Entrepreneurs venturing into the world of start-ups have emerged as one of the biggest beneficiaries of the State Budget presented by Finance Minister Thomas Isaac on Friday.
The Kerala Startup Mission, the nodal agency for start-ups, has been allocated ₹73.50 crore for the 2020-21 financial year.
Capital paucity
The Budget focuses on helping start-ups to tide over the capital paucity and proposes three major schemes to resolve the problem. While reminding that Kerala holds the first place in the ‘start-up promotion ranking’ by the Union Ministry of Commerce in 2018, the Minister observes that paucity of capital remains the “biggest issue” faced by 2,300 start-ups functioning across various sectors in the State.
The Minister said that loans would be made available without asset security to those startups, which had secured work order from government/quasi government/major corporates or institutions.
“A scheme is being announced for providing 90% of work order as loan, up to a maximum of ₹10 crore at an interest rate of 10%. If these are purchase orders, money will be given after discounting them,” the Budget proposes.
An expert committee to be set up under the chairmanship of the Information Technology Secretary will make recommendations based on which the Kerala Financial Corporation (KFC) and Kerala State Industrial Development Corporation will give money across the counter without any collateral security. Significantly, any loss sustained on account of this will be made good by the government.
Financial assistance of up to ₹1 crore will be provided at the time of expansion of new product prototypes, which are related to sustainable development goals of the United Nations and are also required by any government department. The KFC has been allocated ₹10 crore towards this end.
The Budget also takes a serious note of the continuing criticism that new companies evade Kerala and set up their headquarters in Chennai and Bengaluru on account of the higher stamp duty in Kerala for starting and merging the companies.
The Minister assures to rationalise stamp duty by including it in the Finance Bill.
