Guidelines for setting up of Incubators under Atal ...

1 Page 1 of 36 Guidelines for setting up of Incubators under Atal innovation mission - Atal Incubation Centres Government of India NITI Aayog Atal innovation mission June 2017 Page 2 of 36 Government of India NITI AAYOG Atal innovation mission Guidelines FOR setting UP OF ATAL INCUBATION CENTRES (AICs) Background: The Government of India has setup the Atal innovation mission (AIM) at NITI Aayog. The overarching purpose of this mission is to promote a culture of innovation and entrepreneurship in India. The Government realizes that there is a need1 to create world class incubation facilities across various parts of India with suitable physical infrastructure in terms of capital equipment and operating facilities, coupled with the availability of sectoral experts for mentoring the start-ups, business planning support, access to seed capital, industry partners, trainings and other relevant components required for encouraging innovative start-ups.

2 Accordingly, AIM supports the establishment of Atal Incubation Centres (AICs) that would nurture innovative start-up businesses in their pursuit to become scalable and sustainable enterprises. The scheme is known as Atal Incubation Centre. The terms and conditions of the scheme are at Annexure I. In the previous year, AIM has provided support to set up ten Atal Incubation Centres (AICs). The list of the ten supported AICs can be found here: AIM invites applications for setting up Atal Incubation Centres (AICs) through the online application form provided at this URL - format of the application form is also provided at Annexure II to this document. Objectives of the Scheme: The objective of the scheme is to promote and establish world class incubation centres in specific subjects/sectors such as manufacturing, transport, energy, health, education, agriculture, water and sanitation etc.

3 In India. These incubation centres would support and encourage innovative technology based start-ups that have an application and/or impact in the core sectors of the economy. The incubation centres would provide the start-ups with necessary guidance, tech support, infrastructure, access to investors, networking, and facilitating a host of other resources that may be required for the start-up to survive and scale. Expected Functions of the AICs: Assist the incubatees in creating a sustainable, scalable & profitable business model Provide physical infrastructure and value-added support services Create a strong network of mentors who would provide sector specific knowledge & real world practical guidance 1 Turning innovations into enterprises: ( ) Page 3 of 36 Conduct events and inspirational programs Provide trainings and mentorship to entrepreneurs Forge partnerships and networks with academia, industry, funding sources, existing Incubators and others for the start-ups to leverage.

4 Enable access to prototyping facilities, test beds, markets, and pilot implementation for the product/services. Build a strong team with adequate knowledge and experience in guiding start-ups, building business plans, facilitating investments, building networks etc. An ideal application would be a collaboration between a corporate sector entity and a research oriented / academic institution with aligned areas of focus. Features of the Scheme: Keeping in view the learnings from round 1 of AIC selections in 2016-17, it has been decided to broaden the applicant pool, by inviting a wider category of entities, such as higher educational institutions, R&D institutes, corporate sector, alternative investment funds registered with SEBI, business accelerators, group of individuals, and individuals.

5 AICs can be established by one or more collaborating entities. For the purposes of this application, only the entity who will be providing the space for setting up the AIC (as per requirements in para on Infrastructure) shall be considered as the applicant (hereinafter referred to as Applicant ). AICs are encouraged to focus on a limited number of areas, which align with their core strengths. The AIC should have up to a maximum of three primary sectors of focus. An illustrative list of sectors has been provided in the online application form. Successful AIC applicants will be required to incorporate a Special Purpose Vehicle (SPV), either a Section 8 company or a private limited company registered under the Companies Act, 2013.

6 Based on learnings from round 1 of AICs, these SPVs will not be allowed to incorporate as trusts or societies. Funding Support: Successful applicants would be provided grant-in-aid to set up the AIC for a maximum period of 5 years upto Rs. 10 crore to cover the capital and operational expenditures. The exact amount of the grant shall be decided by AIM based on the application and business plan, as per the prevailing scheme. AIM reserves the right to modify the scheme as and when required, without prior notification. Key aspects of funding AICs in academic / R&D institutes: a) Such applicants would be provided grant-in-aid of up to 100% of the total eligible project costs subject to a maximum of crore.

7 B) Cost components mentioned in para (given below) shall not be considered as eligible project costs. Page 4 of 36 c) The budged plan presented by the applicant should clearly demarcate all components of the project costs which are not eligible for funding by the AIM, including those mentioned in section Key aspects of funding AICs proposed by applicants other than academic / R&D institutes: a) AICs would be provided a Grant-in-aid of up to 50% of the total eligible project cost, subject to a maximum of upto Rs. 10 crore. b) Rental value of the building as per fair market value or as per the registered lease agreement can be considered as the applicant s contribution to the AIC in the eligible project cost.

8 C) Costs mentioned in section (given below) shall not be considered as eligible project costs. d) Each tranche of the grant-in-aid shall be disbursed only after the applicant provides proof of matching 50% contribution that is to be brought in by the applicant. The grant-in-aid shall be disbursed in a phased manner as per the budget plan submitted by the applicant and approved by the AIM Directorate. Budget Guidelines : a) Expenditure on office furnishings, administration, utility and maintenance, and office expenses should be kept to a minimum. b) The larger part of the grant-in-aid should be spent on the core operation activities of the AIC s described in para (Expected functions of the AIC).

9 C) The total grant-in-aid which can be spent towards sector specific laboratory and seed fund combined should not exceed Rs. crores. The following elements shall not be allowed to be included in the project cost itself (irrespective of whether it s the contribution of the applicant or NITI Aayog): Cost of purchasing land, construction of building, purchase of vehicles. Rental expense in case the applicant is an academic institution and the AIC is located in the premises of the academic institution. Cost of hiring any external agency/consultant for developing the AIC operational model or for conducting whole or part of the AIC operations. (AIM will assist the AIC in developing the operational model based on global best practices and will provide training to the AIC team).

10 Cost of any fee paid to any external agency/individual(s) for the preparation of the application for AIC. Expenses such as SPV registration charges, seed money for the bank accounts, and other similar expenses for incorporation of the SPV. Monetisation of any notional / opportunity costs. Page 5 of 36 The applicant is strongly encouraged to make the AIC self-sustainable in a period of five years and it should clearly reflect in the proposed budget submitted by the applicant. The applicant can apply for scale up support at the end of the program subject to fulfilling the objectives and targets and based on the performance of the AIC through a separate program which may be notified in due course of time.