India’s Department for Promotion of Industry and Internal Trade (DPIIT), with a motive of boosting up startups focused on priority areas, plans to set up an India Startup Fund with an initial amount of Rs 1,000 crore. Rural healthcare, water and waste management, clean energy solutions, cybersecurity and drones are considered as these key priority areas.

An official aware about the proposal told ET, that the government wanted to offer seed funds for high-tech cutting edge startups. The proposal will provide funds to 5000 startups in priority areas.

The respective dedicated fund plan which is proposed to be department’s 100 day action plan is different from the fund of FFS. The FFS, or Fund of Fundswas set up in 2016 under the Small Industries Development Bank of India. It is a ₹10,000 crore (~USD 1.6 Bn) fund plan that makes downstream investments in venture capital funds which in turn invest in startups.

The official added that the startups based on Internet of Things and Artificial Intelligence will be added gradually.

Recommendations for regulatory changes aimed at venture capital and angel investments, especially from indian investors has been suggested by DPIIT with a view to boost up startups.

Major changes were announced in February that aimed at freeing investors and entrepreneurs from the professed angel-tax. The government increased the exemption threshold and kept investments by listed companies of certain minimum size. It kept the venture capital funds and the startups by non-residents outside the ambit of tax to provide relief to the companies registered with the department for the purpose of startups.

Till now, 17,984 startups have been recognized by the department. Besides, the government has aimed to treat outsourced R&D efforts on par with in-house R&D for incentivizing purposes and for trouble free movement of researchers between academia, public research institutions, entrepreneurship and industry.