TMT LawsAnalyzing The Government Grants For Start-Ups In Gujarat

December 2, 20220


Start-ups are the engines for growth and employment for every economy. It leads to innovation and serves as an accelerator for socio-economic advancement through innovation and scalable technology.

India is one of the top emerging economies in the world in terms of entrepreneurship and start-ups. Several new start-ups have emerged in recent years, have succeeded.

In terms of valuation of the start-up ecosystem, India ranks third with more than 60,000 start-ups and over 100 unicorns operating in the nation. The main reason behind the success of the startups is the active assistance and incentives given by the Indian government to entrepreneurs and start-ups through its various initiatives.

The  Ministry  of Commerce and Industry,  and the Department for Promotion of Industry and Internal Trade (hereinafter referred to as “DPIIT”) assists and  encourages start-ups and support entrepreneurs. There are various  programmes launched to support entrepreneurship in India and provide financial support for new ones such as ASPIRE, Pradhan Mantri Mudra Yojana (PMMY), Fund of funds for start-ups, etc.

Along with, the State governments have also adopted initiatives for promoting start-ups in their respective region. Gujarat’s start-up system is thriving. The Gujarat government aids budding entrepreneurs and has launched various and implemented a number of efforts to encourage start-ups.


Gujarat is investing significantly to create a robust environment for fostering innovation and start-ups to promote economic growth and increase employment. The Gujarat government’s incentives for entrepreneurs have helped to build a strong network, and many start-ups have grown their operations and products on a national and worldwide scale.

According to a recent analysis by the DPIIT, Gujarat  ranks first in India for promoting start-ups. Gujarat has recently surpassed states like Karnataka, which is well-known for its vibrant start-up environment. The DIPP ranking is based on seven important reform areas.  the DIPP survey’s identification of seven important reform areas. According to the poll, 14,565 businesses offering services in a range of industries, including IT, technological hardware, healthcare, agriculture, education, food, and renewable energy, were registered nationwide during the course of the year.

The Gujarat Government has established an effective ecosystem to support the start-up companies. The start-up companies can directly contact the Industrial Commissionerate, for all kinds of assistance required. Gujarat Government has provided aid to at least 200 start-up initiatives and allotted INR 1 billion to the entrepreneurs.


The Government of Gujarat has developed a number of its schemes in addition to those offered by the Central Government to encourage start-ups and the spirit of entrepreneurship in the state. The primary incentives provided by the Gujarat Government are:

A. Scheme for assisting Start-ups and Innovations:

A five-year programme of assistance for start-ups/innovation was introduced by the Government with effect from 07.08.2020, in light of the objectives under the Gujarat Industrial Policy, 2020.

Any person or group of people who has an original idea or concept and is also suggested by a Nodal institution that has given it the green light is qualified to become a start-up under this programme. It offers up to Rs. 33,00,000/- of funding, of which a start-up can use Rs. 30,00,000/- for prototype development and promotion support and Rs. 2,40,000 for a subsistence stipend. Moreover, the firm is eligible for Rs.3,00,000/-  if it has a female co-founder while applying for the initiative.

The following list includes the necessary qualifications to apply for this programme:

1. The start-up’s Proof of Concept process ought to be finished.

2. The start-up should have a Gujarat company registration (Pvt. Ltd. or LLP) and the majority of its operations should be situated there as well.

3. The founder of the start-up should not own more than 10% of another company.

4. The company must go through an incubation period of at least two months at the nodal institute.

To be eligible for the sustenance payment indicated above, start-ups asking for funding under the scheme must submit a monthly progress report.

Some of the main components of the plan are listed below:

i. Assistance up to Rs. 30 lakh as seed support for the price of raw materials, consumables, hardware, software, professional services, other equipment/tools necessary for developing a prototype, product, or process, market research, testing, and trials, and assistance with marketing/publicity;

ii. Each start-up will receive a monthly maintenance stipend of Rs. 20,000/- for one (one) year, and Rs. 25,000/- if the start-up has at least one female co-founder;

iii. Assistance for attaining soft skill training of up to Rs. 1 lakh per start-up;

iv. Assistance for start-ups making a substantial effect on society of up to Rs. 10 lakhs;

v. Assistance of up to Rs. 3 lakhs for participation in an acceleration programme recognised nationally or internationally;

In accordance with the terms of the Micro Small and Medium Enterprises Assistance Scheme, a separate fund under Gujarat Venture Finance Limited had been established for mid-level pre-series A funding of between Rs. 50 lakh and Rs. 3 crore, as well as an interest subsidy of 1% per year on term loans, up to a maximum of 9%, for applicants.

B. Student Start-up & Innovation Policy

This policy was established by the Department of Education, Government of Gujarat, and provides up to Rs. 2,00,000/- for the start-up proposal. The following are the basic eligibility requirements for the Scheme:

1. The Applicant must be enrolled in school or a recent graduate (within five years) of a college or university.

2. The school mentioned above must be a reputable university or college with a Gujarati location.

3. The ideation stage should be where the start-up is at.

4. The candidate should have spent at least three months developing the concept.

Although the Policy provides up to Rs. 2,00,000/- as financial support, the Applicant may be eligible for additional money based on the strength of their proposal.

In addition, the Policy also offers fundings for patent applications up to Rs. 25,000/- for the start-ups. Moreover, facilitators are appointed who can help the start-ups  avail the funds directly from the Government.

C. Electronics & IT/ITeS Start-up Policy

The Gujarat government has also created policies for start-ups in the Electronics and IT/ITeS sector in addition to the perks provided expressly for start-ups, with the purpose of providing a stable infrastructure for the sector and offering highly trained resources in this quickly evolving technological era. The Policy was formulated by the Department of Science & Technology, Government of Gujarat, and is also open to start-ups that were founded no more than five years ago and had annual sales of no more than Rs. 25 crores.

The scheme offers:

1. Refund of 100% of the registration price and stamp duty.

2. Lease Rental Subsidy for 50 square feet per employee for two years at a rate of Rs. 15 per square foot per month.

3. 9% annual interest subsidy for two years, up to Rs. 2 lakhs.

4. Patent assistance of Rs. 2 lakhs for domestic patents and Rs. 10 lakhs for foreign patents, or 75% of the total cost.

5. Up to 70% of bandwidth is subsidised, with a two-year cap of Rs. 20,000/-.

6. Up to Rs. 5,000/- in skill certification fees per individual, with a 2-year cap of Rs. 1 lakh per year.

7. One-time support of Rs. 1 lakh for product development and marketing.

The Government of Gujarat also offers a variety of incentives for MSMEs operating in the state, which can be utilised by start-ups, in addition to the specific schemes and regulations outlined above.


The Government’s initiatives to support and foster start-ups have created a favourable environment. The State Governments have also aided the start-ups by formulating various policies.  Gujarat has the state’s steadily growing number of start-ups and incubators. Gujarat is home to more than 14,200 registered start-ups, or 6.70% of all start-ups in India.

Gujarat has a broad network of academic and incubation institutions, with over 180 of them now assisting entrepreneurs in the state. The Government of Gujarat has implemented progressive laws and schemes and has a pro-business stance, Thus the state is in a good position to offer a platform for Indian start-ups to incubate and grow nationally and worldwide. Moreover, the policies are well formulated and well implemented and hence, budding the economy to grow.

– Team AMLEGALS assisted by Ms. Ishita Jaiswal (Intern)

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