From 500 in 2016 to 1.8 lakh in mid-2025, the government-registered startups have increased in India. Many of these startups are eligible for tax benefits under the Startup India scheme. Another benefit of getting recognised under the scheme is that you get seamless access to business loans.

Funding is a common challenge that prevents entrepreneurs from starting or scaling a business. The Startup India loan scheme offers entrepreneurs loans, grants, tax relief, and market access to start a business. In this blog, we will understand everything about the Startup India scheme.

What is the Startup India Scheme?

The Startup India scheme is a government initiative that offers loans, grants, and tax benefits to businesses and startups to fuel innovation and business growth. The Department for Promotion of Industry and Internal Trade (DPIIT) administers the scheme and helps access funding under Fund of Funds for Startups (FFS) and the Startup India Seed Fund Scheme (SISFS).

It also simplifies compliance norms and offers tax exemptions. The scheme is open to the entire industrial sector, including technology, agriculture, health, education, etc. The government has also partnered with incubators and venture capital firms to ensure that startups have enough money, guidance, and space to grow.

Key Features of the Startup India Scheme

• A Startup India Hub where one point of contact exists to help startups get resources and funding.
• Funding support via Fund of Funds and the Credit Guarantee Fund.
• Quick and affordable patent application and legal services.
• Relax public procurement to help startups compete equally.
• Income, capital gains, and investment tax exemption.

Key Loan and Grant Schemes under Startup India

Here are some of the means that the government has introduced to provide financial help through the Startup India scheme:

1. Startup India Seed Fund Scheme (SISFS)

The fund is designed to help early-stage startups. It supports financing proof of concept, prototype creation, product testing, market access, and commercialisation.

• Startups are eligible for a grant of up to ₹20 lakhs for the development of a prototype or trials of their product.
• They can receive a maximum of ₹50 lakhs as investment support for market access, commercialisation, and scaling up.
• Startups get reimbursed through incubators, which also track performance and ensure utilisation.

2. Fund of Funds for Startups (FFS)

Instead of making direct investments in startups, the government set up a large fund that is managed by SIDBI (Small Industries Development Bank of India). The money is allocated to venture-capital funds, which further invest the money in startups. It is a means through which enterprises with high potential are given access to growth capital funding.

• It does not directly fund startups but offers SEBI-registered capital Alternative Investment Funds (AIFs).
• The plan is industry-neutral, and it backs startups in a wide range of industries.
• It assists in crowdfunding local and international investments into the Indian startup ecosystem.

3. Credit Guarantee Scheme for Startups (CGSS)

One of the biggest challenges entrepreneurs face when acquiring a business loan is providing security for the loan. Under the CGSS scheme, eligible startups can obtain unsecured loans from Non-Banking Financial Companies (NBFCs) or Banks without depositing any security in return.

• The scheme offers credit guarantees to banks and other financial institutions that lend to eligible startups.
• The scheme minimises the risk to lenders, and this motivates them to offer loans without collateral.
• It makes it easier to access debt financing for startups that have little assets or collateral.

4. Other Startup Grants India

The government also provides grants to startups in India via various initiatives at the state level and through different industry-specific schemes. These funds are usually allocated to research, the introduction of novelties, and the upscaling of activities in healthcare, clean energy, and social impact verticals.

The Startup scheme, a government initiative, provides startups with tax exemptions and support through incubators. These grants and support mechanisms create an enabling environment for startups to thrive and scale their operations.

Startup India Loan Eligibility Criteria

Here is the Startup India loan eligibility criteria you must meet in order to qualify for the loan and grant:

• Business must be a private limited company, a partnership firm, or an LLP.
• The age of the company must not exceed 10 years from the date of incorporation.
• Annual turnover must be less than ₹100 crores.
• A business must engage in innovation, improvement, or development of goods, services, or processes.
• A business must not be an outcome of the splitting or restructuring of an existing venture.
• Minimum 51% shareholding by Indian promoters as of the application date.

Documents Required for Startup India Scheme

Here are the documents you require to submit to apply for the Startup India scheme:

• Certificate of incorporation/partnership deed
• Founders’ PAN card and Aadhaar card
• Bank account details
• GST registration
• Business plan and pitch deck
• Company financials, if available
• Board resolution or letter of authorisation.

How to Apply for the Startup India Loan?

Here is how you can apply for a Startup India loan:

1. Incorporate Your Business: Incorporate your business in India as a Private Limited Company, LLP or a Registered Partnership Firm.
2. Register at the Startup India Portal: Visit the official Startup India site and fill in your startup profile by providing basic information such as business name, industry, location, and team.
3. DPIIT Recognition Application: Head to the Get Recognised section and complete the DPIIT application with the information about your product, innovation, scalability, and potential to create jobs.
4. Upload Documents: Upload documents such as the incorporation certificate, pitch deck, and KYC.
5. Application Review and Registration: DPIIT examines your application on the basis of eligibility and innovation.
6. Accept the Recognition Certificate: After approval, a digital Startup India Recognition Certificate is sent to you through email and the portal. This certificate will enable you to enjoy tax benefits, funding schemes and government tenders.
7. Identify the Loan Scheme: Select the applicable government-supported loan program, including the CGFS or FFS.
8. Approach Eligible Lenders: Apply to banks or NBFCs registered under the Startup India initiative or government schemes that provide collateral-free or subsidised loans.
9. Submit Loan Application: Complete the loan application form and provide the necessary documents.
10. Loan Processing and Approval: The lender will check eligibility and documentation, complete due diligence, and approve the loan.

Benefits and Government Incentives under Startup India

Here are some of the main benefits of the Startup India scheme:

• Financial Support: With initiatives like the Seed Fund, Fund of Funds, and Credit Guarantee Scheme, startups can raise funds for their growth, research, or expansion.
• Tax Exemptions: To minimise the burden on finances, eligible startups are exempted from an income tax holiday for three years in their initial ten years.
• No Collateral Loans: Startups can get loans under the Credit Guarantee Scheme without providing collateral.
• Streamlined Compliance: Startups can self-certify themselves under labour and environmental regulations, with minimal paperwork and inspections.
• Accelerated Patent Process: Under the Startup India scheme, patent application procedures have been made more easily available at lower costs.

The Startup India Scheme aims to encourage entrepreneurship and offer easy access to business financing. The initiative supports startups from idea to implementation and further through loans, grants, tax incentives, and mentorship.

Frequently Asked Questions (FAQs)

1. What is the aim of the Startup India Scheme?

The Startup India scheme aims to support new businesses with business funding, tax benefits, and mentorship so they can grow faster and create jobs.

2. What is the Startup India Seed Fund Scheme?

It is a government scheme that provides up to ₹20 lakhs as grants and up to ₹50 lakhs as investment support for early-stage startups.

3. Who is eligible for Startup India recognition?

Any business that is less than 10 years old, has a turnover under ₹100 crores, and works on innovation or improvement is eligible.

4. How can I check my Startup India loan eligibility?

You can check it by visiting the official portal and reading the detailed guidelines for loan and grant schemes.

5. Can I apply to multiple incubators at once?

Yes, startups can apply to up to three incubators at the same time for seed fund support.

6. What documents are needed for the application?

You’ll need incorporation documents, PAN, Aadhaar, GST details, business plan, financials, and a video explaining your startup.

7. Is there any fee for the Startup India application process?

No, the Startup India scheme application process is completely free of charge.

8. Do startups get tax exemptions under the Startup India scheme?

Yes, eligible startups can get an income tax exemption for three consecutive years.

9. Can I apply if my startup has already received government funding?

If your startup has received less than ₹10 lakhs from other government schemes, you can still apply.

10. Does the scheme provide mentorship along with funding?

Yes, startups also get access to incubators, mentors, and networking opportunities in addition to financial support.