"We have come out with the concept paper and are holding consultations with stakeholders," National Manufacturing Competitiveness Council (NMCC) Member Secretary Ajay Shankar told PTI.
He said once the consultation process is over, NMCC would place the proposal before the high level committee on manufacturing chaired by the Prime Minister.
NMCC was set up by the government in 2004 as an autonomous body to serve as a policy forum for credible and coherent policy initiatives in the manufacturing sector.
Sources said the fund would invite proposals and select a few consortia, predominantly of Indian origin scientists and technologists for funding where the full cost of start-ups, from conception to proof of concept and then manufacturing, would be met through equity infusion.
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"The fund would provide 85 per cent of the equity without management control and the remaining 15 per cent can be provided by the entrepreneurs in the form of sweat equity," sources added.
It also proposes that in case of unsuccessful start-ups, the fund provided as equity would be written off.
As per the proposal, the promoter of the company would have full control of the management subject to the six monthly reviews by a panel of eminent persons.
To incentivise investments in telecom manufacturing equipment, an empowered committee could be given the mandate of identifying key building blocks of telecom equipment industry, sources said.