To offer additional capital support to the entrepreneurs across the country, the Government of India will reportedly offer an equity fund for start-ups with a 20% limited stake by it. The announcement was made by Rajeev Chandrasekhar, the minister of state for information technology (IT) and electronics.

The minister, who was partaking in an event hosted by the industry body CII (Confederation of Indian Industry), referred to the announcement of the budget regarding the establishment of the fund by finance minister Nirmala Sitharaman.

Mr. Chandrasekhar said that the finance minister has announced that a fund will be opened, managed by private fund managers, where the government will be a limited partner with a 20% stake. Of course, there will be a fund created and subsidized by the government, but it will be managed similar to other private funds. This will produce required private equity capital as an addition to what exists today.

The finance minister declared the establishment of government-backed funds to encourage important sunrise sectors, like climate action, pharma, digital economy, deep-tech, and agri-tech.

Already, the government has put some of the funds in place, like the Startup India Seed Fund Scheme (SISFS), with an expenditure of ₹945 crores for helping start-ups to fulfill their capital requirement.

Some states like Bihar, Uttar Pradesh, Gujarat Karnataka, and Rajasthan have set up funds to support start-ups.

Mr. Chandrasekhar has said that this is a great time to be an entrepreneur and a great time to be a start-up. It is a complete mission and object of faith for the Prime Minister and the government that the expansion of the start-up ecosystem, fueling and funding it, and building innovations in the start-up system are existing in a post-COVID-19 world in such a way that supports the creation of intellectual properties.

Source Credit - https://www.ndtv.com/business/govt-to-create-equity-fund-for-start-ups-with-20-pc-limited-partnership-mos-it-2777816