How to Raise Government Grants for Startups in India
Navigate India's top government grants and secure the funding your startup needs to thrive
Imagine your startup is on the verge of something great, but you need a little extra funding to make it happen. Instead of going for traditional financing options that often come with complications, think about using government grants specifically created for startups like yours in India.
This guide will take you through each step, from learning about the top government schemes to submitting a successful application. Ready to explore a funding option that’s easy to access and perfect for your startup’s growth? Let’s dive in!
What Are Government Grants and Why Should You Consider Them?
For many Indian startups, securing funding is a significant challenge. While venture capital and loans are options, they often come with the cost of equity or debt. To support homegrown innovation, the Indian government offers several grant schemes designed specifically for startups.
The reason one can consider Government grants is that they are non-repayable funds provided to support specific activities or sectors. Unlike loans, they don’t need to be repaid, making them an excellent option for startups looking to grow without incurring debt. These grants are part of the government's broader strategy to foster innovation, create jobs, and drive economic growth by empowering entrepreneurs.
The Major Government Grant Schemes Available for Startups in India
India’s government has rolled out a variety of schemes designed to support startups at different stages of their growth. Here’s a closer look at some of the most impactful ones:
1. Startup India Seed Fund Scheme (SISFS)
The Startup India Seed Fund Scheme (SISFS) is a key initiative from the Indian government that aids early-stage startups in securing funding during their crucial initial phases, bridging the gap between ideation and commercialization.
Who Can Apply:
DPIIT-recognized startups incorporated within 2 years from the application date.
Startups must have an innovative and scalable product or service with clear market potential.
Indian promoters need to own at least 51% of the equity.
No requirement for physical incubation.
Key Benefits:
Grants up to ₹20 lakh for activities such as proof of concept, prototype development, product trials, and market entry.
Available to startups from a wide range of industries, with no sector-specific restrictions.
Funds are provided through approved startup incubators across India.
Application Link: For detailed information on eligibility, benefits, and how to apply, visit the official SISFS website.
2. SAMRIDH S
Launched in 2021, the SAMRIDH S program is a government initiative aimed at boosting product-based startups. Designed for early-stage companies with a validated concept, it provides essential support to enhance their growth.
Who can apply:
Startups: Must be Indian, with a strong product concept and a solid business plan.
Accelerators: Required to have at least three years of experience and a history of supporting at least 50 startups.
Key Benefits:
Funding: Up to INR 40 lakh per startup, distributed through approved accelerators.
Mentorship: Access to expert advice and support from the accelerator network.
Networking: Connect with investors, potential customers, and industry experts.
Market Access: Assistance in expanding into new markets and scaling globally.
Application Link: For detailed information on eligibility, benefits, and how to apply, visit the official SAMRIDH website.
3. Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE)
For startups struggling to secure loans because of insufficient collateral, the Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE) offers crucial support. This government-supported scheme provides collateral-free loan guarantees of up to INR 1 crore, facilitating easier credit access and enhancing the startup ecosystem.
Who can apply:
Micro and Small Enterprises (MSMEs): Must be involved in manufacturing or service activities, excluding agriculture and self-help groups.
Startups: Need to meet MSME standards, including specific turnover and investment limits.
Special Categories: Enhanced guarantee coverage is available for women entrepreneurs, SC/ST founders, and startups from designated regions.
Key Benefits:
Collateral-Free Loans: Secure funding without traditional collateral, simplifying the loan application process.
Lender Risk Reduction: CGTMSE guarantees part of the loan, making it more attractive for banks to offer financing. Guarantee coverage varies, with up to 75% for most MSMEs and up to 85% for women entrepreneurs.
Extensive Reach: Supports a wide range of businesses across sectors such as manufacturing, services, and education.
Loan Types: Includes term loans for capital investments and working capital loans for operational needs.
Guarantee Coverage:
Coverage Details: Varies by business type, location, and entrepreneur profile—generally 75% for MSMEs and 85% for women-led businesses.
Loan Amount: Guarantees are available for loans from INR 5 lakh to INR 1 crore.
Application Link: For further details on eligibility, guarantee coverage, and application procedures, visit the official CGTMSE website.
4. Pradhan Mantri Mudra Yojana (PMMY)
The Pradhan Mantri Mudra Yojana (PMMY), introduced in 2015, is a government scheme that provides financial support to micro and small enterprises (MSEs) and startups across India. Its goal is to facilitate easier access to credit, helping businesses maintain and expand their operations.
Who can apply:
Available to micro and small businesses engaged in non-farm activities such as manufacturing, trading, services, and allied agriculture sectors (like poultry and dairy).
Must be non-corporate and non-farm entities.
Key Benefits:
Provides loans of up to ₹10 lakh for working capital purposes.
Loan categories include Shishu (up to ₹50,000), Kishor (up to ₹5 lakh), and Tarun (₹5 lakh - ₹10 lakh).
Repayment period extends from 5 to 7 years.
Loans can be accessed through a wide network of Member Lending Institutions (MLIs), including public and private sector banks, cooperative banks, and microfinance institutions.
Application Link: For detailed information on eligibility, benefits, and how to apply, visit the official PMMY website.
5. Design Clinic Scheme for MSMEs
The Government of India’s Design Clinic Scheme helps MSMEs integrate design thinking into their business strategies by offering financial support and resources. It promotes innovative design practices through funding streams like Design Awareness (seminars and workshops) and Design Project Funding. Applications can be submitted via the Design Clinic Centre website, with projects to be completed within a year, focusing on commercialization and intellectual property protection.
Who can apply:
Enterprise Type: Micro, small, or medium-sized enterprises as defined by the MSMED Act 2006.
Design Experience: Must be new to design, without previous internal or external design expertise.
Collaborations: Work with approved designers, design firms, or academic institutions.
Key Benefits:
Financial Support: Covers up to 60% of design project costs, with caps of Rs. 15 lakhs for groups of four or more MSMEs, Rs. 9 lakhs for smaller groups, and Rs. 2 lakhs for student projects.
Expertise Access: Connect with qualified design consultants and academic institutions.
Guidance and Support: Includes need analysis, consulting, proposal development, and project implementation.
Networking: Opportunities to connect with other design-focused businesses and industry professionals.
Application Link: For more details on eligibility, coverage, and application procedures, visit the official Design Clinic Scheme website.
6. Idea2PoC/ELEVATE
The Idea2PoC/ELEVATE initiative by the Government of Karnataka provides financial aid to innovative startups, offering non-repayable grants without taking equity. The program focuses on social impact, job creation, and innovation, with multiple tracks tailored to different startup needs and demographics.
Who can apply:
Startup Location: Must be registered in Karnataka.
Age and Revenue: Less than 10 years old with revenue under INR 100 Crore.
Innovation: Focused on innovative products, processes, services, or scalable business models.
Specific Tracks: Includes criteria for different groups like Elevate Kalyana Karnataka, AMRITA for Other Backward Class entrepreneurs, and Elevate Unnati for Scheduled Caste/Scheduled Tribe entrepreneurs.
Key Benefits:
Grant Amount: Up to Rs. 50 lakhs for prototype development, market entry, and scaling.
Support: Access to co-working spaces, mentoring, and workshops.
Expert Guidance: Mentorship from experienced industry professionals.
Booster Kit: Additional resources tailored to startup needs.
Incentives: Potential tax benefits and other government perks.
Investor Connections: Opportunities to meet potential investors.
Application Link: For detailed information on eligibility, benefits, and how to apply, visit the official Idea2PoC/ELEVATE website.
7. Dairy Processing and Infrastructure Development Fund (DIDF)
The Dairy Processing and Infrastructure Development Fund (DIDF) is a significant initiative by the Government of India, established within the National Bank for Agriculture and Rural Development (NABARD). This scheme aims to modernize and upgrade the infrastructure for milk processing and value addition, ensuring that dairy farmers receive better prices for their produce.
Who can apply:
Eligible Entities: Cooperative milk unions, state cooperative dairy federations, multi-state milk cooperatives, milk producer companies, and subsidiaries of the National Dairy Development Board (NDDB) or National Cooperative Development Corporation (NCDC).
Project Focus: Proposals should be aimed at enhancing milk processing capacity, modernizing existing plants, and expanding value addition and milk drying capacities.
Key Benefits:
Loan Assistance: Financial support for eligible projects, with NABARD providing loans for the modernization of dairy infrastructure.
Project Scope: Sanctioned projects cover the creation of new milk processing capacities, modernization of existing plants, and value addition infrastructure across various states.
Impact: The scheme is expected to increase milk processing capacity by 119.70 lakh liters per day (LLPD) and create significant employment opportunities in the dairy sector, both directly and indirectly.
Application Link: For detailed information on eligibility, benefits, and how to apply, visit the official DIDF website.
8. 4E (End-to-End Energy Efficiency)
The 4E scheme provides financial assistance to MSMEs in manufacturing and services to implement energy-efficient measures, reducing energy costs and promoting sustainability. It covers part of the capital expenditure for equipment, machinery, and installation, funding up to 50% of the project cost.
Who can apply:
Business Duration: Operational for at least 3 years with profits in the last 2 years.
Financial Status: No defaults on loans or financial obligations.
Project Requirements: Must fit specified categories (C1-C8) and pass a Detailed Energy Audit (DEA) by a BEE-certified agency.
Project Report: Detailed Project Report (DPR) must be approved by SIDBI.
Compliance: Must adhere to the Environment & Social Management Framework.
Key Benefits:
Energy Savings: Reduces energy consumption and operational costs.
Operational Efficiency: Enhances competitiveness and efficiency.
Environmental Impact: Contributes to sustainability efforts.
Application Link: For detailed information on eligibility, benefits, and how to apply, visit the official 4E scheme website
9. Multiplier Grants Scheme (MGS)
The Multiplier Grants Scheme (MGS) by the Ministry of Electronics and Information Technology (MeitY) supports collaborative R&D between industry and academic institutions to foster the development of commercially viable products. The scheme matches industry funding for research and development projects, providing up to twice the amount contributed by the industry, thereby accelerating the path from R&D to market-ready products.
Who can apply:
Industry-Academic Collaboration: Joint proposals must be submitted by both an industry partner and an academic/R&D institution.
Focus Areas: Projects should aim to develop indigenous products and bridge the gap between research and commercialization.
Key Benefits:
Financial Support: Up to twice the industry’s contribution for R&D activities.
Collaboration: Strengthens linkages between academia and industry.
Commercialization: Supports the development of products with high commercialization potential.
Application Link: For detailed information on eligibility, benefits, and how to apply, visit the official MGS website.
To conclude, Government grants in India offer a unique opportunity for startups to access crucial funding without the burden of debt or equity dilution. By understanding the various schemes available and approaching the application process strategically, you can secure the resources your startup needs to grow and thrive. Whether you’re at the seed stage, scaling up, or developing innovative technologies, there’s likely a government scheme designed to support your journey.
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