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What’s in for Start-ups in Atma Nirbhar Bharat Yojana?

The economic relief package for ‘Atma Nirbhar Bharat Yojana’ introduced by the Central Government is being considered as a welcome measure by the start-up community, which plays a major role in fostering the ‘Make in India’ scheme. Recently, India’s Finance Minister, Nirmala Sitharaman announced certain measures that will help start-ups get back on their feet. It is essentially an instrument of economic remedy promulgated in the interests of the ailing business community whose operations have been heavily hit due to the lockdown enforced in response to the outbreak of COVID-19 pandemic.

Viability gap funding for creating social infrastructure: In the fourth tranche of the proposed economic stimulus, around INR 8,100 crores are allocated for viability gap funding in order to aid in the development of social infrastructure. Social infrastructure today is not just about building a local hospital or creating an asset which will be put to use by the community as a whole. It includes building and maintaining facilities that support social services. Entrepreneurs and start-ups are encouraged to provide solutions for a typically local problem related to social infrastructure and strengthen the capacity of that infrastructure to a level where it can be put to use in the interests of the greater national economy. It can also serve as an integral part of the global chain and retain a global value. 

Social infrastructure, which otherwise suffers from poor viability shall receive a one-time or deferred grant from the Union or State Government in the amount of a maximum 30% of the total cost of the project. This would boost their ability to take off rather than linger away in gestation thus adding significantly increased costs of commercialization over time.

Farm Infrastructure: In the Agricultural sector, an increase in production of agro and farm infrastructure through private partnership and intervention has been given a filip. In the third tranche of the economic package, the government has allocated Rs. 1 lakh crore for strengthening infrastructure in the areas of cold storage, supply chains, establishing post-harvest management infrastructure, etc. for the start-ups who wish to procure the produce directly from farmers. The government emphasizes how innovation can change the face of Indian agriculture sector. 

Limitation on Global Tenders: The government has stated that global tenders will be disallowed in the governmental procurement tenders for up to Rs. 200 Crores. This shall encourage the creativity and innovation of start-ups in the economy by protecting them from foreign competition and simultaneously, boost the agenda of ‘Make in India’.

Change in definition of MSME: According to the new definition, MSMEs with an investment of Rs. 1 crore and a turnover of Rs. 5 crores will be classified as micro-units. Units with an investment of Rs. 10 crore and turnover of Rs. 50 crores shall be classified as small units, while those with an investment of Rs. 50 crore and turnover of Rs. 250 crores will be classified as medium units. In addition to this, exports shall be excluded from the turnover cap. By revising the definition of MSME under applicable law, it is intended to bring more enterprises into the MSME fold. The collateral-free automatic credit line and the subordinate debt to MSMEs are expected to act as a game-changers for the sector. Online Marketplace for MSMEs has been encouraged to help the market participants including the end-consumer. 

Indian space start-ups and the armed services: The economic package has also aided a greater participation of private enterprise in the space sector which appears to be very promising. The announcement indicated that various implementing strategies are in the pipeline for the start-ups, with the government suggesting the use of infrastructure facilities of ISRO thrown open to them. Moreover, the government has encouraged entrepreneurial activity and innovation in space and satellite launches.

Scheme for formalization of Micro-Food Processing Enterprises: A Scheme for Formalization of Micro Food Processing Enterprises (FME) was provided with a budget outlay of Rs. 10,000 crores with a view to encourage the micro-food processing units through financial assistance, increasing the revenue of target enterprises, enhancing the better quality of food and increased level of safety. The costs earmarked above will be borne by the Union and State Governments in the ratio 60:40. It shall also give crucial focus to women entrepreneurs and aspirational districts in tribal regions.

Through the package the Government not only hopes to provide economic relief to start-ups but to also provide a fillip to innovation in the country and making start-ups a partner in nation building.

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