Despite India’s rapid rise as a global startup hub with over 1.8 lakh DPIIT-recognised startups by mid-2025, ₹77,000 crore in government grants allocated to support innovation, entrepreneurship, and R&D remained unclaimed. There is a big difference between what policies say and what people know. This means new business owners are missing out on important chances.
Why Startups Are Ignoring Government Grants
Experts attribute this underutilisation to several key factors:
- Lack of Awareness: Many first-time founders are unaware of existing central and state government schemes like Startup India Seed Fund, MUDRA loans, Atal Innovation Mission, or sector-specific subsidies.
- Complex Processes: Bureaucratic processes, long paperwork, and delays in getting approvals often discourage startups from applying.
- Preference for VC Funding: A significant number of startups chase venture capital (VC) and angel investments, viewing them as faster and more accessible, even if it dilutes equity.
- Perception Problem: Some entrepreneurs view grants as restrictive or less scalable, while others believe they are geared towards manufacturing or tech-heavy startups only.
The Case for Non-Dilutive Capital
Government grants are non-dilutive, meaning startups don’t have to give up ownership or equity in exchange for funds. Grants can greatly help early-stage businesses, especially in fields like:
– Agri-tech
– Green energy
– Social impact
– Healthcare
– Women-led enterprises
Grants also serve as proof of a startup’s potential, making it easier for them to secure funding and partnerships later on.
Experts Call for Founder Education & Policy Overhaul
Industry leaders are urging both the government and startup incubators to:
- Launch awareness campaigns to educate founders about available schemes.
- Simplify the application process using digital platforms and single-window clearances.
- Empower incubators and accelerators to guide startups in navigating government incentives.
The government is also considering real-time tracking dashboards and performance-based disbursement models to improve accessibility.
Founders Must Look Beyond VC to Unlock Growth
India’s startup ecosystem is growing. Founders need to find different ways to fund their businesses. They should mix money from investors with government grants, corporate social responsibility (CSR) funds, and loans. This mix can help them build strong, innovative businesses that last.
With ₹77,000 crore left untouched in 2025, the message is clear, the next big startup leap could be powered not just by VC, but by smart use of public support.
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