Startup India Seed Fund Scheme (SISFS) — DPIIT Guidelines
₹20 Lakh
Max Grant To A Startup For Proof Of Concept / Prototype
₹50 Lakh
Max Investment For Market Entry / Scaling, Via Debentures Or Debt
₹5 Crore
Max Grant To A Selected Incubator, In 3+ Installments
≤ 2 Years
Max Age Of Startup Since Incorporation At Application
Video Explanation & Insights
What SISFS Is, and the Gap It Fills
Source: This page decodes the official Guidelines for the Startup India Seed Fund Scheme issued by DPIIT, Ministry of Commerce and Industry. All eligibility conditions, funding limits, committee compositions, timelines and disbursal rules below are drawn strictly from that document.
Validity flag (as at 25 July 2026) — the current application window has closed. The last date for startups to apply in the current cycle was 31 May 2026, and incubators were to complete 100% startup selection by 30 June 2026. Any client asking to apply now should be advised that the live position is 'await the next cycle', not 'apply today' — confirm the reopening date, if any, on seedfund.startupindia.gov.in.
SISFS provides financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialisation. The premise: angel and VC money arrives only after proof of concept, and banks lend only to asset-backed applicants — so an innovative idea at the seed stage often faces a make-or-break capital gap. SISFS fills exactly that gap so a startup can graduate to a point where it can raise angel, VC or bank funding.
The Two-Tier Structure
The Seed Fund is disbursed to startups through eligible incubators, not directly by Government. DPIIT selects and grants funds to incubators; each incubator runs its own committee to select and fund startups. Every eligibility rule, timeline and obligation below follows from that two-tier design.
Why the delivery channel matters to an applicant: A startup does not 'get a grant from DPIIT' — it is selected and funded by a specific incubator it applied to, on that incubator's committee assessment, from that incubator's sanctioned pool. The choice of incubators (up to three, in preference order) is a strategic decision, not a formality.
Seven Conditions — Each a Hard Gate
| Condition | Requirement |
|---|---|
| Recognition and age | A DPIIT-recognised startup, incorporated not more than 2 years ago at the time of application. |
| Business idea | Must have a business idea to develop a product or service with market fit, viable commercialisation and scope of scaling. |
| Use of technology | Technology must be core to the product or service, or to the business model, distribution model, or methodology solving the targeted problem. |
| Preferred sectors | Preference to innovative solutions in social impact, waste management, water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil and gas, textiles, and similar. |
| Prior government support cap | Must not have received more than ₹10 lakh of monetary support under any other Central or State scheme. Excluded from this count: competition prize money, subsidised working space, founder monthly allowance, lab access, and prototyping-facility access. |
| Indian shareholding | Indian promoters must hold at least 51% at the time of application, per the Companies Act 2013 and SEBI (ICDR) Regulations 2018. |
| Once only | A startup will not receive seed support more than once each under the grant and the debt limbs. |
The two gates that quietly disqualify otherwise-good startups: First, the 2-year incorporation ceiling is measured at application — a strong startup that crosses its second anniversary before applying is simply out. Second, the ₹10 lakh prior-support cap catches founders who have already stacked State and Central assistance; the exclusions are specific and should be checked line by line before assuming a client is under the cap.
Two Instruments, Two Purposes, Both Milestone-Linked
| Limb | Amount | Instrument, purpose and terms |
|---|---|---|
| Grant (para 8.1.1) | Up to ₹20 lakh | For validation of proof of concept, prototype development or product trials. Disbursed in milestone-based installments. First installment released not more than 60 days from receipt of the startup's application; subsequent installments need an interim progress update and utilisation certificate. |
| Investment (para 8.1.2) | Up to ₹50 lakh | For market entry, commercialisation or scaling up, through convertible debentures, debt or debt-linked instruments. Interest not more than the prevailing repo rate; tenure not more than 60 months; moratorium of up to 12 months permitted; unsecured, with no promoter or third-party guarantee. |
- •Seed fund must not be used to create any facilities — only for the granted purpose.
- •The incubator executes a legal agreement with the startup before the first installment, detailing milestones and terms.
- •Funds are paid into the startup's company bank account.
- •A final report and audited utilisation certificate are submitted at the end of the project; a failed venture submits its learnings and reasons for failure along with the utilisation certificate.
- •The incubator or its staff must not charge any fee, in cash or kind, from applicants or beneficiaries for any process.
The grant limb is genuinely non-dilutive; the investment limb is debt, not equity given away. Up to ₹20 lakh comes as a grant — no repayment, no dilution. The up-to-₹50 lakh scaling limb is structured as convertible debentures or debt at a capped rate (no more than repo), unsecured and without personal guarantee — unusually founder-friendly terms, but still a liability with a fixed tenure of up to five years.
The Gatekeepers — and the Higher Bar for Non-Government-Assisted Ones
Because the incubator is the disbursing channel, its eligibility is as load-bearing as the startup's. An incubator must:
- •Be a legal entity — a society (Societies Registration Act 1860), a trust (Indian Trusts Act 1882), a private limited company (Companies Act 1956 or 2013), or a statutory body created by an Act of legislature.
- •Be operational for at least two years on the date of application.
- •Have facilities to seat at least 25 individuals.
- •Have at least 5 startups undergoing incubation physically on the date of application.
- •Have a full-time CEO experienced in business development and entrepreneurship, with a team able to mentor on testing and validation and on finance, legal and HR.
- •Not disburse seed fund to incubatees using third-party private funding.
- •Have been assisted by Central or State Government(s).
If the incubator has NOT been government-assisted
A higher bar applies: operational for at least three years; at least 10 separate startups undergoing incubation physically on the date of application; and audited annual reports for the last 2 years. The EAC may set additional criteria.
Up to ₹5 Crore, Milestone-Released, With Hard Utilisation Gates
| Item | Rule |
|---|---|
| Grant to an incubator | Up to ₹5 crore, in milestone-based three or more installments; exact quantum and installments decided by the EAC. |
| Use of the grant | Only for disbursal to eligible startups — not for facility creation or other expenses. |
| Management fee | 5% of the Seed Fund grant, provisioned on top. Used for administrative expenditure, selection and due diligence of startups, and monitoring — not for facility creation. Released proportionately with each installment. |
| First installment | Up to 40% of the total approved commitment. |
| Next installment trigger | When cash-in-hand falls below 10% of the total EAC commitment, the incubator may request the next installment, released within 30 days of proof of milestone achievement. |
| Grant on startups (limit) | Not more than 20% of the total grant to an incubator may be given as grants to startups. |
| Utilisation window | Grant to be fully utilised within 3 years of receipt of the first installment. |
| Drawdown clawback | If less than 50% of the total commitment is utilised within the first 2 years, the incubator gets no further drawdowns and must return all unutilised funds with interest. |
The 20% grant sub-limit shapes what a startup can realistically get. No more than 20% of an incubator's total grant can go out as startup grants (the ₹20 lakh limb); the balance is deployed through the debt / convertible limb. A startup counting on the ₹20 lakh grant should understand it is competing for a deliberately limited slice.
Who Selects Whom — the EAC and the ISMC
Experts Advisory Committee (EAC) — Selects Incubators
Constituted by DPIIT, the EAC is responsible for overall execution and monitoring: it evaluates and selects incubators, sets the fund quantum and installments for each, specifies release milestones, monitors progress, and may discontinue support for poor performance. It convenes at least quarterly, and the incubator call is open online throughout the year.
Incubator Seed Management Committee (ISMC) — Selects Startups
Each incubator constitutes an ISMC to evaluate and select startups. Composition: a nominee of the incubator (Chairman); a representative of the State Government's Startup Nodal Team; a representative of a VC fund or angel network; a domain expert from industry; a domain expert from academia; two successful entrepreneurs; and any other relevant stakeholder. The final ISMC composition must be approved by the EAC.
How the ISMC Scores a Startup
| Criterion | What it assesses |
|---|---|
| Need for the idea | Market size, the market gap it fills, whether it solves a real-world problem |
| Feasibility | Reasonableness of technical claims, methodology for PoC and validation, product-development roadmap |
| Potential impact | Customer demographic and the technology's effect, national importance if any |
| Novelty | USP of the technology and associated IP |
| Team | Strength of the team; technical and business expertise |
| Fund utilisation plan | Roadmap of money utilisation |
| Additional parameters | Anything the incubator considers appropriate |
| Presentation | Overall assessment |
The weightings across these eight criteria are set by each incubator individually — they are not fixed by the scheme. Because each incubator assigns its own weights, the same startup can score differently at different incubators. Matching the pitch's strengths to an incubator's known emphasis is a real part of the work, not a lottery.
One Portal, Up to Three Incubators, a 45-Day Clock
- 1Apply on the Startup India portal: An online call for applications runs on an ongoing basis on the Startup India portal. The applicant applies for seed fund to up to three incubators (selected as disbursing partners), in order of preference.
- 2Submit the application detail: The applicant may be asked for team profile, problem statement, product / service overview, business model, customer profile, market size, quantum of funds needed and a projected fund-utilisation plan. All applications are shared online with the respective incubators.
- 3Shortlisting against eligibility: Incubators shortlist applicants against the para 3.1 eligibility criteria, then evaluate eligible applications through the ISMC on the eight-criteria grid.
- 4Presentation and selection within 45 days: Shortlisted applicants may be called to present before the ISMC, which selects startups within 45 days of receipt of application. Progress is updated to the Startup India portal in real time.
- 5Preference-order allocation: A selected startup is funded by the highest-preference incubator that selects it. If Preference 1 selects, Preference 1 funds; if Preference 1 rejects and Preference 2 selects, Preference 2 funds; and so on.
- 6Track, and reapply if rejected: Applicants track progress on the portal in real time; rejected applicants are notified by email and may apply afresh.
Preference order is a real decision, not a form field. Because funding goes to the highest-preference incubator that selects, listing a highly selective marquee incubator at Preference 1 can mean losing the faster or surer offer from a Preference 2 or 3 incubator. The preference list should be built on where the startup is genuinely likely to be selected and funded well.
The Compliance Spine That Keeps Money Flowing
Accounting and Utilisation (Incubator Side)
- •The incubator maintains an exclusive, project-specific Trust and Retention Account (TRA) with a nationalised bank; funds are released into it in milestone-based three or more installments.
- •Net returns from a beneficiary startup (principal, interest and profits) may be recycled into further startup funding under the scheme; if not so used within three years, they are returned to DPIIT.
- •The incubator reports funds sanctioned, received and disbursed per startup per financial year, and submits a detailed utilisation status and audited expenditure each financial year.
Success Indicators Tracked for Every Beneficiary
For all beneficiary startups, the incubator tracks and records: progress of proof of concept, prototype development, product development, field trials and market launch; quantum of loan, angel or VC funding raised; jobs created; turnover; and return on investment. This is fed to Startup India real-time via dashboards and presented to the EAC quarterly.
Repeat Applications, Grievances and Enforcement
- •An incubator may reapply for funds once it has disbursed or committed its entire previously released grant.
- •A grievance cell at DPIIT handles applicant issues — delayed evaluation, delayed disbursement by incubators, and so on.
- •The EAC may discontinue support to a poorly performing incubator; and legal action follows if an incubator uses the grant for purposes other than those awarded.
Where the professional work concentrates: On the startup side: the utilisation certificates, the interim progress updates that unlock later installments, and the final audited utilisation certificate. On the incubator side: the TRA operation, the per-startup per-year financial reporting, the annual audited expenditure, and the real-time dashboard discipline that the next drawdown depends on. The scheme is milestone-and-report gated at every step.