India Electronics and Semiconductor Association (IESA) has applauded the government decision to establish the ‘fund of funds’ for start-ups, which is likely to generate 18 lakh jobs in start-ups and support the budding companies.
By Belal Khan
The Union Cabinet, chaired by the Prime Minister Narendra Modi, on Wednesday (June 22) approved the establishment of “Fund of Funds for Start-ups” (FFS) at Small Industries Development Bank of India (SIDBI) for contribution to various Alternative Investment Funds (AIF), registered with Securities and Exchange Board of India (SEBI) which would extend funding support to Start-ups.
This is in line with the Start-up India Action Plan unveiled by Government in January 2016.
“Though it was announced in the form of a corpus fund of Rs. 10,000 crores, we believe that this could potentially be a nucleus of a Rs. 60,000 crores equity investment opportunity,” said MN Vidyashankar, President of India Electronics and Semiconductor Association (IESA).
The corpus of FFS is Rs.10,000 crore which shall be built up over the 14th and 15th Finance Commission cycles subject to progress of the scheme and availability of funds. An amount of Rs.500 crore has already been provided to the corpus of FFS in 2015-16 and Rs.600 crore earmarked in the 2016-17. The fund is expected to generate employment for 18 lakh persons on full deployment.
“We commend the government for being giving the required impetus to stimulating the growth of the entrepreneurial ecosystem. This is a significant move to address challenges like limited domestic capital and support from credible agencies and will certainly be instrumental in accelerating our ‘Make in India’ mission,” added MN Vidyashankar.
Further provisions will be made as grant assistance through Gross Budgetary Support by Department of Industrial Policy and Promotion (DIPP) which will monitor and review performance in line with the Start up India Action Plan.
The FFS emanates from the Start up India Action Plan, an initiative of Department of Industrial Policy & Promotion (DIPP). The expertise of SIDBI would be utilized to manage the day to day operations of the FFS. The monitoring and review of performance would be linked to the implementation of the Start Up Action Plan to enable execution as per timelines and milestones.
A corpus of Rs. 10,000 crore could potentially be the nucleus for catalysing Rs. 60,000 crore of equity investment and twice as much debt investment. This would provide a stable and predictable source of funding for Start up enterprises and thereby facilitate large scale job creation.
