In recent years ,annual budgets have given due importance to both the MSME sector and the start up Ecosystem. This year too start ups got a fair mention – one article stated that the word “start-up” was mentioned no less than 7 times in the budget speech.
The Government is clearly intervening with both financial and non-financial policies towards the MSME and start up ecosystems. Four that warrant a mention here are:
Fund of Funds : In addition to a previously allotted Rs 10,000 cr, SIDBI has been granted an additional Rs 10,000 cr this year , for investment in registered Alternative Investment Funds ( AIFS as they are called) . One category of AIFs focusses on start-ups and MSME.
Customized credit cards: A credit card with a withdrawal limit of Rs 5 lakhs provides document light and hassle free on tap funding.
Credit Guarantee: Lending Banks were provided a government Guarantee for loans extended to MSMEs for up to Rs 5 cr. This limit has been doubled to Rs 10cr. Enterprises that have already availed this line of credit now get an additional amount of Rs 5cr.
Digitalization: To enable a smooth and inexpensive transition to e Commerce, Government plans to provide platforms focused on MSME. Thw giants in e -Commerce the likes of Amazon are already active in this space. A competing platform would help reduce costs of e Commerce.
Economic growth is closely linked to entrepreneurship , which in turn is linked to innovation. Our country has and continues to make rapid strides in innovation , though yet a fair distance away from neighboring China. In an interesting report[1] , attempting at a reasoning for the less than 10% success rate in startups, the top three causes were (1) Poor leadership , (2) lack of clarity on product market segmentation and (3) Inadequate or weak partnerships . These are clearly outside any government support .
[1] “Critical decisions at early stage of development of start-ups”: Journal of Innovation and Entrepreneurship 2024