Indian Finance minister, Arun Jaitley unveiled a USD 1.6 billion fund to support startups in India during the new government’s first budget presentation in the Indian Parliament on Thursday. The fund will be used to provide “equity through venture capital funds, quasi-equity, soft loans and other risk capital specially to encourage new startups by youth to be set up.” The other terms and conditions like how will the funds get disbursed and administered are still undisclosed. A few weeks before, the Indian Software Product Industry Round Table (iSPIRT), an industry think tank was in talks with Ravi Shankar Prasad, India’s minister for information technology, telecom, and law, suggested for launching an USD 50 million fund for tech Startup along the lines of the Yozma fund in Israel.
iSPIRT had told the minister that India had the tech talent to overtake Israel in four years, if a startup fund were to be set up just as Israel had done. Naveen Tewari, CEO of one of the Indian startup InMobi, has believe that this move is expected to comes as a boost for the Indian startup scene. Kailash Katkar, CEO of anti-virus software maker QuickHeal, says “The Software Product Industry (SPI) needs privileged access to strategic technologies. Today’s announcement about the special focus on the SPI by the government clears the path for this happening in the near future.”
Sharad Sharma, CEO of BrandSigma and co-founder of iSPIRT, notes the budget is a good first move: The Finance Minister has done well in his maiden budget to recognize the Software Product Industry (SPI) as a distinct industry. At iSPIRT, we believe that this is the first step in giving the SPI ecosystem in India the much needed impetus juxtaposed with the recent assurances of the Minister of IT and Communications about making India a Product Nation. (As covered by Tech in Asia)
TechinAsia says: This is the first time that such a fund has been set up by the government in India though the earlier government had launched a INR 5 billion (US$83 million) India Inclusive Innovation fund, which wasn’t specifically for startups. The Yozma fund began as an Israel government initiative in the nineties and seeded the venture capital ecosystem in what has become popularly known as Startup Nation.
Today, the Israeli tech startup scene is way ahead of that in India, even though India is a world leader in software services. At iSPIRT’s meeting in Bangalore with the IT minister on July 1, Tech in Asia had specifically asked the minister if the time had come to have separate policy frameworks for the software services and products industries. Prasad replied diplomatically that he did not want to think in silos, but he would do everything in his power to create an environment for innovation. That he intends to walk the talk was evident just nine days later, because it found its way into the finance minister’s budget speech and gave a new direction to India’s tech industry.
TheNextWeb says: Late last year, Facebook made its very first acquisition in India, purchasing Little Eye Labs, a Bangalore-based company that produces a mobile app crash testing service, for an estimated $10-$15 million. All these are proof points for startup advocates in the country, such as GSF Indiafounder Rajesh Sawhney, who told TNW he believes that India can provide world-class technology and services. To contact the author, email at firstname.lastname@example.org.