For the next 4 years starting from 2020-2021 Startup India Seed Fund Scheme (SISFS) has been approved. Implementing from 1st April 2021, Rs. 945 Crore corpus will be divided over the next 4 years for providing seed funding to eligible startups aiming to provide financial assistance to startups as proof of concept, prototype development, product trials, market entry and commercialization. The scheme is expected to support about 3600 startups.

Numerous proposals made under Atmanirbhar Bharat Package are supportive for many Startups. Those proposals are:


A. PAYMENT SCHEDULE for Term Loans and Working Capital Facilities

  • All co-operative banks, all commercial banks (including regional rural banks, small finance banks and local area banks) & all-India Financial Institutions, and NBFCs (including housing finance companies) (“lending institutions”)was permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020 in respect of all term loans (including agricultural term loans, retail and crop loans).All lending institutions were permitted to extend the moratorium by another three months i.e. from June 1, 2020 to August 31, 2020 for payment of all instalments in respect of term loans in consideration with the of the extension of lockdown and continuing disruption on account of COVID-19.
  • Lending institutions were permitted to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 up to May 31, 2020 in respect of working capital facilities sanctioned in the form of cash credit/overdraft .Furthermore extension for this was granted until 31st August 2020.
  • Kamath Committee: Under the chairmanship of Shri K.V. Kamath an expert committee formed by the Reserve Bank of India (RBI) to prepare suggestions & solutions on the required financial parameters to be factored in the resolution plans under the ‘Resolution Framework for Covid19-related Stress’ along with sector specific benchmark ranges for such parameters. With their recommendations RBI has specified five specific financial ratios and the sector-specific thresholds for each ratio in respect of 26 sectors to be taken into account while finalising the resolution plans.

B. Easing of Working Capital Financing

The lending institutions may recalculate the ‘drawing power’ by reducing the margins and/or by reassessing the working capital cycle in concern of the borrowers facing stress on account of the economic fallout of the pandemic,for their sanctioned working capital facilities.With respect to the economic fallout from COVID-19 further accounts will be provided relief under these instructions with subject to authorised analysis.

2. Parameters for Businesses & MSME’s

A. Rs 50,000 crore Equity infusion for MSMEs through Fund of Funds.

B. Rs 3 lakh crore Emergency Working Capital Facility for Businesses, including MSMEs.

C. Rs 20,000 crore Subordinate Debt for Stressed MSMEs.

D. New definition of MSME: The financial structures are reshaped for

  • Micro manufacturing and services unit as Rs. 1 crore of investment and Rs. 5 crore of turnover.
  • Small unit as Rs. 10 crore of investment and Rs 50 crore of turnover.
  • Medium unit as Rs 20 crore of investment and Rs. 100 crore of turnover.
  • Medium manufacturing and service units as Rs. 50 crore of investment and Rs. 250 crore of turnover. Also for any section of MSME units whether micro, small or medium the turnover with respect to exports will not be counted in the limits of turnover.

E. With preference to domestic suppliers and boost to startups,global tenders have been dismissed upto Rs 200 crore.

F. Production-Linked Incentive (PLI) Scheme

To enhance exports & manufacturing capabilities Atmanirbhar Bharat,has initiated 10 key sections in the PLI scheme.These sections welcome global trade & exciting investment opportunities, thus enlarging the business scope of India & with the increase in employment also.

G. Reliefs through Employee Provident Fund (EPF)

The payment of 12% of employer and 12% employee contributions was made into EPF accounts of eligible establishments under Pradhan MantriGaribKalyan Package (PMGKP).Earlier it was included in the salary of months March, April and May 2020.Now its extended to another 3 months to salary months of June, July and August 2020.Now the support will be enlarged to Rs 4,860 crore to 3.67 lakh establishments, for 72.22 lakh employees.

H. EPF contribution reduced for Business & Workers for 3 months

The statutory rate of the EPF contribution of both employer and employee has been reduced to 10% of basic wages and dearness allowances from the existing rate of 12% for all class of establishments covered under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. These updates for months of May 2020, June 2020 and July 2020 were announced May 18, 2020.These recommendations are for workers who were not eligible for 24% EPF support under PM Garib Kalyan Package and its extension. Under this scheme Reduction in rate of EPF contributions from 12% to 10% of basic wages and Dearness allowances was provisioned to benefit both 4.3 crore employees/members and employers of 6.5 lakhs establishments to tide over the immediate liquidity crisis during Pandemic situation.

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