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YOJANA April 2023

(APRIL 2023)

STARTUP BASICS

S. No.	Terms	Meaning/Description
1	Startup	A startup is an early-stage entrepreneurial venture that is typically formed to solve real-world problems. Because many startups address societal needs, they attract investors and funders due to their tremendous growth potential.
2	Startup India Scheme	Startup India is a flagship initiative of the Government of India, intended to catalyse startup culture and build a strong and inclusive ecosystem for innovation and entrepreneurship in India. Since the launch of the initiative on 16 January 2016, Startup India has rolled out several programs with the objective of supporting entrepreneurs, and transforming India into a country of job creators instead of job seekers.
3	Unicorn	The term ‘Unicorn’ refers to the rarest of the rare startups that become Unicorns attaining a valuation of more than USD 1 billion.
4	Seed Funding	Seed funding is the first official equity funding stage. It typically represents the first official money that a business venture or enterprise raises. The Startup India Seed Fund Scheme has been approved for the period of 4 years starting from 2021-22. The Scheme aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market-entry, and commercialization. It has been implemented with effect from 1 April 2021.
5	Incubator	Incubators play a vital role in the growth of startups. They provide the necessary resources such as infrastructure, mentorship, and financial support to nurture and support the innovation of startups. India has 400+ Incubators with most of them at the nascent stage.
6	Pitch	Pitch is a brief presentation or introduction to a prospective investor about the startup. The goal of a pitch is not to answer every possible question about the startup, but rather to engage an investor's interest in learning more about it.
7	Angel Investor	‘Angel investor’ means any person or entity who proposes to invest in an angel fund and satisfies one of the following conditions, namely- An individual investor who has net tangible assets of at least two crore rupees excluding value of his principal residence (among other criterions); A body corporate with a net worth of at least ten crore rupees; or An AIF registered under these regulations or a VCF registered under the SEBI (Venture Capital Funds) Regulations, 1996.

CHAPTER 1- OPPORTUNITIES FOR YOUTH IN STARTUP ECOSYSTEM

Today the world acknowledges the capacity, knowledge, and vigour of Indian youth in providing solutions to the most complex problems of human civilisation. The Government of India has been able to bring capital investment as well as the best innovative practices from around the world to India.
The world's youngest yet largest democracy is 75 years old today. India will celebrate its 100 years of independence in 2047. The next 25 years are termed Amrit Kaal by Prime Minister Shri Narendra Modi ji.
Out of 1.4 billion human resources, about a billion Indians are under the age of 35 today. Our average age is 29. In 2047, 21% of the global workforce will be in India.
To ensure that India fully reaps the benefit of its demographic dividend, the Government of India is planning & executing policy meticulously.
Startup India Scheme was launched on the 16 January 2016 as a clarion call to the innovators, entrepreneurs, & thinkers of the nation to lead from the front in driving India’s sustainable economic growth and creating large-scale employment opportunities.
Government of India is providing all the necessary policy, institutional and regulatory framework support to the startups in the country.
Out of the $950 billion in FDI received since independence, $532 billion came in the last 8 years or so. And the best part is that it has come from 162 countries in 61 sectors to the 31 states & UTs.

STARTUP INDIA FACTSHEET
S.No.	Fact	Number/Position
1	Number of Startups at the launch of Startup India Scheme	452
2	Number of Startups recognized by DPIIT	92,888 (as on Feb 02,2023)
3	A Unicorn added in every (in 2021)	29 days
4	A Unicorn added in every (in 2022)	9 days
5	India’s position in starting new startups everyday	1^st
6	India’s rank in number of startups	2^nd
7	Position in world in startup ecosystem	3^rd largest
8	Ecosystem contribution to GDP of the country	4-5 %
9	Position in number of Unicorns in the world	3^rd largest
10	India’s establishment of Startup20 engagement group in G20 presidency	1^st
11	India’s GDP ($3.5 trillion)	5^th largest in world
12	Aim to become $5 trillion economy by	2025-26
13	Indian GDP driver by domestic demand	2/3rd

Initiatives like Digital India, broadband connectivity in villages drove the growth of the startup ecosystem, especially in remote parts of the nation.
‘"MAARG' portal is helping innovators and startups from remote areas to get access to crucial opportunities and funding ecosystem.

Startups catering to market demands

Today, 11 percent of the world’s population lives in Indian villages.
Around 30 people are moving from Indian villages to cities every minute. By 2047, 20 percent of the world’s middle class will be in India.
It means that in the next 25 years, there will be an entirely new Urban population that will need A to Z of things including housing, infrastructure, food, education, water, health, entertainment, social security, etc.
Young entrepreneurs have a myriad of sectors to innovate in and positively disrupt the market. The startups have the opportunity to fill an ever-increasing demand.

Scope in knowledge-based digital economy

The Government of India is moving towards 100 percent digitisation of government processes to make them more citizen-centric.
A new programme will be started through the Centre of Excellence to promote research and innovation in pharmaceuticals. District Institutes of Education and Training Centres will be developed for revolutionary change in the training of teachers.
A National Digital Library will also be built.
Under the Pradhan Mantri Kaushal Vikas Yojana, skilling and training will be given for artificial intellegence, coding, 3D printing, Internet of Things.

Innovators in Future Technology

About 41 percent of the world’s real-time transactions happened in India last year.
According to a NASSCOM report, the IT industry posted a 15.5 percent YoY growth for FY22.
It further added, that the tech sector revenue surpassed USD 200 billion.
We are witnessing an increased demand and development in various tech sub-sectors such as Al, blockchain, XaaS, platformisation, cloud computing, cybersecurity, hyper-scale computing, loT, machine learning, and supply chain which can be leveraged by startups.

National Logistics Policy: A Boon for Startups

To boost the ease of doing business and enhance the livability quotient, National Logistics Policy (NLP) was launched on 17 September 2022.
The policy aims to lower the cost of logistics from the existing 13%-14% range and bring it on par with other developed countries.
The NLP’s transformational capacities further increase when combined with previous connectivity and infrastructure improvement schemes like Gati Shakti, Sagarmala, and Bharatmala.

AVGC SECTOR

The Animation, Visual Effects, Gaming and Comics (AVGC) sector in India has witnessed unprecedented growth rates in recent times, with many global players entering the Indian talent pool to avail of offshore delivery of services.
These startups, through government initiatives, have the potential to make a mark in the global markets through their enterprise and innovation.

Defense and Space Sector

The country, which was the biggest defence importer for decades, is today exporting defence equipment to 75 countries around the world.
The country’s defence exports have increased 6 times in the last 5 years.
The target is to increase Indian defence exports from $1.5 billion to $5 billion by 2024-25.
The government launched the Innovations for Defence Excellence (iDEX) framework with the goal of encouraging innovation and technology development in the Defence and Aerospace sectors by involving industries such as MSMEs, startups, individual innovators, R&D institutes, and academia, as well as promoting self-reliance.
Ministry of Defense has also accorded the Acceptance of Necessity (AoN) for 14 iDEX products, paving the way for placement of orders with the iDEX winners.
The Government has approved a central sector scheme for iDEX with a budgetary support of Rs 498.78 crore for the five years from 2021-22 to 2025-26.

Agriculture Startups

The Agricultural Budget which was less than Rs. 25,000 crores in 2014 has been increased to more than Rs. 1,25,000 crore today.
India is home to more than 3000 agri-startups today compared to almost nothing 9 years ago.
The Accelerator funds for agri-tech startups is creating digital infrastructure and also preparing funding avenues.
Shree Ann is being promoted for the benefit of our small farmers as well as to increase the growth possibilities of startups in this sector.

Conclusion-It is the strength of India’s startup ecosystem that is full of passion, sincerity and integrity and is constantly discovering itself, improving itself, and growing in strength.

CHAPTER 2- STARTUP INDIA ACTION PLAN

Startups are the backbone of the New India. The ecosystem of startups is encouraging innovation, promoting and strengthening new young entrepreneurs, businesses with new ideas, and new ways of doing business.
Today, we have at least one recognised startup in every State and UT spread across over 660 districts and diversified in more than 55 sectors.
About 47% of recognised startups have at least one woman director.
The inclusiveness and diversity of the Indian startup ecosystem are truly encouraging.
The complex opportunity of the Indian startup ecosystem lies in the standard lifecycle of a startup: ideation, validation, early traction and scaling.
The key pillars of Startup India Action Plan were envisaged to be executed in a phased manner with differentiated approaches.
The Action Plan comprises 19 action items spanning across areas such as ‘Simplification and handholding, ‘Funding support and incentives, and ‘Industry-academia partnership and incubation’.
The Action Plan sets the tone for recognising ‘startup’ as a distinct economic pillar and laid out the key interventions to be executed in a phased manner for the ecosystem at large.
DPIIT institutionalized Startup India Hub (‘the Hub’), a one stop online portal to execute the Action Plans understanding the visionary and dynamic nature of the initiative and demography of the beneficiaries.
To address the funding needs of the startup ecosystem, the DPIT is implementing Fund of Funds for Startups (FFS), Startup India Seed Fund Scheme (SISFS), and Credit Guarantee Scheme for Startups (CGSS) as envisaged in Startup India Action Plan.
These Schemes enable funding to startups through their entire business lifecycle.
The SISFS provides funding in form of grant or debt for startups in early stages of their growth.
FFS mobilises private equity capital for high growth startups and
CGSS promotes collateral free debt funding for mature startups.
DPIIT launched States Startup Ranking Framework (SRF), an exercise to identify good practices, foster mutual learning amongst States and UTs, and developing a momentum across States and UTs to build favorable policy landscape for startup ecosystems.
DPIIT launched the National Startup Awards (NSA) to identify the depth, quality and spread of innovation, inclusivity and diversity, and entrepreneurship in country.
National Startup Advisory Council (NSAC) is established by government with the aim to develop policy and programs with the concerned stakeholders.
It is chaired by the Hon'ble Minister of Commerce and Industry, the council member includes members from line Ministries, Departments and Organisations, and non-official members, representing various stakeholders from the startup ecosystem.
The Council plays an important and active role in identifying areas of interventions for expansion of startup ecosystem, ideating, and mentioning national programs under Startup India initiative.
The institutionalization of the Startup20 Engagement Group within G20 provides us with another opportunity to lead from the front, unite the world to support the entrepreneurship ecosystem and take our startups to a global stage.
Thus, the collaborative efforts of the ecosystem will play paramount role to further developing an enabling and inviting ecosystem which empowers Indian thinkers and innovators in their journey from being job seekers to job creators.

CHAPTER 3- STARTUP20 ENGAGEMENT GROUP

Startup20 – Startup20 is an official engagement group, established under the G20 India Presidency 2023.

The engagement group would act as the voice of the global startup ecosystem bringing together varied stakeholders on a common platform.

Startup20 Engagement Group would create a global narrative for supporting startups and enabling synergies between startups, corporates, investors, innovation agencies and other key ecosystem stakeholders.
The goal of Startup20 is to create an environment that amplifies all such startups, in keeping with India’s G20 theme of One Earth, One Family, One Future.

Goal of Startup 20

The overarching goal of the Startup20 is to propose a policy framework that achieves two objectives simultaneously:

harmonization of global startup ecosystems to facilitate their collaboration, and
doing so without compromising the national ecosystems freedom to grow in whatever way they see fit.

Three Taskforces Under Startup20 India

To accomplish its goals, the Startup20 has formed three Task Forces that focus on critical areas vital to the development of a thriving startup ecosystem which are as follows:-

S.No.	Taskforce	Main objectives of taskforce
1	Foundation & Alliances	Startups need support, partnerships, collaborations to survive and scale in their markets or access new markets. Development of startup ecosystems in nascent markets and improving access to such ecosystems at a global level is required to develop prospective startups. Harmonize the global startup ecosystem through consensus-based definitions Promote a global community of knowledge sharing among the startup ecosystems Bridge the knowledge gap between the startup ecosystems of G20 member countries and emerging economies through partnerships Enable more industry players across G20 nations to work with Startups and cocreate solutions Create supportive policies for industry players and government organizations to work with startups To provide country point of contact for sustained collaboration
2	Finances	To increase access to capital for startups by providing financing and investment platforms specifically for early-stage startups Broaden the array of financial instruments available to startups Create pitching and networking opportunities for startups with the global investor community Build suggestive frameworks that could be implemented in emerging ecosystems for building investment capabilities Provide a framework built upon best practices for global investors to fund startups across G20 member nations.
3	Inclusion and Sustainability	Create equal opportunity for startup founders irrespective of gender, race, class, creed to significantly expand the pool of startups and encourage alternate school of thoughts developed through different experiences. Increase support for women led startups and organizations Promote startups working on making communities more inclusive Enable more investors to invest responsibly in startups built upon sustainable practices Encourage mentorship support to the startup ecosystems of the G20 member countries and emerging economies Promote startups working on SDGs in areas of global interest

About G20

The Group of Twenty (G20) is the premier forum for international economic cooperation.
It plays an important role in shaping and strengthening global architecture and governance on all major international economic issues.
The G20 was founded in 1999 after the Asian financial crisis as a forum for the Finance Ministers and Central Bank Governors to discuss global economic and financial issues.
India holds the Presidency of the G20 from 1 December 2022 to 30 November 2023.
The Group of Twenty (G20) comprises 19 countries (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Türkiye, United Kingdom and United States) and the European Union.
The G20 members represent around 85% of the global GDP, over 75% of the global trade, and about two-thirds of the world population.

CHAPTER 4- AGRI STARTUPS: CHALLENGES AND OPPORTUNITIES

Agri-startups shall play a critical role in making India a knowledge-based and technology-driven economy.
Due to a very unique agricultural ecosystem, there is vast potential (largely untapped) and ample opportunities for the development of agri-startups.
India’s arable land area of 156.06 million hectares (2019) is the world'’s second-largest after the United States.
Our country has an incredible diversity of climate and soil types (15 agro-climatic zones, 8 major soil types), making it suitable for growing a wide range of field crops, fruits, vegetables, and so on.
India is currently the world’s largest producer of milk, pulses, millets, and jute, as well as the world's second largest producer of rice, wheat and fruits and vegetables. India has recently emerged as a leading exporter of agricultural and livestock products.
The agricultural sector is also facing several complex problems and challenges such as shrinking size of operational landholdings, raising transaction costs, difficult to adapt several modern technologies, difficult to use inputs and natural resources efficiently. Farmers not having easy access to timely information about soil, weather, markets, advisories, and other topics.
Agri-startups strive to provide solutions through innovations, technology interventions or business models specific to the need of farmers mostly on a real-time basis.

Modes, Models and Classification of Agri-Startups

In January 2016, the Government of India unveiled a 19-point’Startup India Action Plan, which resulted in the implementation of several policy/ promotion initiatives aimed at creating a robust ecosystem for nurturing startups and innovations.
In terms of geographical distribution, nearly 60% of agri-startups are based primarily in Tier I and II cities in a few states.
Bengaluru is one of the country’s established startup ecosystem hubs, followed by Mumbai and Delhi NCR.
Agri-startups are further classified based on their focus areas, such as agri-tech, animal husbandry, precision farming, organic agriculture, mechanics, advisories, etc.
Agri startups typically operate at one or more stages of the agricultural value chain, and on this basis have been classified into seven broad categories: providing output market linkages; facilitating input supply; enabling mechanization and irrigation; offering a financial solution (credit and insurance); helping quality maintenance and traceability; post-harvest management; logistic services (warehousing and cold chains); and supporting animal husbandry activities.
Some new business models in the agricultural space have emerged, including the ‘farm to fork’ supply chain model, loT (Internet of Things) or big data-led innovation model, and the upstream market place model.
These Agri-startups are mainly formed to solve complex problems in the value chain through innovations or technological interventions.
Scaling up in agri-startups is especially difficult because it necessitates field testing/applications in which many external factors exert their own unpredictable actions. As a result, agri-startups require the most incubation support/handholding and seed funding.

Policies and Promotions

The Government of India has launched several initiatives to facilitate and promote agri-startups such as: -

The Agri-Business Incubator (ABIs) Centres were established in various parts of the country, primarily in R&D institutions, in 2015-16.
ABIs identify and mobilise emerging entrepreneurs, facilitating their growth through a variety of services including shared facilities (workspaces, infrastructure, etc) and equipment, business development, technology, finance, mentoring, and networking.
In India, there are over 100 agri-focused incubators, most of which are housed in academic and research institutions such as the Indian Council of Agricultural Research (ICAR) and agricultural universities.
Startup India, the Atal Innovation Mission, the Department of Science and Technology (DST), and the Ministry of Agriculture and Farmers Welfare also support these incubators.
In 2019-20, the Department of Agriculture, Cooperation, and Farmers Welfare has added ‘Innovation and Agri-Entrepreneurship Department’ to its flagship scheme, the ‘Rashtriya Krishi Vikas Yojana’ (RKVY-RAFTAAR).
Under this programme, a selected startup is eligible for a maximum financial assistance of Rs. 5 lakh at idea/ pre-seed stage and a maximum of Rs. 25 lakh at the seed stage.
To further support and promote agri-startups, the Ministry of Agriculture and Farmers Welfare hosts an annual event called ‘Agri-Hackathon, where agri-startups can provide viable and innovative solutions to identified challenges and problems.
The Department of Science and Technology has set up 25 Technology Innovation Hubs (TIH) in premier institutes of national importance across the country. Three of these are involved in the applications of loT and Al in Agriculture with the objective of carrying out research translation and technology development in specified areas.
Sincem2016, the DST has been implementing an umbrella programme called NIDHI (National Initiative for Developing and Harnessing Innovations) to promote S&T-based entrepreneurship and startup ecosystems in the country.
NIDHI operates through its various components which are designed to support ideators and innovators from the beginning of their journey and link them to the entire market value chain.
The Government of India launched an ambitious Atal Innovation Mission last year, with the goal of establishing 10,000 Atal Tinkering Labs, 101 Atal Incubation Centers, 50 Atal Community Innovation Centres, and supporting 200 startups through the Atal New India Challenges.
Startup India and Standup India Programmes provide funding and incentives to eligible startups, which include agricultural enterprises. Handholding and incubation facilities help startups in their early stages.

Intentions and Investments

The year 2023 has been designated as the International Year of Millets, providing an excellent opportunity for Indian entrepreneurs to enter the global market.
More than 500 startups in India are working in the millets value chain, of which 250 startups have been incubated by the ICAR Indian Institute of Millets Research under RKVY-RAFTAAR.
NABARD is facilitating a fund with blended capital raised through a co-investment model to finance agri-tech startups and rural farming enterprises.
This scheme provides funding to startups that support food producer organisations, farm rental services, and technology incorporation.
The Government announced an agricultural-focused accelerator fund in the current Budget (2023-24) to encourage agri-tech startups in rural areas of the country. The Fund is aimed at building innovative and effective agri-tech solutions for farmers so as to improve access to market linkages and yields.
According to Economic Survey (2022-23) Agri-tech startup have raised approximately Rs. 6600 crore from private equity investors over the last four years, representing a growth rate of more than 50% per year.
The National Academy of Agriculture Sciences in New Delhi has recommended that each research and education organisation establish a Business Incubation Center to promote agripreneurship.

Conclusion: - Agri-startups thus provide solutions to the emerging problems of the agriculture sector and are going to become a significant growth engine of the Indian economy and great contributor in realising the dream of Atmanirbhar Bharat.

CHAPTER 5- WOMEN ENTREPRENEURSHIP IN MSME SECTOR

According to the Registrar General of India, the work participation rate for women stands at 25 percent which is one of the lowest in the world.
The Government of India has ensured that all policy initiatives are geared towards enabling equal opportunity for women, recognizing the importance of women's entrepreneurship and economic participation in enabling the country's growth and prosperity.
There is a lack of infrastructural facilities for women at workplaces e.g. proper creche facilities and their maintenance with decent infrastructure and other resources needed for the same.
The Report of the Expert Committee on Micro, Small and Medium Enterprises (2019), constituted by the Reserve Bank of India, has identified a lack of access to credit as one of the major constraints faced by the MSME Sector.
The MSME sector offers multiple opportunities to empower women by promoting entrepreneurship and plays a crucial role in the process of economic and social development through value addition, employment generation, equitable distribution of income, and removal of regional disparities.

Initiatives by the Ministry of MSME

Public Procurement: The Public Procurement Policy for Micro and Small Entrepreneurs Order, 2012 (as amended in 2018), mandates that 3% of the total annual procurement by Central Ministries/Departments/CPSEs shall be from women-led Micro and Small Enterprises (MSEs).

To promote inclusivity and entrepreneurship, the Ministry has launched the National Schedule Caste and Scheduled Tribe Hub.

New Enterprise Creation & Employment Generation: The Ministry of MSME supports women entrepreneurs and artisans through its various schemes in the agro-rural sector. Under the Ministry’s flagship scheme- Prime Minister's Employment Generation Programme (PMEGP), since inception in 2008, 2.59 lakh women entrepreneurs out of a total 8.37 lakh entrepreneur have been provided credit support with a subsidy.

Credit Facilitation

Initiatives for women led enterprises: Under the Credit Guarantee Scheme Fund Trust for Micro & Small Enterprises (CGTMSE), to support Women Entrepreneurs, the concession of 10% in guarantee fee and enhanced guarantee coverage of 85% (against 75% in other cases) has been introduced in respect of loans given to women entrepreneurs.
Artisan-Based Cluster Development: Under the Scheme of Fund for Regeneration of Traditional Industries (SFURTI), a special focus has been given to providing sustainable livelihood to artisans through the formation of manufacturing collectives in the traditional sector.
Coir Industry Programmes: In the coastal states of the country, the Coir Board, under different schemes, imparts training to women workers on manufacturing of quality coir products, thereby creating employment opportunities.

The Ministry of MSME has made it mandatory for all Central Government Ministries/ Department/ CPDUs to procure at least 25% of their annual procurement from MSMEs including 3% from MSMEs owned by women entrepreneurs.
The Ministry also implements several other schemes for the promotion and development of MSMEs, including women-owned MSMEs, namely, Micro and Small Enterprise Cluster Development Programme (MSE-CDP), Tool Rooms & Technology Centres, Scheme of Fund for Regeneration of Traditional Industries (SFURTI), Procurement and Marketing Support Scheme, Entrepreneurship and Skill Development Programme (ESDP), etc.
The Pradhan Mantri Kaushal Vikas Yojana provides opportunities for training and capacity building of prospective/existing women entrepreneurs.

CHAPTER 6- OPPORTUNITIES FOR MSMEs IN AMRIT KAAL

New Definition of MSME, according to new classification

Classification	Micro	Small	Medium
Manufacturing Enterprises and Enterprises rendering Services	Investment in Plant and Machinery or Equipment: Not more than Rs.1 crore and Annual Turnover ; not more than Rs. 5 crore	Investment in Plant and Machinery or Equipment: Not more than Rs.10 crore and Annual Turnover ; not more than Rs. 50 crore	Investment in Plant and Machinery or Equipment: Not more than Rs.50 crore and Annual Turnover ; not more than Rs. 250 crore

The Micro, Small, and Medium Enterprises (MSMEs) sector in India has been a significant contributor to the country’s economic growth and job creation.
The Government has launched several schemes to support the MSMEs in exporting their products and services and to encourage them to adopt digital technologies.
The infrastructure development initiatives, such as the National Infrastructure Pipeline (NIP) and the Atmanirbhar Bharat Abhiyan, also provide opportunities for the MSMEs to dispense goods and services so as to support infrastructure projects.

Scope and Potential in Amrit Kaal

Some of the key opportunities for the MSMEs in India’s Amrit Kaal are:

Digital Transformation: The Covid-19 pandemic has accelerated the adoption of digital technologies across industries, and the MSMEs in India need to embrace this change to remain competitive.
Export Opportunities: The Government of India has launched several schemes, such as the Export Promotion Capital Goods (EPCG) scheme and the Merchandise Exports from India Scheme (MEIS), to support the MSMEs in exporting their products and services.
Infrastructure Development: The Government of India has announced several initiatives, such as the National Infrastructure Pipeline and the Atmanirbhar Bharat Abhiyan, to boost infrastructure development in the country.
Healthcare Sector: The Covid-19 pandemic has highlighted the importance of the healthcare sector, and the MSMEs in India can leverage this opportunity by providing goods and services to support the healthcare industry.
Green Energy: MSTMEs can play a significant role in this sector by providing goods and services to support the renewable energy industry. MSMEs can explore opportunities in areas such as solar energy, wind energy, and energy storage solutions.

Role of MSMEs in Indian Economy

MSME contributes significantly to the country’s GDP, employment generation, and exports. They account for over 45% of India’s total manufacturing output and employ around 110 million people.
They also play a significant role in promoting exports and contributing to the country’s balance of payments The sector accounts for over 40% of India’s total exports and is critical to promoting the country’s trade relations with other countries
It also contributes to the development of rural areas by providing employment opportunities and helping in the decentralization of industries.
They play a crucial role in the socio-economic development of the country, especially in the rural areas, by creating jobs and reducing poverty.
MSMEs are also essential in promoting entrepreneurship and innovation in the economy.

Government Initiatives for the Sector

The government is also providing the vital funding support, technology upgradation, skill development, market access, and regulatory support.

Funding Support: The Government schemes to provide funding support to MSME includes the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), the Prime Minister's Employment Generation Programme (PMEGP), and the Micro and Small Enterprises Cluster Development Programme (MSE-CDP).
Technology Upgradation: To help the MSMEs upgrade their technology and adopt modern and efficient production processes, initiatives such as the Technology Upgradation Fund Scheme (TUFS) is launched which provides funding support for technology upgradation and modernization of the MSMEs.
Skill Development:The National Skill Development Corporation (NSDC) and the Skill India Mission are two initiatives aimed at providing training and skill development to the MSME workforce.
Market Access: The National Small Industries Corporation (NSIC), which assists MSMEs with marketing, and the Public Procurement Policy for Micro and Small Enterprises (MSEs), which provides a 25% reservation for MSEs in government procurement.
Regulatory Support: To simplify regulatory compliance for the MSMEs, government launched several initiatives such as Udyog Aadhaar registration process, which simplifies the registration process for the MSMEs, and the MSME Facilitation Council, which provides a platform for the MSMEs to resolve their grievances related to regulatory compliance and many others.

Government’s Flagship Schemes

To boost the growth and development of the Micro, Small, and Medium Enterprises (MSMEs) sector some of the key schemes launched by government are:

S.No.	Scheme	Aim
1	Prime Minister’s Employment Generation Programme (PMEGP):	This is a credit-linked subsidy scheme that aims to promote self-employment and entrepreneurship by providing financial assistance to the startups and new enterprises in the MSME sector.
2	Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE):	This scheme provides collateral-free credit to the MSMEs up to a certain limit. Furthermore, the scheme aims to encourage banks and financial institutions to provide lending to the MSMEs, thereby increasing their access to credit.
3	Micro and Small Enterprises Cluster Development Programme (MSE-CDP):	This scheme aims to promote the development of the MSME clusters by providing support for infrastructure development, technology upgradation, and market access.
4	Technology Upgradation Fund Scheme (TUFS)	This scheme provides financial assistance for the technology upgradation and modernization of the MSMEs in the textile and jute sectors.
5	Digital MSME Scheme	This scheme aims to encourage the adoption of digital technologies by the MSMEs by providing support for the development of digital infrastructure, capacity building, and digital marketing.
6	National Manufacturing Competitiveness Programme (NMCP)	This scheme aims to enhance the competitiveness of the manufacturing sector, including the MSMEs, by providing support for the technology upgradation, quality certification, marketing assistance, and skill development.
7	National Skill Development Corporation (NSDC):	This scheme aims to provide skill development training to the MSME workforce so as to enhance their employability and productivity.
8	Public Procurement Policy for Micro and Small Enterprises (MSEs):	This policy mandates a 25% reservation for the MSEs in the government’s procurement, thereby providing them with an access to a large market and increasing their competitiveness.

MSMEs and Defence Manufacturing

The Government of India has been focusing on indigenization and self-reliance in the defence sector, and has launched several initiatives to promote the participation of MSMEs in defence

manufacturing.

Some of the opportunities for MSMEs in defence manufacturing include:

S.No.	Government Policy	Objective
1	Offset Policy	Under this, a foreign firms that win defence contracts in India, must invest a certain percentage of the contract value in India’s defence manufacturing sector.
2	Defence Procurement Procedure (DPP)	It encourages the participation of the MSMEs in defence manufacturing by providing them with preference in procurement, setting aside certain categories of products for the MSMEs, and relaxing the eligibility criteria for participation in tenders.
3	Innovation for Defence Excellence (iDEX)	It promotes innovation and indigenization in the defence manufacturing by providing funding support, mentorship, and incubation facilities to MSMEs and startups working in the defence sector.
4	Defence Investor Cell (DIC)	It is a dedicated cell under the Department of Defence Production that assists and supports the MSMEs interested in making investments in the defence manufacturing sector.
5	Defence Industrial Corridors (DICs):	The Government of India has identified six regions across the country as DICs, which are aimed at promoting the development of defence manufacturing clusters. The MSMEs can take advantage of these clusters to access infrastructure, technology, and market linkages.

FDI Advantages for Indian MSMEs-

Foreign Direct Investment (FDI) can provide several benefits to the Indian MSMEs including:

Access to Capital
Technology Transfer
Market Access
Management Expertise
Brand Building
Brand Building

Alternate Finance Opportunities

There are several alternate finance opportunities available to these companies. These alternate finance opportunities are getting great push from the Government agencies and greater pull from the MSME sector itself. These alternate finance includes:

Non-Banking Financial Companies (NBFCs): NBFCs offer loans, lines of credit, and factoring services to the MSMEs. NBFCs have more flexible lending criteria than banks and can make loans more quickly.
Peer-to-Peer (P2P) Lending: P2P lending platforms connect MSME borrowers directly with individual lenders through an online platform.
Trade Credit: Here suppliers provide goods or services to these companies on credit. This can assist the MSMEs in better management of their cash flow and working capital management.
Angel Investors and Venture Capitalists: They provide funding to the MSMEs in exchange for equity in the company and also provide strategic advice and mentorship to the MSMEs to help them grow and expand their businesses.
Crowdfunding: It enables the MSMEs to raise funds from a large number of individual investors through an online platform. This can help them raise capital quickly and efficiently.
Government Schemes: The Government of India has launched several schemes, such as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), to encourage banks and financial institutions to lend to MSMEs.

CHAPTER 7- INCUBATORS-THE GROWTH ENABLERS

Incubators play a vital role in the growth of startups. They provide the necessary resources such as infrastructure, mentorship and financial support to nurture and support innovation of startups.
India has 400+ Incubators with most of them at a nascent stage.
Startup India aims to enhance capacities of the existing incubators and also provide support in setting new incubators.

What is an Incubator?

Business incubators are organisations that assist entrepreneurs in developing their businesses, particularly in the early stages.
These are organisations dedicated to accelerating the growth and success of startups and early-stage businesses.

What is Atal Innovation Mission?

AlM is a flagship initiative in India to promote a culture of innovation and entrepreneurship.
It is an umbrella structure tasked with promoting innovation and revolutionising the country’s entrepreneurial ecosystem.
It creates new policies and programmes to promote innovation in various sectors of the economy, as well as providing a platform and opportunities for collaboration to various stakeholders in the entrepreneurial space.

What is Atal Incubation Centre?

AIM intends to assist in the establishment of new greenfield incubation centres known as Atal Incubation Centres (AICs), which will nurture innovative startups in their pursuit of becoming scalable and sustainable business enterprises.
AIM will assist these AICs in developing worldclass incubation facilities across the country.
Majority of AICs established would be sector-specific in areas such as manufacturing, transportation, energy, health, education, agriculture, water, and so on, in order to foster unprecedented technological innovation in specific sectors.

What is MAARG portal?

The Department for Promotion of Industry and Internal Trade (DPIIT) launched this portal.
It’s goal is to further boost the startup ecosystem in India by catalysing the startup culture and creating a strong and inclusive ecosystem for innovation and entrepreneurship.

The MAARG portal (Mentorship, Advisory, Assistance, Resilience, and Growth) is a one-stop shop for startups of all sectors, functions, stages, geographies, and backgrounds.

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