In today’s competitive market, many startups struggle to secure the necessary startup funding. Studies show that over 70% of new ventures face cash flow challenges in their early days. As a result, founders often search for ways to invest in startups, find investors for startup ideas, and secure seed funding for startups. However, the problem is that traditional financing may require equity dilution or collateral. This is precisely where government grants for startups come in. They provide non-repayable funds that help founders concentrate on innovation and business growth without compromising startup capital.
Moreover, according to recent data, government-backed initiatives have already provided billions of rupees in startup business funding, thereby easing the burden on entrepreneurs and bolstering the startup ecosystem in India. To help startups navigate these opportunities, this article outlines over 25 government grants and schemes that offer financial support to startups across various sectors, from tech startups and fintech startups to legal tech startups and AI startups.
The Challenge for Startups
Undoubtedly, many startups face high costs in research, product development, and market entry. Since they often lack sufficient startup capital, they depend on angel investors for startups or crowdfunding for startups, which may dilute ownership or bring high expectations. As a result, without proper funding, even the best startup ideas can stall. Consequently, startups may suffer from cash flow issues, limited R&D, and inadequate marketing, forcing founders to compromise on innovation. Ultimately, this financial strain can derail business startup plans and slow down the overall growth of the startup ecosystem.
Fortunately, government grants for startups offer non-dilutive funding. Unlike traditional financing options, these grants help cover costs without needing to give up equity or incur debt. By doing so, they create a supportive environment for business startup ventures, allowing founders to concentrate on scaling operations and executing their business plans for startup success.
25+ Government Grants for Startups in India
To provide a comprehensive understanding, below is a detailed list of over 25 grants and schemes offered by the Government of India and state governments that provide critical funding for startup companies:
Central Government Schemes
- Startup India Seed Fund Scheme (SISFS)
- Provides seed funding for proof of concept, prototype development, product trials, and market entry.
- Founders receive up to ₹20 lakhs for early validation and ₹50 lakhs for scaling up.
- Technology Incubation and Development of Entrepreneurs (TIDE)
- Offered by MeitY, TIDE supports technology-driven startups with funding, incubation, and mentorship services.
- Atal Innovation Mission (AIM)
- A flagship initiative that includes Atal Incubation Centres. AIM offers non-dilutive grants and support to innovative startups across sectors.
- National Initiative for Developing and Harnessing Innovations (NIDHI)
- Launched by DST, NIDHI provides seed funding, pre-seed funding, and mentorship to early-stage startups.
- MSME Grants Program
- Focuses on supporting micro, small, and medium enterprises with grants for innovation and technology adoption.
- Biotechnology Ignition Grant (BIG)
- Offered by the Department of Biotechnology (DBT), BIG funds startups in the biotech sector for early research and product development.
- BIRAC AcE Fund – Accelerating Entrepreneurs
- Provides non-dilutive grants to startups working on disruptive biotechnology innovations.
State-Level and Regional Grants
- Karnataka Idea2PoC Scheme
- A one-time grant provided by the Karnataka government to fund the proof of concept for tech startups.
- Rajasthan Istart Grant
- Supports startups in Rajasthan by offering seed funding and mentoring for early-stage product development.
- Telangana T-Hub Grants
- Offered by the Telangana government to nurture innovation through funding and incubation support for startups in various sectors.
How to Qualify for Government Grants
Securing government grants for startups requires a robust business plan and a clear demonstration of innovation. To maximize your chances of success, follow these key steps:
- Research Eligibility:
- Check each scheme’s eligibility criteria. Most grants require your startup to be registered under Startup India or recognized by DPIIT.
- Prepare a Detailed Business Plan:
- Outline your objectives, market strategy, and financial projections. A clear business plan for startup funding is crucial.
- Gather Supporting Documents:
- Provide proof of concept, product prototypes, and other technical details that validate your innovation.
- Seek Expert Guidance:
- Consult with a startup accountant or startup consultant to review your application.
- Submit Your Application:
- Follow the application guidelines carefully. Timely submission with all required documents can boost your chances of approval.
- Prepare for Follow-Up:
- Many schemes require periodic progress reports and audits. Therefore, maintain clear records to ensure compliance.
Step-by-Step Guide to Applying for Government Grants
Securing a government grant for startups in India can be a game-changer, but the process requires careful planning. Follow this step-by-step guide to improve your chances of approval.
Step 1: Identify the Right Grant for Your Startup
- Research available government grants that match your industry and business stage.
- Check eligibility criteria for Startup India Seed Fund, MSME Schemes, and sector-specific grants.
- Shortlist grants that align with your startup’s needs.
Step 2: Prepare a Strong Business Plan
- Clearly define your business idea, revenue model, and growth plan.
- Include market research, competitor analysis, and financial projections.
- Highlight how the grant will be used for expansion, R&D, or employment generation.
Step 3: Gather Required Documentation
Each grant has its documentation requirements, but common ones include:
✔ Company Registration Certificate (Startup India/DPIIT recognition is a plus)
✔ Business Plan & Financial Statements
✔ Project Report & Funding Utilization Plan
✔ Pitch Deck & Proof of Concept (if applicable)
Step 4: Submit the Application on the Right Platform
- Most government grants can be applied for via the Startup India Portal, the MSME Portal, or state government websites.
- Ensure all information provided is accurate to avoid rejections.
Step 5: Follow Up & Attend Selection Rounds
- After submission, some grants require pitches or interviews to assess your startup.
- Be prepared to present your startup’s potential impact and financial viability.
Common Mistakes to Avoid When Applying for Grants
❌ Applying for the wrong grant – Always match the grant’s objective with your startup’s needs.
❌ Incomplete applications – Missing documents can lead to rejection.
❌ Weak business justification – Clearly define how the grant will help your business grow.
❌ Not demonstrating scalability – Government funds often support scalable, high-impact businesses.
Additional Support for Startups Beyond Funding
Apart from grants, the Indian government offers multiple support programs, including incubation, mentorship, and tax incentives.
1. Incubation Centers & Startup Hubs
Several government-backed incubators help startups grow by providing workspace, mentorship, and networking opportunities:
- Atal Incubation Centers (AICs) – NITI Aayog initiative supporting startups with funding and infrastructure.
- Centre for Innovation, Incubation & Entrepreneurship (CIIE), IIM Ahmedabad – Helps tech-based startups with funding and mentorship.
- Technology Business Incubators (TBIs) – Supported by the Department of Science & Technology (DST) for deep-tech startups.
2. Tax Benefits & DPIIT Recognition
- Startups recognized under DPIIT (Department for Promotion of Industry and Internal Trade) get tax exemptions for the first three years.
- Angel Tax Exemption – DPIIT-recognized startups get relief from tax on funding raised from angel investors.
- Patent Filing Support – Startups can avail up to 80% rebate on patent filing fees under the Startups Intellectual Property Protection (SIPP) scheme.
3. MSME Support Schemes
- Credit Guarantee Scheme for Startups (CGSS) – Provides collateral-free loans to startups.
- ZED Certification Scheme – Helps manufacturing startups adopt zero-defect, zero-effect (ZED) practices for better sustainability.
Global Government Grant Programs for Indian Startups
Indian startups can also apply for international grant programs to expand their business globally. Some major funding opportunities include:
1. World Bank & UNDP Grants
- Global Innovation Fund (GIF) – Supports innovative startups working on global challenges (health, education, fintech).
- United Nations Development Programme (UNDP) Grants – Funds startups working in sustainability, clean energy, and poverty alleviation.
2. International Government Startup Grants
- Google for Startups Accelerator Fund – Provides funding and mentorship for high-growth startups.
- Facebook Small Business Grants Program – Offers grants to startups impacted by economic downturns.
- US Government SBIR & STTR Programs – Ideal for Indian deep-tech and AI startups looking for global expansion.
3. CSR & Corporate Startup Grants
- Microsoft AI for Good – Funds AI-based startups working on sustainable development goals (SDGs).
- Amazon Sustainability Accelerator – Supports green startups with funding and mentorship.
By leveraging government grants, incubation support, tax benefits, and global funding programs, Indian startups can access vital resources for scaling their business.
Conclusion: Empower Your Startup with Government Grants
To summarize, government grants for startups undoubtedly serve as a crucial lifeline for early-stage ventures. Not only do they reduce financial risks, but they also support innovation and enable startups to focus on developing products without the pressure of equity dilution. For instance, by leveraging grants such as the Startup India Seed Fund Scheme, TIDE, and several state-level initiatives, entrepreneurs can secure the funding needed to transform their startup ideas into successful businesses.
Furthermore, combining these non-dilutive funds with additional capital from angel investors for startups and crowdfunding for startups can build a robust financial foundation. To maximize success, stay informed, seek expert advice, and refine your business plan for startup funding. With that in mind, the right support and a proactive approach by Founderlabs can help you unlock the potential of government grants for startups and drive your business towards sustained growth and innovation.
Moreover, embrace the opportunities, streamline your application process with guidance from startup mentors, and invest in your startup’s future with confidence. Whether you are exploring funding for start-up businesses, seeking seed funding for startups, or looking for ways to reduce startup costs, government grants provide an unmatched avenue to kickstart your entrepreneurial journey.
