little interest can
be a big burden.

2. Lack of Employee Benefits: Most of the individuals in this current era want to enjoy
monetary as well as non-monetary benefits. But under this scheme, there is least or no
benefits as received under employment contracts.

3. Start from the Scratch: Establishing business and building a client base can be a tiring
and frustrating process. You need determination to succeed and perseverance.

4. Lack of finance in the rural area: Nobody can deny that most of the unemployed youth
belong to rural India. This program aims at providing funds, but the sad part is that its reach
is still limited to the urban areas. Most of the rural areas are deprived of funds to start a new
business.

5. Continuous Running Costs: One can go for several months without earning a profit, and
one always has to pay running costs such as rent, insurance, and internet access. Hence, it
program may lead to an increase in burden on the individuals in the initial phase of the
business. In extreme cases, it also leads to an increase in the NPA of the government.

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