7 government schemes every startup needs for subsidies, funding, and mentorship

If you have the ambition to build a disruptive startup, it isn’t only the VC/Angels that can help you. The Central Government (along with the respective state government) has been actively encouraging entrepreneurs to succeed through targeted schemes that offer working capital, subsidies, mentorship, and tax breaks tailored to the profile you are working with. These 7 schemes have been a godsend to entrepreneurs seeking resources for their startups.

Prime Minister’s Employment Generation Programme (PMEGP)

PMEGP supports rural and semi-urban entrepreneurs with subsidies and loans to launch manufacturing and service businesses

PMEGP helps to set up micro enterprises in manufacturing, services and trading by offering credit to entrepreneurs working in rural and semi-urban areas. You take a term loan from the bank and the government offers a margin money subsidy (15-35% of the project cost) that gets adjusted after a lock-in period. The maximum subsidy available is Rs.50 lakh for manufacturing or Rs.20 lakh for services. Women, SC/ST, and those from select districts in North East India and backward regions can get higher 25-35% subsidies 

Eligibility

• This is only for new units; existing units and those already availing similar subsidies are ineligible.
• Also open to SHGs, registered societies, trusts and co‑operative production units.

Stand‑Up India Scheme

Stand-Up India empowers women and SC/ST entrepreneurs with bank loans for greenfield startup ventures.

Stand‑Up India provides bank loans to SC/ST and women entrepreneurs to launch greenfield enterprises in manufacturing, services, trading, or agri‑allied activities. Each bank branch should support at least one SC/ST and one woman borrower, with a composite loan (term + working capital) from ₹10 lakh to ₹1 crore.

Eligibility 

• SC/ST or woman entrepreneur (18+), starting a first‑time greenfield enterprise.
• For non‑individual entities, at least 51% shareholding and control must be with eligible SC/ST or woman founder.

Startup India Seed Fund Scheme (SISFS)

SISFS provides grants and early-stage funding support to innovative startups building scalable products and technologies.

SISFS offers grants and investments to research-based startups that have reached the proof of concept(PoC), prototype development, product trials, market entry and early commercialization stages, routed through recognized incubators. It offers up to Rs.20 lakh for POC, prototyping and trials with another Rs.50 lakh as investments through convertible debentures or debt-linked instruments. 

Eligibility

• DPIIT‑recognised startup with innovative product/service and scalable business model.
• Generally, not more than 2 years from incorporation when applying (incubator‑specific flex exists).
• Cannot have already received more than ₹10 lakh of other government monetary support (with some exclusions).

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

CGTMSE enables MSMEs to secure collateral-free business loans through government-backed credit guarantees

CGTMSE guarantees your loan to the bank, offering collateral free credit to micro and small enterprises. Banks and NBFCs extend the loans and you get 75-85% of the facility guaranteed, with higher covers for women, micro units and aspirational districts 

Eligibility

• Micro and small enterprises (as per MSME investment/turnover norms) in manufacturing and services; some trading segments also covered as per latest guidelines.
• New and existing units; borrower itself doesn’t apply to CGTMSE – the lender does.

Pradhan Mantri Mudra Yojana (PMMY/MUDRA)

PMMY/MUDRA loans help micro and small businesses access easy working capital without collateral requirements.

PMMY/MUDRA provides collateral‑free micro‑credit loans up to ₹10 lakh to non‑corporate, non‑farm micro and small enterprises via banks, MFIs and NBFCs. Loans are of various tiers depending on the business being set up. This includes Shishu (up to Rs.50,000), Kishor (Rs.50,001 to Rs.5 lakh) and Tarun (Rs. 5 lakh to Rs. 10 lakh)

Eligibility

• Proprietors, small firms, micro‑manufacturing/service/trading units outside agriculture.
• Ideal for very early‑stage founders, side‑hustles, home‑kitchens, small e‑com sellers needing working capital or basic equipment.

National Small Industries Corporation (NSIC)

NSIC supports MSMEs with raw material assistance, marketing support, and government procurement opportunities.

NSIC helps small businesses with raw material support, marketing, credit facilitation and goverment procurement access. It runs multiple schemes that help with help finance raw material purchases, marketing and to help MSMEs claim benefits under the Single Point Registration Scheme (SPRS) for public procurement. 

Eligibility

• Micro and small enterprises with valid Udyam registration.
• Scheme‑wise conditions apply (e.g., turnover, years in business).

Atal Innovation Mission (AIM)

AIM promotes innovation and startup incubation through grants, innovation challenges, and incubation ecosystems.

AIM doesn’t offer direct loans. Instead, the program focuses on incubation, problem-solving and ecosystem building. It operates Atal Incubation Centres (AICs), Atal Community Innovation Centres (ACICs), Atal Tinkering Labs and offers competitive grants under the Atal New India Challenges (ANIC).

Eligibility 

• Startups and social enterprises working on national priority problems in health, education, agri, mobility, sustainability, deep‑tech etc. can work with AICs/ACICs and participate in challenges.
• Institutions can apply to set up incubators/centres, but as a founder, you typically apply to an AIC or into a challenge.