The first union budget presented by Finance Minister Arun Jaitley has a lot of expectations. The media and industry veterans has predicted a tight first budget from Prime Minister Narendra Modi’s.

The Finance Minister though brought some cheerful news to Startups and Entrepreneurs.He announced a host of measures and schemes to encourage entrepreneurship, including a Rs 10,000-crore fund to back early stage companies. If itsestablished, this fund will be the largest pool of money invested. Only second to Sequoia Capital who has invested around Rs.12,000 crore in Startup ecosystem of India.

The move is in a good direction and the timing has been perfect enough. The startup ecosystem is developing in India and we have seen more and more startups coming out of India. There is still a long way to reach the likes of Silicon Valley. But the contributions of government along with other investors is a good move and is a boost to the entire ecosystem. Earlier we have seen that state governments like Kerala setting up examples by ear marking one percent of the state budget for young entrepreneurs which amounts to Rs.500 crore. AlsoKerala State Industrial Development Corporation (KSIDC) has created a Rs 10 crore angel fund to support startups this financial year.

Budget 2014 for startups and entrepreneurs

Highlights of Budget 2014 beneficial for Startups and Entrepreneurs

Smart Cities

This is in line with the Prime Ministers vision of 100 smart cities and FM has decided to allocate a sum of Rs. 7060 crore in the current fiscal for creating smart cities.

Skill India

A national multi skill programme called Skill India is proposed to be launched. The programme would skill the youth with an emphasis on Entrepreneurship and employability skills. It will also provide training and support for traditional professions like weaving, carpentry, cobblers, masons, etc.

Welfare of Scheduled Caste/Tribe

To provide credit enhancement facility for young startups entrepreneurs from scheduled castes, who aspire to be part of the neomiddle class, the FM has set aside a sum of Rs.200 crores which will be operationalized through a scheme by IFCI.

National Livelihood Mission

A sum of Rs.100 crore is set aside to set up a startup village entrepreneurship programme for encouraging rural youth to take up local entrepreneurship programs.

Virtual Class Rooms

To take advantage of the reach of IT, the FM proposed to allocate a sum of Rs.100 crore for setting up virtual classrooms as Communication Linked Interface for Cultivating Knowledge (CLICK) and online courses.

Focus on Product Startups

Special focus would be on supporting software product startups.

“Promotion of entrepreneurship and startup companies remains a challenge. While there have been some efforts to encourage, one principal limitation has been the availability of startup capital by way of equity to be brought in by the promoters. “

A Rs. 10, 000 crore venture capital fund is introduced to help companies in the MSME sector. This fund provides as a catalyst to attract private capital by way of providing equity, quasi equity, soft loans and other risk capital for startup companies.

To establish technology centre network to promote innovation, entrepreneurship and agro industry, Rs.200 crore has been set aside. Entrepreneur friendly legal bankruptcy framework will be developed for SME’s to enable easy exit. A nation wide “District level Incubation and Accelerator Programme” would be taken up for Incubation of new ideas and providing necessary support for accelerating entrepreneurship.

The budget as such might not have brought any cheers on the face of common man. Like most of the economists said the budget has been laid a foundation for a good future. The focus is on creating more jobs and investments in India.

The main advantage of promoting Entrepreneurship is that it creates more jobs and attracts more investments and even control the brain drain.

Rs. 100 crore startup village programme is similar to startup village in Kerala startedby Mobme founders.

The budget has focused on some of the basic aspects of growth like education, development of rural India, promoting entrepreneurship and startups in rural India. The induction of five new IIT’s and IIM’s are some of the measures taken in this direction.

Missing Facts!

I would loved to see subsidies given to promote green entrepreneurship. India isseeing aboom in software startup space but there isnot much happening around green startups. The subsidies would help to promote this space by creating more awareness as well as encouraging people to startup on green concepts.

Funds has been set aside for women safety and it is available through Nirbhaya schemes but there is no fund provided for promoting women entrepreneurship and support women entrepreneurs.

I would love to see some of the industry veterans and existing members of Indian startup ecosystem contributing to these efforts of the government. I am sure if there is no proper planning or proper monitoring, these funds will not reach the needy and it will end up in another scam! I would suggest to form a startup cell by the central government consisting of entrepreneurs, investors and accelerators who already have knowledge about this space.

Hope that Narendra Modi will bring cheers to the entire nation in his five-year rule and these steps taken in the right direction are implemented in the right way by the right people.


Provide your comments on governments efforts to promote entrepreneurs and startups in India and how this budget will impact the startup ecosystem in India.