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Venture Capital Fund for ST (VCF-ST): Empowering ST Entrepreneurs

Learn about the Venture Capital Fund for Scheduled Tribes (VCF-ST) scheme, its objectives, eligibility criteria, and impact on ST entrepreneurship.

In a significant move to promote entrepreneurship and innovation among Scheduled Tribes (ST), the Government of India introduced the Venture Capital Fund for Scheduled Tribes (VCF-ST) scheme. This initiative, born out of recommendations made by the Group of Secretaries (GoS) on education and social development, aims to provide concessional finance and support to ST entrepreneurs, fostering growth and financial inclusion within ST communities.

Origins and Objectives

The VCF-ST scheme was conceptualized following a presentation made to the Hon'ble Prime Minister under the head 'Affirmative Action' on January 13, 2017. The subsequent decision in the EFC meeting held on May 12, 2021, paved the way for the introduction of this groundbreaking scheme. The VCF-ST has been designed with four primary objectives:

Objective Description
Promote Entrepreneurship Provide concessional finance to ST entrepreneurs
Support Innovation Back innovative ideas through Technology Business Incubators (TBIs)
Nurture Start-ups Offer equity and/or credit support from ideation to commercial stage
Foster Financial Inclusion Motivate ST entrepreneurs for further growth of ST communities

Note: The scheme aims to ensure that at least 30% of the beneficiaries assisted under the fund should preferably be women entrepreneurs, promoting gender equality in entrepreneurship.

Eligibility Criteria

The VCF-ST scheme has been designed to cater to a wide range of projects and enterprises, with specific eligibility criteria to ensure targeted support for ST entrepreneurs.

General Eligibility

The scheme considers projects and units set up in the following sectors:

  • Manufacturing
  • Services
  • Allied sectors
  • Start-ups
  • Units being incubated in technology business incubators

Important: The scheme ensures asset creation out of the funds deployed in the unit, promoting sustainable growth and development.

Minimum Existence and Shareholding Criteria

The VCF-ST scheme categorizes investments based on the amount of assistance required:

  1. For Companies applying for assistance up to Rs. 50 lakh:
    • Companies must have at least 51% shareholding by ST entrepreneurs for the past 6 months with management control, OR
    • A new company that is a successor entity of an established business (Proprietary Firm, Partnership Firm, OPC, LLP, etc.) with a sound business model, operational for over 6 months, where the predecessor entity had at least 51% ST shareholding with management control.
  2. For Companies applying for assistance above Rs. 50 lakh:
    • Companies must have at least 51% shareholding by ST entrepreneurs for the past 12 months with management control, OR
    • A new company that is a successor entity of an established business, operational for over 12 months, where the predecessor entity had at least 51% ST shareholding with management control.

Eligibility Criteria for Technology Oriented Innovative Projects

The VCF-ST scheme also provides special considerations for technology-oriented innovative projects:

  1. Innovative ideas selected by Technology Business Incubators (TBIs) for incubation funding:
    • Covers the cost of carrying out innovation projects
    • Subject to a ceiling of Rs. 10 lakhs on average per year
    • For a period of three years, aggregating Rs. 30 Lakh
    • Subject to satisfactory progress
  2. New Companies with at least 51% shareholding by first-time ST entrepreneurs working on technology-oriented innovative projects:
Scenario Requirements
With Incubation Support Projects supported by incubation centers at IITs, NITs, Premier Business Schools, Universities, Institutions, Medical Colleges, NSTEDB under DST, or corporates
Without Incubation Support Projects with patents/copyrights showing good commercialization potential
Government Sanctioned Projects sanctioned by Departments/Ministries of Government of India after due appraisal

All projects must demonstrate good potential for commercialization and be at the implementation stage.

Required Documents

To apply for the VCF-ST scheme, entrepreneurs need to submit the following primary documents:

  • Documentary proof of ST status
  • Certificates from incubation centers/corporates or documents related to patents/copyrights (for technology-oriented projects)
  • Sanction letter from the relevant Department/Ministry of Government of India (if applicable)
  • Proof of management control and minimum 51% ST shareholding
  • Other documents supporting eligibility conditions

The scheme accepts e-documents, making the application process more accessible and efficient.

Impact and Future Prospects

The Venture Capital Fund for Scheduled Tribes (VCF-ST) scheme represents a significant step towards empowering ST entrepreneurs and promoting innovation within ST communities. By providing concessional finance, supporting start-ups, and fostering financial inclusion, the scheme aims to create a robust ecosystem for ST-led businesses to thrive.

"The VCF-ST scheme is not just about providing financial assistance; it's about nurturing dreams, fostering innovation, and building a stronger, more inclusive economy where Scheduled Tribe entrepreneurs can play a pivotal role." - Anonymous Government Official

IGNOUSTATUS.IN Venture Capital Fund for ST (VCF-ST)
Venture Capital Fund for ST (VCF-ST)

As the scheme progresses, it is expected to catalyze a wave of entrepreneurship among ST communities, leading to job creation, economic growth, and social development. The focus on women entrepreneurs further enhances its potential to drive inclusive growth and gender equality in the business landscape.

Conclusion

The Venture Capital Fund for Scheduled Tribes (VCF-ST) scheme stands as a testament to the government's commitment to inclusive growth and affirmative action. By providing targeted support to ST entrepreneurs, the scheme not only aims to bridge the economic gap but also to unleash the untapped potential within ST communities.

As we look to the future, the VCF-ST scheme promises to be a game-changer in the realm of ST entrepreneurship. It offers not just financial support, but also a platform for innovation, growth, and societal transformation.

Learn More About VCF-ST