- The Startup India fund has fallen short of its capital allocation target by around Rs 1,000-1,200 crore.
- The Startup India fund which was launched in 2016 had a disbursal target of Rs 3,300-3,500 crore to venture capital(VC) firms at the end of the financial year ending March 2019.
- However,the Startup India fund has allocated Rs 2,265 crore to VC funds at the end of March 2019.
- Startup India is a flagship initiative of the government launched in 2016.It is intended to build a strong eco-system for nurturing innovation and Startups in the country to drive sustainable economic growth and generate large scale employment opportunities.
- In the previous government,startups were identified as a critical part of the economy which create new jobs.The government had launched the startup India fund to help startups get funding in early stages.
- This fund doesn’t directly invest in startups.Instead,it allocates money to VC funds which are required to invest at least twice the amount of contributions received from the government.
- However,early-stage startups in India had criticised the Startup India campaign after entrepreneurs of hundreds of startups complained of harassment by tax authorities who sent them ‘angel tax’ notices.
- Angel Tax is a 30% tax that is levied on the funding received by startups from an Angel investor.However, this 30% tax is levied when startups receive angel funding at a valuation higher than its ‘fair market value’. It is counted as income to the company and is taxed.
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