UP to create Rs 200 crore venture capital fund for MSME start-ups

SIDBI will manage the venture capital corpus

Uttar Pradesh government will set up a Rs 200 crore venture capital fund to promote micro, small and medium enterprises (MSMEs) startups, especially pertaining to traditional industries in the state.

The government will sign a memorandum of understanding (MoU) with Small Industries Development Bank of India (SIDBI) in this regard. The fund would give preference to such MSMEs, which are involved in manufacturing of traditional products and crafts under the aegis of state’s flagship One District, One Product (ODOP) scheme.

UP MSME and export promotion principal secretary Navneet Sehgal yesterday here chaired an important ODOP review meeting, in which it was decided to tie-up with SIDBI to create the proposed venture capital corpus.

While, 25% or Rs 50 crore would be provided by the Yogi Adityanath government, the larger share of 75% or Rs 150 crore would be contributed by SIDBI for creating the venture capital fund to handhold and finance startups and enterprises.

SIDBI would also function as the venture capital fund manager and facilitate credit flow to the MSMEs, startups and artisans by coordinating with different microfinance institutions, non banking financial companies (NBFC) and other such integrators.

The central refinance bank will also share the database of state ODOP enterprises and artisans for chalking out future roadmap pertaining to their training, capacity building, credit requirement and growth.

Meanwhile, the state government had already tied up with commercial banks for providing loans totalling Rs 5,000 crore to MSMEs under ODOP scheme. These loans will be disbursed to entrepreneurs on the occasion of Gandhi Jayanti on October 2, 2019.

Launched in January 2018, ODOP is aimed at scaling up traditional industries associated with each of the 75 districts in UP. For example, the Adityanath government had already tied up with ecommerce major Amazon to market ‘UP Khadi’ products over its online platform apart from handholding artisans.

The state government has also proposed to provide subsidies on capital expenditure (capex) and interest payment to borrowers under the ODOP scheme, Sehgal had earlier told Business Standard. The government expects the ODOP programme to boost UP MSME exports to almost Rs 2 trillion from the current level of more than Rs one trillion across different categories and products.