Subscribe print version with complimentary e-version @Rs.530 per annum; Subscribe only e-version @Rs.400 per annum. || !! ATTENTION ADVERTISERS !! Advertisers are requested to give full details of job Vacancies/ Minimum size will now be 200 sq.cm for shorter advertisements || Click here to become an e-resource aggregator of Publications Division || New Advertisement Policy || ||

Special Content


Issue no 21, 24 - 30 August 2024

Budget 2024-25

Strategic Investments for India's Start-Up Ecosystem

Dr. Nimish Kapoor

The Union Budget 2024-25 represents a pivotal moment for India's start-up landscape, introducing a robust framework to accelerate innovation and support start-ups through targeted R&D initiatives. It aligns with areas such as science, technology, space, energy, defence, agriculture, and skill development, under the proposed National Deep-Tech Start-Up Policy (NDTSP). By boosting investments in Fintech and Deep-Tech sectors and enhancing support for emerging enterprises, India is bolstering its innovation capacity and cementing its role in cutting-edge technology.

Key initiatives include the establishment of the Anusandhan National Research Foundation to drive scientific and technological progress and significant investments in private sector-driven research to accelerate start-up innovation across various sectors, including the space economy, agriculture and nuclear energy.

Rs. 1 Lakh Crore for Anusandhan National Research Foundation

The recent establishment of the Anusandhan National Research Foundation (ANRF) through the ANRF Act 2023 signifies a pivotal advancement in India's research and development landscape. With a visionary objective to support both fundamental research and prototype development, the ANRF is poised to provide strategic oversight for scientific initiatives. It aims to bolster the start-up ecosystem by fostering collaborations among industry, academia, government departments and research institutions, thus creating a dynamic interface for participation from industries and state governments.

The Union Budget 2024-25 underscores this transformative initiative by allocating a substantial Rs. 1 lakh crore to the ANRF. This financial commitment sets a precedent for India's Deep-Tech Start-Ups, establishing robust mechanisms to stimulate private sector-driven research and scale innovation commercially. Consequently, this budget positions India as an emerging epicenter of technological excellence and entrepreneurial dynamism.

Rs. 1 Lakh Crore Fund for R&D and Innovation

The Indian government acknowledges the essential role of the private sector in fostering innovation and bringing research to market. By offering substantial funding and cultivating a favourable environment for private sector involvement, the government aims to speed up the development of new technologies and products. This initiative seeks to bridge the gap between research and industry, nurturing a more vibrant and dynamic R&D ecosystem and to stimulate private sector-led research and innovation on a commercial scale. The Union Budget proposed to establish a financing pool of Rs. 1 lakh crore to support these initiatives.

Rs. 1,000 crore Venture Capital Fund for Space Startups

Rs. 1,000 crore Venture Capital Fund (VCF) was also announced specifically for supporting Space Start-ups, further enhancing the financial backing available to emerging enterprises in this high-growth sector. This approach not only underscores the government's commitment to technological advancement but also highlights its strategic vision for expanding the space economy.

Alongside the venture capital boost, the recent policy changes, including the allowance of 100% foreign direct investment in satellite manufacturing and the liberalisation framework for private space ventures, are set to further energise the sector. These measures aim to create a more conducive environment for innovation and attract international investment, fostering a vibrant ecosystem for Space Start-ups.

India's space economy, currently valued at $8 billion and accounting for 2-3% of the global space market, is on an extraordinary growth trajectory. With the government's bold target of expanding this sector to $100 billion by 2040, the recent budget allocations and policy reforms reflect a strong commitment to this ambitious goal.

The surge in private sector participation is already evident, with nearly 200 Space Start-ups emerging in 2024 compared to just one in 2022. This explosion in start-up activity highlights the transformative impact of recent reforms, which have opened up new opportunities for entrepreneurial ventures in the space industry.

PPP & Collaborative R&D for Clean Energy

The Budget's initiative to set up Bharat Small Modular Reactors (SMRs) through a partnership with the private sector and collaborative R&D paves the way for start-ups to engage in cutting-edge nuclear technology and creating new opportunities in India's clean energy sector. Nuclear energy has a significant role in the energy mix for Viksit Bharat. The R&D funding of Rs. 1 trillion announced in the Interim Budget 2024-25 will be made available for nuclear energy.

SMRs, with a power capacity of up to 300 megawatts (MW) per unit, offer a transformative approach to nuclear energy production. Unlike conventional reactors, which are constructed on-site, SMRs can be factory-built, ensuring faster deployment and reduced construction costs. This mobile and agile technology can be installed at locations unsuitable for larger nuclear plants, thereby broadening the geographical scope of nuclear energy in India.

India's commitment to achieving net-zero carbon emissions by 2070 underscores the urgency of integrating cleaner fuels into the energy mix. In this context, SMRs represent a strategic advancement. With the current installed nuclear power capacity at 7.48 gigawatts (GW) and projections to reach 22.28 GW by 2031, the integration of SMRs are crucial for meeting these ambitious targets.

Boosting Defence Innovation with iDEX

The budget underscores a significant leap in supporting innovation in the defence sector with a substantial increase in allocation for the Innovations for Defence Excellence (iDEX) programme. The funding has surged from Rs. 115 crore in FY 2023-24 to an impressive Rs. 518 crore this fiscal year. This strategic enhancement is poised to invigorate start-ups, MSMEs, and innovators, fostering a dynamic environment for developing cutting-edge defence technology (def-tech) solutions.

The expanded budget will enable start-ups to access greater resources and support for creating innovative solutions tailored to the evolving needs of the defence sector. This boost not only enhances their capability to contribute to national security but also provides a platform for collaboration with defence research institutions and industry leaders.

At present iDEX supports over 300 start-ups. Under the iDEX programme, start-ups focus on developing advanced Artificial Intelligence (AI) and Machine Learning (ML) solutions for defence applications, specialising in drone technology, providing cutting-edge solutions for aerospace and defence.

AgriStack for Agri Startups

The budget marks a transformative moment for India's agricultural sector with the introduction of AgriStack, a groundbreaking Digital Public Infrastructure (DPI) designed to revolutionise farming practices. AgriStack aims to integrate over 6 crore farmers into a formal land registry system over the next three years. This ambitious initiative promises to provide a structured digital framework that will significantly enhance the agricultural landscape.

For Agri Start-ups, AgriStack represents a tremendous opportunity. By creating a comprehensive digital record of land ownership and farming practices, AgriStack will facilitate better access to critical data. This data-centric approach will enable start-ups to develop innovative solutions tailored to the needs of farmers, such as precision agriculture technologies, crop management tools and advanced analytics for yield optimisation. Start-ups specialising in financial technology (fin-tech) can leverage this data to offer customised loan products and insurance services, addressing the unique needs of individual farmers and promoting financial inclusion in the agricultural sector.

Moreover, AgriStack will enhance supply chain transparency by providing accurate and up-to-date information on land use and crop production. This will enable Agri-tech Start-ups to build more efficient supply chains, reduce wastage and connect farmers with markets more effectively. The initiative also opens doors for innovation in agricultural research and development. AgriStack significantly cuts costs for Agritech Start-ups by formalising and simplifying access to farmer data. This digital infrastructure reduces the high expenses associated with acquiring and managing farmer information, allowing start-ups to operate more efficiently.

Streamlining Kisan Credit Cards

The budget introduces streamlined processes for issuing Kisan Credit Cards (KCCs) for fin-tech growth in the agricultural sector. By simplifying the issuance and management of KCCs, the budget facilitates easier access to credit for farmers, thereby unlocking new opportunities for fin-tech start-ups.

For fin-tech start-ups, the streamlined issuance of KCCs offers a valuable opportunity to expand their service offerings. Start-ups can now more easily develop and deliver tailored financial products, such as personalised loan options and digital credit solutions, directly linked to KCCs. This integration allows for more precise risk assessments and better-targeted financial services, contributing to improved financial inclusion and support for the agricultural sector. Additionally, the simplified KCC issuance reduces administrative overhead and operational costs for fin-tech start-ups, enabling them to allocate resources towards innovation and growth.

Paid Internships

This scheme serves as a bridge between academia and industry by connecting young talents with opportunities in top 500 companies across the country. Under this scheme, interns will receive a monthly stipend of Rs. 5000 along with a one-time assistance amount of Rs. 6000. The internship scheme is a strategic move that addresses both immediate financial needs and long-term professional development for the youth.

Doubling Mudra Loan Limit

The limit of Mudra loans has been increased to Rs. 20 lakh from the current Rs. 10 lakh for those who have successfully repaid previous loans under the 'Tarun' category. This is a significant boost for promoting entrepreneurship and aiding start-ups. By doubling the loan limit, the government ensures that entrepreneurs have greater access to capital.

Mudra loans, introduced under the Pradhan Mantri Mudra Yojana, are designed to provide financial support to micro and small enterprises in India. Mudra loans are categorised into three types-Shishu (up to Rs. 50,000), Kishor (Rs. 50,000 to Rs. 5 lakh), and Tarun (Rs. 5 lakh to Rs. 20 lakh).

Abolishing Angel Tax

The abolishment of the Angel Tax is a significant and welcome move for the start-up ecosystem. This tax often deterred investors and created financial challenges for start-ups. By abolishing it, the government aims to create a more favourable investment climate, encouraging more capital flow into the start-up ecosystem.

Start-ups, typically in their nascent stages, rely heavily on investments from angel investors-wealthy individuals who provide the much-needed capital to nurture and grow these innovative ventures. Angel tax is a 30% levy imposed on the funding received by start-ups from angel investors when the investment exceeds the fair market value of the company's shares.

By removing this tax, the government has made it easier for start-ups to secure investments without the fear of heavy taxation. This move not only encourages more domestic and international investors to support Indian start-ups but also solidifying India's position as a global start-up hub.

The Union Budget 2024-25 is a crucial enabler for India's start-up ecosystem, with its comprehensive approach to fostering innovation and entrepreneurship. By strategically investing in key sectors of S&T, Space, Defence, Energy and Agriculture the government is laying a robust foundation for sustainable growth and global leadership in cutting-edge technology. These initiatives not only address current funding and development gaps but also create an enabling environment for future technological advancements.

(The author is a science communication specialist. Feedback on this article can be sent to feedback.employmentnews@gmail.com)

Views expressed are personal.