For Funding Startups, Govt to Set Up Credit Guarantee Fund

for funding startups govt to set up credit guarantee fund

Today, in a written reply in the Lok Sabha, Mr. C. R. Chaudhary, who is Minister of State of Commerce and Industry, said that the government is planning to set up a Credit Guarantee Fund (CGF) for encouraging start-up companies with a view to providing funding facilities in the country.
It is noted that the CGF scheme, which is still to be made operational, has been talked about its launch a number of times since 2016.
In 2016, Mr. Ramesh Abhishek, who is Secretary of Department Of Industrial Policy & Promotion (DIPP), had also announced that the government would shortly set up a Credit Guarantee Fund with a corpus of INR 2000 crores to support their ventures and risk taking abilities.
In July 2017, the ministry had already issued a press release where it stated that the government is formulating a CGF scheme with a corpus contribution of INR 2000 crores that will enable Startups to raise loans without any collateral for their business purposes.
The much lucrative scheme however never took off and yet to be made operational.
To recall, in 2016, Haryana state chief minister Manohar Khattar had also announced that the state would give collateral-free loans up to Rs 1 crore to startups in the state. Collateral free loans are kind of unsecured loan where the signature of the borrower(startups) on the loan contract is the only security that the lender(banks) has to commit you to pay the loan back in full.
In December 2016, Prime Minister Narendra Modi had announced the enhancement of credit guarantee scheme for small, medium and micro enterprises (SME) for loans up to Rs 2 crore.

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Incentives & Relaxations to Benefit Startups

Incentives being provided to Startups under Startup India initiative are Self-Certification under 6 Labour Laws & 3 Environmental Laws, Relaxations in Public Procurement Norms, Faster exit under the Bankruptcy Code, Rebates on Patent & Trademark filing fees, support from facilitators and expedited examination of Patent application, Income Tax exemption, etc.
Other benefits include Exemption from Income Tax on investments received above fair market value, Funding support under the Fund of Funds for Startups, Guidance and facilitation support from Startup India Hub.
The statement added DIPP hosted Startup India Global Venture Capital Summit 2018 on 7th December 2018 in Goa.
It was a gathering of global fund managers, limited partners, officials from the Government of India and innovative startups.
The dialogue focused on the huge return-generating potential of India’s vast and diverse market monetized through cutting-edge technologies supported by investor-friendly regulations.
Source – Press Information Bureau,

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