The Finance Minister’s announcement of a ₹10,000-crore fund for start-ups in the Union Budget will serve as a catalyst for the sector, helping attract private capital by providing equity, soft loans and risk capital, say experts.

“The size of the fund indicates the commitment of the Government to nurturing entrepreneurship and small businesses in India. For the first time, a special programme to support software product start-ups was mentioned in the Budget,” said Ravi Gururaj, Chairman, Nasscom Product Council.

Gururaj said the Government has announced a simplified tax and legal framework that will enable start-ups to shut shop and exit easily when they fail, allowing for greater risk taking.

Key barrier The limited availability of start-up capital by way of promoter equity was hindering the growth of innovation and entrepreneurship in the country, said one analyst.

While bank loans are available to start-ups, exorbitant interest rates are a big deterrent for anyone wanting to start new business. The first Budget addresses this problem, he said. Several start-ups Business Line spoke to lauded the Government’s move to establish a technology centre network to promote innovation, entrepreneurship and the agro-industry, with a corpus of ₹200 crore.

Alan D’Souza, founder, Vavia Technologies, feels this is the most favourable Budget for start-ups till date. “The setting up of national accelerators, incubators and the young leaders programme shows a commitment to promote small businesses,” he said.

“We are disappointed that the so-called “Angel Tax” has not been dealt with,” said Saurabh Srivastava, co-founder, Indian Angel Network.

Sanjay Vijayakumar, chairman of Startup Village, the first technology business incubator on the PPP mode in the country, has said the Budget will give impetus to start-up companies and will help create an entrepreneurship culture among youth.

 It has brought very positive news for aspiring entrepreneurs, mainly through the proposal to establish a ₹10,000 crore fund to act as a catalyst to attract private capital by way of providing equity, quasi-equity, soft loans and other risk capital for start-up companies, he said in a statement.

Startup Village Chief Executive Officer Pranav Kumar Suresh said the fund allocation would be a shot in the arm for the investment ecosystem in India. “The evolution of the start-up ecosystem over the last five to seven years was primarily driven by talent.”

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