Unit-4

Government Funding Scheme for Entrepreneur

4.1.1 Multiplier Grants Scheme for IT research
and development
 Launched by Department of Electronics and
Information Technology
 Aim: ‘encourage collaborative R&D between
industry and academics/R&D institutions for
development of products and packages’
 Valid till March 31st ,2020.
 Outlay of Rs 36 crore.
 Applicable Industries:
◦ Artificial Intelligence, Technology, Hardware,
Internet of Things, IT services, Enterprise
Software, Analytics
4.1.2 The major objectives of the scheme are:
1. The linkages between the industry and Institutes
2. To promote R&D
3. Development of products and packages
4. Bridge the gap between R&D/ proof-of-concept
and commercialization/ globalization.

4.1.3 Scope:
1. The idea- originate from industry/ industry
consortium and academic institution/ R&D bodies-
submitted to DeitY under MGS scheme.

2. The proposal for innovation in modules/ products/

packages/ services- area E&IT
3. Core area- business of the industry
◦ The identified institute/ Project investigator – expertise
and tack record in the proposed area
4. To ascertain R&D capabilities
1. Level of professional courses in ICTE (B.Tech, M.Tech/
PhD) being conducted by them
2. Prior research work/ projects undertaken
3. No. of papers published
4. Collaboration with industry if any
5. Min 5 years of existence
5. The outcome- promise technical and commercial
viability- contain market survey information
6. The industry requires
1. Manpower for absorption of technology
2. Infrastructure for production
4.1.5 Description:
 If an industry supports innovation and commits its
resources (SR), the government would commit a
grant of [n* SR] (n= max 2)- case to case basis
 Greater support (n ~ 2)- MSME and large
industry ,,n” could be one
◦ (n ~ 2) generally for innovations in nature as compare to
incremental
 Only given to academic/ R&D institution only- in
cash (cheque/DD/RTGS)- In stage and as per
recommendations of working group
 Grant cover- expenditure of project- equipment,
consumables, manpower, travel and training,
contingencies, and overhead (15%) if any.
 Max grant Rs. 2.0 Crores per project , duration –
less than 2 years
◦ For industry consortium- 4.0 Crores and 3 years
 Formal agreement- sharing IPRs/know-how and
royalty/ lump sum - sign before 1st installment
◦ Periodic report-min 5 years
 Retain the know-how in India – further R&D and IPR
in India- control and national interest
 Reviewed/ update- on feedback bases.
4.1.6 Implementation Mechanism:

1. The project proposal submitted by academic

institution/ R&D bodies jointly with industry/
industry consortium
◦ Idea Originated - industry/ industry consortium
2. Proposals invited up to a max of 3times in a year
3. A working group- scrutinize, evaluate proposal
and recommend financial support
◦ A working group- additional domain experts
4. A project Review & Steering Group (PRSG) –
periodically review
5. The existing mechanism of project approval,
PRSG and project closure- adopted
6. The grants- subject to Terms & Conditions-
annexure-I
7. Submission of proposal under- Scheme annexure-
8. The details of the scheme, including current status-
available on website.

4.1.7 Benefits:
1. The academic and Government R&D Labs- for
Market oriented R&D;- enhance the relevance of
Education and Training
2. Enabled- mobilizing technical know-how and
skills
3. Industry- quickly respond to market needs- in
terms of competitive products
 Incentives- in terms of royalty sharing, attracting
and retaining quality manpower
 Close industry- academia/ R&D Lab interaction –
lead to increase in no. of entrepreneurs.
4.2 Modification Special Incentive Package
Scheme: (M-sips)
 Launched by Department of Electronics and
Information Technology (DeitY) and supported by
Center for development of Advanced Computing or
CDAC
 Aims to ‘Promote large-scale manufacturing in the
Electronic System Design and Manufacturing (ESDM)
sector’
 Also provide subsidy up to 25% in establishing
offices, research centers in SEZ, all over the nation.
 Applicable industries: IT Hardware, Medical-tech,
Solar Power, Automobiles, Healthcare,
Semiconductors, Processors/ Electronica, LEDs, LCDs,
Avionics, Industrial Electronics, Nano-Electronics,
Biotech, Strategic Electronics, Telecom and more.
 Background:
◦ Notified vide Notification No.175 dated 27.07.2012 in
Part-I, Section 1 of the Gazette of India (Extraordinary)
[F.No.24(10) –IPHW].
◦ As per Para 5.2 of Scheme, M-SIPS will be open for\
receiving applications for three years from date of
notification
 Definitions
 Applicant:
◦ an legal entity or consortium of legal entities
registered in India, proposing to invest in a project
under one of the verticals of Electronics System
Design and Manufacturing listed under Annexure 2 of
the Scheme and Annexure 5 of the Guidelines.
◦ As amended from time to time, and making an Initial
Application, seeking approval of the project.
 Approved Project:
◦ A project approved by the Department of Electronics and
Information Technology, Government of India under the
Scheme based on an Initial Application.
 Capital expenditure:
1. Expenditure incurred on land and building
required for the project:
> 2% of the total capital expenditure on the project-
not eligible.
2. Expenditure incurred on plant , machinery and
equipment:
including erection and commissioning of the same,
tools, dies, moulds, jigs, fixtures and parts,
accessories, components, spares of the plant and
machinery or equipment used in the manufacture or
processing of any of the products- eligible
3. Expenditure on leasing or hire and purchase of
plant, machinery and equipment
treated as capital expenditure (certificate from the
auditor)
4. Expenditure on plant, machinery and equipment,
tools, dies, moulds, jigs, fixtures and parts,
accessories, components, spares required for in-
house and captive Research and Development
including associated software costs and software
license fees; purchase of technology, IPRs, patents,
copyrights
treated as part of the capital expenditure (certificate
from the auditor)
5. Utility machines such as compressors for
compressed air; Expenditure for set-up of captive
power plants if set-up exclusively for manufacture of
items- eligible
 Initial application:
 requisite information, along with supporting documents +
application fee +documents showing Financial Closure of an
amount not less than the threshold value and 20% of the
complete project.
1. Electronic Manufacturing Clusters:
 means a geographical area or a region, so notified by
DeitY under the ‘Scheme’. This may include a Greenfield
EMC or a Brown field EMC.
2. Expansion of existing unit:
 an increase in the value of fixed capital investment in
plant and machinery of an existing unit by not less than
25%, for the purposes of either expansion of capacity, or
modernization or diversification.
3. Financial Closure:
 Firm loan agreement for debt portion of the
investment proposed and Legally binding
commitment from equity providers to provide or
mobilize funds towards equity or Legally binding
commitment of funding from internal accruals, in
case of an existing unit
4. Follow up Application:
 application would be made in the Follow up
Application Form along with application fee and
supporting documents.
4.3 The Venture Capital Assistance Scheme:

 Launched in 2012 by Small Farmers’ Agri-Business

Consortium (SFAC).
 Aims to assist agriculture based entrepreneurs to
kick start their agri-business.
 tied up with 42 banks, which help them to disperse
interest-free loans to farmers (individuals/groups),
partnership firms, self- help groups, agriculture
pass out /graduates, agri-preneurs, producer
groups, and companies.
 Applicable Industry: Agriculture
 Introduction
◦ single largest private sector economic activity
◦ growth potential -changes taking place in food
consumption and there is growing demand for high
value processed products
◦ The result of small and medium enterprises- capture
opportunities that arise all along the farm to table
supply chain.
◦ In order to facilitate agribusiness development in
the country SFAC venture capital scheme will:
1. Assist agri-preneurs to make investments in setting
up agribusiness projects through financial
participation
2. Provide financial support for preparation of bankable
Detailed Project Reports (DPRs) through Project
Development Facility(PDF).
 Objectives:
1. To facilitate setting up of agribusiness ventures-
association with all Notified Financial Institutions
notified by the RBI - the ownership of the Central/
State Government > 50%
 such as Nationalized banks, SBI & its subsidiaries, IDBI,
SIDBI, NABARD, NCDC, NEDFi, Exim Bank, RRBs & State
Financial Corporations.
2. To catalyze private investment - agri-business
projects -assured market - increasing rural income
& employment.
3. To strengthen backward linkages of agri-business
projects with producers.
4. To assist farmers, producer groups, and agriculture
graduates to enhance their participation in value
chain through Project Development Facility.
5. To arrange training and visits, etc. of agri-preneurs.
 6. To augment and strengthen existing setup of State and
Central SFAC
 Salient features of the Scheme:
◦ Provide Venture Capital to qualifying projects- will be
repayable back to SFAC after the repayment of term loan.
1. VC in the way of soft loan - subject to the fulfillment of the
following conditions:
1. Qualifying projects under Venture Capital:
 agriculture or allied sector or related to agricultural services.
(Poultry and dairy projects)
 Assured market to farmers/producer groups.
 encourage farmers to diversify
 Be accepted by Notified Financial Institution for grant of term
loan.
2. The quantum of SFAC Venture Capital Assistance will depend on
the project cost: ‹ 26% of the promoter’s equity,`50.00 lakhs.
Located in North-Eastern Region, Hilly States ( Uttarakhand,
Himachal Pradesh, Jammu & Kashmir): ‹ 40% of the promoter’s
equity ‹`50.00 lakhs
5. The project proposal in the form of DPR to area lending Notified
Financial Institution.
6. On receipt of project proposal, Notified Financial Institution will
appraise, assess and sanction requisite amount of term
loan/working capital.
7. Notified Financial Institution will also workout the amount of
Venture Capital, and communicate it to SFAC with its
recommendation.
8. SFAC will make said amount available to there commending Notified
Financial Institution on case to case basis for disbursement to the
beneficiary either in lump sum or in stages, as may be considered
appropriate by the Notified Financial Institution.
4.4 Credit Guarantee
 Credit Guarantee Fund Trust for Micro and Small
Enterprises (CGTMSE) has launched to help assist
retailers, educational institutes, self- help groups,
farmers and SMEs.
 Aims to smoothen credit delivery system, as
guarantee cover up to 85% is provided to the SMEs
for loans up to Rs5 lakh.
 Applicable Industry: SMEs
 Introduction
1. Title and date of commencement:
 (CGFSI)
 come in to force from August1,2000.
 extended by June1, 2000.
 MSMED Act-2006 the Trust was renamed
 Credit facilities eligible under the Scheme:
1. to a single eligible borrower in the Micro and Small
Enterprises sector for credit facility
1. not exceeding Rs. 50 lakh (Regional Rural Banks/Financial
Institutions)
2. not exceeding Rs.100 lakh (Scheduled Commercial Banks and
select Financial Institutions)
by way of term loan and/or working capital facilities on or
after entering into an agreement with the Trust (secured or
partly)
2. Provided further that, as on the material date
1. The dues to the lending institution have not become bad or
doubtful of recovery;
2. The business or activity of the borrower for which the credit
facility was granted has not ceased;
3. The credit facility has not wholly or partly been utilized for
adjustment of any debts deemed bad or doubtful of recovery,
without obtaining a prior consent in this regard from the Trust.
 Credit facilities extended by more than one bank and/or
financial institution jointly and/or separately to eligible
borrower up to a maximum up to Rs.100 lakh per
borrower subject to ceiling amount of individual MLI or
such amount as may be specified by the Trust.

 Credit facilities not eligible under the Scheme:

1. Which risks are additionally covered under a scheme
operated / administered by Deposit Insurance and
Credit Guarantee Corporation or RBI, to the extent
they are so covered.
2. Which risks are additionally covered by Government
or by any general insurer or any other person or
association of persons carrying on the business of
insurance, guarantee or indemnity, to the extent they
are so covered.
3. which does not conform to, or is in any way
inconsistent with, the provisions of any law, or with
any directives or instructions issued by the Central
Government or RBI, which may, for the time being, be
in force.
4. Any credit facility granted to any borrower, who has
availed himself of any other credit facility covered
under this scheme or under the schemes mentioned in
clause (i), (ii) and (iii) above, but has not repaid any
portion of the amount, by reason of any default on the
part of the borrower in respect of that credit facility.
5. Any credit facility which has been sanctioned by the
lending institution against collateral security and /or
third party guarantee.
6. Any credit facility which has been sanctioned by the
lending institution with interest rate > 3% over the
Prime Lending Rate(PLR)of the lending institution.