The government has firmed up a plans to unveil a national policy to encourage deep-tech start-ups with assorted tax concessions and other incentives, official sources told FE, adding that the full Budget likely to be presented by mid-July, might announce an outlay for a related scheme, besides a funding mechanism for such units.
The idea is give them a helping hand, to improve their viability till they reach the commercial arena.
Apart from funding options, the National Deep Tech Start-up Policy (NDTSP) would include differentiated treatment of these units from the other start-ups, and steps to reduce their costs by way of Customs duty exemptions or reduced tariffs customs on imported equipment, machinery, and raw materials, the sources said. Special support woulod be given to firms operating in manufacturing or technology
The consultation process on the draft of the policy has already been completed and a cabinet note on it is being prepared, a senior official said, on condition of anonymity.
The policy first seeks to define deep tech start-ups and provide them support which is more in sync with their requirements.
Typically, deep tech start-up are early stage start-ups based on scientific and engineering advancements that are yet to be developed for any commercial applications. Unlike other start-ups that are differentiated on the basis of business models and can be replicated, deep tech start-ups are differentiated by technology.
By the nature of functions the deep tech start-ups take longer to mature and need large doses of capital. The draft of the policy talks of a new dedicated deep tech capital guidance fund which should pool investments from the government and private sources. This fund should be in the nature of Funds of Funds – a fund that makes downstream investment in smaller sector- specific funds. The tenure of these funds should be longer looking at the longer gestation period of the deep tech start-ups.
According to the draft policy the early-stage funds should be of higher quantum and deployed for longer durations of more than 10 years. It is of the view that the first or early-stage seed funds to the inventors should be grant based, as in the case of the international ecosystems because equity or debt-based seed funds at this stage would dissuade inventors from participating.
There is already a Fund of Funds for Startups
A common grant framework has been proposed across ministries along with a pilot testing fund and even a debt fund
Beyond funding and taxation matters, the draft policy has recommendations on mannurturing research, development and innovation, strengthening the intellectual property regime, enabling shared infrastructure and resource sharing, creating conducive regulations, standards, and certifications, attracting human resources and initiating capacity building, promoting procurement and adoption.
