Subsidies for start-up in Rajasthan

Rajasthan, being the cradle of entrepreneurship, is the birthplace of some of the world’s most successful entrepreneurs and major industrial houses. However, a large number of educated youths in Rajasthan leave the state after completing their education in search of better opportunities in other states and countries. The State of Rajasthan has formulated the Rajasthan Start-up Policy to develop low-cost, indigenous, and technology-based solutions to address various challenges faced by the state, such as water availability, agriculture, arid land, rural healthcare, food processing, and efficient food supply chains, and at the same time support businesses. In this article, we will take a detailed look at the Subsidies for start-ups in Rajasthan.

Rajasthan start-up policy 2022

The Rajasthan government has announced a brand-new policy for start-ups and entrepreneurs in the state, the Rajasthan Start-up Policy 2022. The policy was officially launched by Rajasthan Chief Minister Ashok Gehlot at the second annual Rajasthan Digi Fest 2022 in Jodhpur, a part of the Ministry of Information Technology and Communication’s Three-Day Youth and Entrepreneurship Summit from November 11 to 13, 2022. The policy aims to promote Rajasthan as a hub for innovation and encourage the growth of start-ups across industry verticals such as agriculture, education, healthcare, and fintech; increase employment opportunities for youth and increase their qualifications; and promote diversity and sustainability within the start-up ecosystem. In an online statement, Chief Minister Gehlot said, “Information technology has played an important role in responsive, transparent, and accountable good governance.” The state government is using IT to make its programmes available to everyone. Rajasthan Start-up Policy 2022 will promote start-ups in the state, increase employment opportunities, and also expand the investment sector. In this regard, special care has been given to each category, including SC and ST [Scheduled Castes and Scheduled Tribes]. The new policy builds on the older start-up policy that was implemented in 2015, increasing incentives for start-ups and expanding its scope. The seed funding amount for all start-ups registered under the Rajasthan government’s iStart programme has doubled from Rs 1.2 million to Rs 2.4 million, with an additional Rs 60,000 given to start-ups with female founders holding more than 50 per cent equity in the company. There are also a number of other financial incentives available to start-ups depending on their QRate, a rating system for start-ups recognised by iStart based on their potential and investment ability. Depending on their ranking, start-ups can apply for a viability grant reserved for early-stage start-ups. This can go up to INR 60,000,000 for companies rated bronze and above; the scale-up fund can be worth up to Rs 2 crore for gold-rated companies and above. There are also boosters for the Viability Grant projects for start-ups that meet certain diversity and employment criteria, and other financial incentives.

Targets of the policy

Below are the main objectives expected to be achieved by the policy.

• Five hundred innovative start-ups to support and incubate
• Fifty incubators or incubator-like organisations will be established.
• 100,000 square feet of incubation space to be facilitated or developed.
• Creating an innovative and problem-solving culture across the state
• INR 500 million in angel and venture capital will be mobilised for start-ups.

Focus areas of the policy

The policy has the following domains as critical areas of concern:

• Social and clean technology: rural services and infrastructure; water; sanitation; crafts; renewable energy; healthcare; and low-asset healthcare delivery models and medical devices.
• Information and mobile technology, including but not limited to crowdsourcing and financing, online financial services
• Internet of Things (IoT), electronics, and hardware.
• “IT for X” in crafts and apparel, mining and manufacturing, and services for small and medium enterprises.
• disruptive ideas or technologies in any industry.

Over time, the Department of Science and Technology and GoR, in association with RIICO and Start-up Oasis, would work to create a Rajasthan Start-up Village and an e-platform that would be able to host a cloud server for start-ups, run MOOCs, and coordinate with many related states and central government agencies to further strengthen the start-up ecosystem in Rajasthan.

Eligibility for the policy

The Rajasthan start-up policy applies to the following:

• Any individual or group of individuals who have an innovative idea or concept would be eligible for support under the policy.
• Students enrolled in higher education institutions in Rajasthan affiliated with the Rajasthan Technical University and the University of Rajasthan, as well as NITs, IITs, and other private universities.
• Universities or educational institutions, research and development institutions, incubation centres, or private and other facilities would be eligible as institutions to support and mentor start-ups as approved by the committee.

Supports under the policy for start-up

Below is the support offered to start-ups on behalf of the Rajasthan state government.

Assistance for start-ups in the prototype phase

• The start-up would be offered INR 10,000 per month as a food allowance for one year. However, the start-up project must be recommended by the nodal institution and approved by the committee.
• Incubators would provide appropriate support to start-ups by offering them free mentoring services along with access to their labs, facilities, and so on.
• The state government would also recommend the selected launch units get free access to universities, libraries, government labs, Centres of Excellence, PSUs, and many more.

Assistance for start-ups in the pilot phase

The start-up would receive marketing and commercialization assistance worth up to INR 10 lakhs in order to launch its products or services in the market. Help would be offered in the following manner:

• It can be offered to a start-up that has secured at least 25% of its funding from a well-known and registered angel or venture fund, or a reputable incubator. The amount would be disbursed as purely or partly grants, concessional loans, or equity on a case-by-case basis, as indicated for registered angels, venture funds, and reputed incubators.
• It may be provided as matching assistance to reputed incubators set up by institutions like IITs, IIMs, or NITs to finance start-ups under an acceleration programme as purely or partly grants, concessional loans, or capital on an individual basis.

Tie-up for other assistance in the pilot phase

• The start-up would also help in raising venture capital from angel investors or venture capital funds.
• Efforts would be made to avail the relevant benefits available under various schemes of the Government of India or the Government of Rajasthan.

Student entrepreneurship support

The following support would be offered to students who want to be entrepreneurs and start their own businesses in the state of Rajasthan:

• Students or teams of students applying to the incubator for incubation support will be offered 5% grace points and 20% attendance for each semester if duly accepted by the concerned educational institution.
• Students working on an innovation project will be allowed to convert their project to a final-year project for credits and graduation requirements.
  Students who want to be entrepreneurs and have their own businesses can take a “gap year,” also known as a “gap year.” This could be done after the first year of graduation or after completing a postgraduate course in technical institutions in order to pursue their ventures full-time in any incubator. This can be extended for a maximum period of 2 years, and this period would count towards the maximum time required to complete the degree. A “Gap Year” option may be offered to ensure continuity of the syllabus at the time of re-joining and after the assessment process in the incubator where the student is attached.
• To promote entrepreneurship at the college level, Entrepreneurship Cells, or E-Cells, would be created in collaboration with incubators to create awareness and support at the grassroots level within the professional university campus. Colleges would receive a one-time capital grant of INR 10 lakhs for establishing and operating the E-Cell. The school is required to generate the necessary financial resources from its own resources in order to continue the programmes and actions initiated under the E-Cell.
• State Business Plan Competition: The nodal institution will organise a state-wide business plan competition to invite new innovative business ideas from different parts of the state. The top 50 winners of the competition will be selected by a committee and awarded a prize of INR 50,000 each.

Incubation support

The following support would be offered to incubators in the state of Rajasthan:

Host institutions

The government is encouraging host institutes like reputed technology, management, and R&D firms set up in the state of Rajasthan to set up new incubators and accelerators to create a start-up ecosystem in the state. All such host institutions would be given a one-time grant of capital items up to a maximum of INR 50 lakhs for carrying out business development and start-up support programmes in their respective regions. Accelerators and incubators would be further linked with nodal institutions to ensure the alignment of activities. The procedures for awarding the grant will be specified later. The nodal institution would also ensure that start-ups grown through government-backed incubators could connect with national and international markets and ecosystems for commercialization, funding, and value addition.

Support for private players

Existing, established, reputed companies, angel investors, and VCs would be eligible for a grant of up to 25% for the establishment of permanent assets and new incubation centres with a limit of INR 50 lakhs, subject to a maximum of 5 per year and 2 per district.

Accelerator support

A maximum grant of INR 10 million would be given to competent institutions like incubators, angel investors, etc. to run accelerator programmes in the state. An angel investor must be registered with SEBI, banks, reputed institutions, or government-approved incubation centres.

Start-up Fests

The majority of the Start-up Fests, as well as two smaller Mini start-up Fests, would be held in the state to stimulate a start-up ecosystem that would provide national and international visibility to start-ups, innovators, and ecosystem players, as well as bring all players onto a common platform.

Conclusion

The Rajasthan start-up Policy 2022 has clearly defined roles and responsibilities for all stakeholders within the start-up ecosystem. This includes enabling a number of outreach and training programmes for start-ups, such as gaining access to courses at the Rajiv Gandhi Centre for Advanced Technology, the Rajasthan Institute of Advanced Learning, and the upcoming Rajiv Gandhi Fintech Digital Institute; increasing awareness of start-ups through exposure visits and networking events such as exhibitions, demo days, and start-up meetups; and facilitating meetings with mentors, investors, and others. Start-ups will also benefit from politics and government-related projects, which include receiving work orders worth up to Rs. 15 lakhs without going through the bidding process and a special start-up category for procurement of goods and services under the Transparency in Public Procurement Act, 2012, in Rajasthan. The Rajasthan Investment Promotion Scheme also gives start-ups an opportunity to avail of tax benefits and refunds such as an investment subsidy of 75% of state taxes payable and deposited for seven years and a 100% exemption from electricity tax, mandi fee, and land tax for seven years.