New Delhi, Feb 2 (KNN) The eagerly awaited Union Budget for 2024 has cast a shadow on the Indian startup ecosystem, especially for early-stage ventures, as the government trims allocations for key schemes under the 'Startup India' initiative.

One of the significant setbacks is the reduction in funding for the Small Industries Development Bank of India (SIDBI)-operated Fund of Funds Scheme (FFS).

The allocation for FFS has been scaled down to Rs 1,200 crore, a notable cut from the previous fiscal year's allocation of Rs 1,470 crore.

Another blow comes in the form of reduced support for the Credit Guarantee scheme for startups.

This scheme plays a crucial role in providing credit guarantees for loans extended to startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT).

The loans are extended by Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs), and Venture Debt Funds (VDFs) under SEBI-registered Alternative Investment Funds.

The overall budget for the Startup India program has witnessed a significant drop, now standing at a mere Rs 1 lakh compared to the previous budget's robust Rs 45.61 crore.

This move comes at a challenging time for startups as overall funding has plummeted by 73 per cent , hitting a five-year low in 2023.

Seed-stage funding has also taken a substantial hit, experiencing a 60 per cent decline from USD 1.7 billion in 2022 to $678 million in the same period in 2023, according to Tracxn data.

As startups grapple with reduced financial support, industry experts express concerns about the potential impact on innovation and growth within the sector.

(KNN Bureau)