The Centre today launched a 'fund-of- funds' aimed at helping start-ups from the electronics and IT sector to create intellectual property, expressing willingness to invest up to Rs 2,200 crore in the initiative.
The Electronic Development Fund (EDF) floated by the Department of Electronics and Information Technology will invest in professional venture capital funds which will in-turn invest the money in start-ups, Minister for IT and Communication Ravi Shankar Prasad said.
A senior ministry official said the government has put a cap of investing up to Rs 2,200 crore in the EDF and the scheme will be operational till March 2017 as of now.
However, he was quick to point out that this is not an explicit commitment by the government to invest the sum, making it clear that the investments will be done in a staggered manner.
He also hinted that if the Rs 2,200 crore cap is not breached by March 2017, the government can extend the scheme as well.
After launching the EDF, which will be managed by state-run lender Canara Bank's venture investment arm Canbank Venture Capital Fund, Prasad handed over letters of commitment to four VC funds totalling Rs 169 crore in commitments.
He said the EDF is separate from the Rs 10,000-crore fund for start-ups announced by the government earlier, but will help in the flow of similar quantum of money into the start-up ecosystem.
"Typically, we will be taking a 20-25 per cent stake in daughter fund. This means that the start-ups will get Rs 10,000 crore in commitments as a result of this," the official explained.
Meanwhile, flagging cyber security as an area of concern for which the world needs solutions, Prasad exhorted Indian start-ups to develop solutions on this front so that we can emerge as a leader at the world stage on this.
The minister also pointed out chip designing, rather than manufacturing, as another area where the Indian start-ups can play a leading role.
On the controversial issue of call drops, Prasad said telcos have installed 34,000 mobile towers across the country in the recent past but underscored the need for them to do more on it so that the services are better.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
