Salient Features

    • Startup India Seed Fund Scheme (SISFS) has been approved for the period of next four years starting from 2021-22.

    • It will be implemented with effect from 1st April 2021.

    • The Scheme aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization.

    • Rs. 945 Crore corpus will be divided over the next 4 years for providing seed funding to eligible startups through eligible incubators across India.

    • The scheme is expected to support about 3600 startups.

Benefits under ‘Atmanirbhar Bharat’ for Startups

    1. Rescheduling of Payments – Term Loans and Working Capital Facilities

        a. In respect of all term loans (including agricultural term loans, retail and crop loans), all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies) (“lending institutions”) were permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020.

        b. In view of the extension of lockdown and continuing disruption on account of COVID-19, all lending institutions were permitted to extend the moratorium by another three months i.e. from June 1, 2020 to August 31, 2020 on payment of all instalments in respect of term loans.

        c. In respect of working capital facilities sanctioned in the form of cash credit/overdraft , lending institutions were permitted to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 upto May 31, 2020. Further extension was granted up to 31st August 2020.

        d. Kamath Committee: An expert committee formed by the Reserve Bank of India (RBI) under the chairmanship of Shri K.V. Kamath made recommendations on the required financial parameters to be factored in the resolution plans under the ‘Resolution Framework for Covid19-related Stress’ along with sector specific benchmark ranges for such parameters.

    2. Easing of Working Capital Financing

        a. In respect of working capital facilities sanctioned to borrowers facing stress on account of the economic fallout of the pandemic, lending institutions may recalculate the ‘drawing power’ by reducing the margins and/or by reassessing the working capital cycle.

        b. Further, accounts provided relief under these instructions shall be subject to subsequent supervisory review with regard to their justifiability on account of the economic fallout from COVID-19.

    3. Measures for businesses including MSMEs

        a. Rs 3 lakh crore Emergency Working Capital Facility for Businesses,including MSMEs.

        b. Rs 20,000 crore Subordinate Debt for Stressed MSMEs.

        c. Rs 50,000 crore Equity infusion for MSMEs through Fund of Funds.

        d. New definition of MSME: The definition of micro manufacturing and services unit increased to Rs. 1 crore of investment and Rs. 5 crore of turnover.

        e. Global tenders has been disallowed upto Rs 200 crore, giving preference to domestic suppliers and boost to startups.

        f. Production-Linked Incentive (PLI) Scheme: For enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat, the PLI Scheme in the 10 key sectors were introduced.

        g. This will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology; ensure efficiencies; create economies of scale; enhance exports and make India an integral part of the global supply chain.

        h. Reliefs through Employee Provident Fund (EPF): Under Pradhan MantriGaribKalyan Package (PMGKP), payment of 12% of employer and 12% employee contributions was made into EPF accounts of eligible establishments.

        i. This provisioned assistance of Rs 4,860 crore to 3.67 lakh establishments, for 72.22 lakh employees.

        j. EPF contribution reduced for Business & Workers for 3 months: Under this package the statutory rate of EPF contribution of both employer and employee has been reduced to 10 percent of basic wages and dearness allowances from existing rate of 12 percent for all class of establishments covered under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952. 

        k. Reduction in rate of EPF contributions from 12% to 10% of basic wages and Dearness allowances was provisioned to benefit both 4.3 crore employees/members and employers of 6.5 lakhs establishments to tide over the immediate liquidity crisis during Pandemic situation.

(The author is a trainer for Civil Services aspirants. The views expressed here are personal.)