Startup India Seed Fund Scheme (SISFS) in 2026: Grant, Debt, Eligibility and Current Status

If you are building a product-led startup in India and have heard that the government will fund your prototype, the scheme people usually mean is the Startup India Seed Fund Scheme, or SISFS. This guide explains exactly what it offered — a grant for proof of concept and a cheap, unsecured loan for market entry — who could apply, how incubators picked startups, what happens after selection, and where the scheme stands in 2026, including the application cut-off and the schemes still open for early-stage founders. Everything is drawn from DPIIT's guidelines, its June 2026 playbook and its March 2026 reply in Parliament.

Quick answer

The Startup India Seed Fund Scheme funds DPIIT-recognised startups through incubators: up to ₹20 lakh as a grant for proof of concept, prototypes or product trials, and up to ₹50 lakh as debt or convertibles for market entry and scaling. The last date for startups to apply was 31 May 2026; disbursals to selected startups are continuing.

• Eligible: DPIIT-recognised, incorporated no more than 2 years before applying, technology at the core, 51% Indian promoters

• Debt is unsecured, at no more than the repo rate (5.50% now), for up to 60 months with up to 12 months' moratorium

• Incubators get up to ₹5 crore each and select startups through their own committee

• No incubator may charge a startup any fee under the scheme

What the Seed Fund is and where it stands in 2026

DPIIT designed SISFS for the stage where most Indian startups stall: you have an idea and perhaps a rough demo, but angel investors want proof that it works and banks want assets or a track record. The scheme was approved with an outlay of ₹945 crore and has run since 1 April 2021. Its original design aimed to reach about 3,600 entrepreneurs through 300 incubators over four years, and the government has since kept it running beyond that first four-year window so that money already committed could flow.

The important point for anyone reading this in 2026 is timing. DPIIT's playbook of startup schemes, published in June 2026, states that the last date for startups to apply was 31 May 2026 and that disbursals are ongoing. In practice that means two groups of founders: those already selected by an incubator, who should keep meeting milestones to draw their next tranche, and new founders, for whom the scheme is not currently accepting applications. As of October 2026 no successor seed-fund scheme has been notified. Secondary sources tracking the portal report that incubators were asked to finish their selections by 30 June 2026; we could not find that instruction on an official page, so treat it as unconfirmed.

The scheme did reach a large number of startups. In a Lok Sabha reply published by PIB on 17 March 2026, the commerce ministry said incubators had approved about ₹592 crore to 3,311 startups (31 Jan 2026), with about ₹294 crore of that going to women-led startups. Only 26 of the supported startups were recorded as closed on the MCA register at that date.

SISFS key dates

1 April 2021

Scheme implemented with a ₹945 crore outlay

31 January 2026

about ₹592 crore to 3,311 startups (31 Jan 2026)

31 May 2026

Last date for startups to apply

October 2026

Disbursals to selected startups continue; no successor scheme notified

The year-wise numbers in that reply show the shape of the scheme. Approvals to startups were about ₹28 crore in 2021, ₹112 crore in 2022, ₹176 crore in 2023, ₹166 crore in 2024 and ₹110 crore in 2025, then under ₹1 crore in January 2026. The tail-off reflects incubators using up their allocations as the scheme approached its end, which is also why many founders in 2025 found that incubators they approached had no money left to commit.

How the money moves: DPIIT, incubators and startups

SISFS never paid startups directly. DPIIT set up an Experts Advisory Committee (EAC) that selected incubators, decided how much each would get and set milestones for releasing it. Each incubator could get a grant of up to ₹5 crore, released in three or more instalments, plus a management fee of 5% on top to cover selection, due diligence and monitoring. The first instalment could be up to 40% of the commitment, and an incubator could ask for the next one once its cash in hand fell below 10%.

How Seed Fund money reaches a startup

Step 1

DPIIT

Step 2

Experts Advisory Committee

selects incubators

Step 3

Incubator

up to ₹5 crore + 5% fee

Step 4

Incubator Seed Management Committee

selects startups

Step 5

Startup bank account

milestone tranches

The incubator then ran its own selection through an Incubator Seed Management Committee (ISMC). The guidelines prescribe who sits on it: the incubator's nominee as chair, a representative of the state government's startup nodal team, someone from a venture capital fund or angel network, domain experts from industry and academia, and two successful entrepreneurs. DPIIT had to approve each ISMC's members, and the quality of that committee was itself one of the criteria for choosing incubators.

Two rules limit how incubators deploy the money. No more than 20% of an incubator's total SISFS grant can go out as grants to startups; the rest has to be deployed as debt, convertible debentures or debt-linked instruments. And incubators cannot use the money to build facilities or cover their own overheads. Whatever startups repay — principal, interest or profit on conversion — can be recycled into new startups under the same rules, but if it sits unused for three years it goes back to DPIIT. The funds must sit in a dedicated Trust and Retention Account with a nationalised bank.

What a startup can get: the grant and the debt

The two forms of support do different jobs, and a startup could receive each only once.

The debt terms are unusually generous by Indian standards. A small business borrowing unsecured from a bank in 2026 typically pays a double-digit rate and offers a personal guarantee; SISFS debt is capped at the RBI repo rate and needs neither collateral nor a guarantee. That is deliberate — the scheme's purpose is to get a startup to the point where angels, venture funds or banks will take it seriously.

Neither form of money can be spent on creating facilities, so you cannot use it to buy land or build a lab. It goes towards things like engineering and material costs for prototypes, testing and certification, field trials, early marketing and the salaries needed to launch. The incubator writes the permitted uses and milestones into a legal agreement before releasing anything, and the money is paid only into the company's own bank account.

Who was eligible

The startup-side criteria are short but strict. Most rejections came from founders who missed one of them rather than from a weak idea.

Startup eligibility under SISFS

0/7

• Recognised as a startup by DPIIT (see our Startup India registration guide)
• Incorporated not more than 2 years before the date of application
• A business idea for a product or service with market fit, viable commercialisation and room to scale
• Technology used in the core product or service, business model, distribution model or method
• Not more than ₹10 lakh of monetary support already received under other Central or State schemes
• Indian promoters hold at least 51% of the shares at the time of applying
• Has not already received the SISFS grant (or the SISFS debt) before

Share Print

The two-year rule is counted from incorporation, not from DPIIT recognition. A company incorporated in March 2024 that only obtained recognition in 2025 would have had until March 2026 to apply. DPIIT recognition itself is available for up to 10 years from incorporation, so being recognised did not make you eligible for the Seed Fund.

The ₹10 lakh cap on other government support excludes prize money from competitions and grand challenges, subsidised workspace, a founder's monthly allowance and access to labs or prototyping facilities. A startup that won a state hackathon prize and sat in a subsidised incubator seat was still fine; one that had taken a ₹15 lakh state seed grant was not.

The technology test is broader than it sounds. The guidelines accept technology in the product itself, in the business model, in distribution or in the method used to solve the problem, so a logistics or agri-marketplace startup using software to reach farmers could qualify. The guidelines also list priority sectors — social impact, waste and water management, financial inclusion, education, agriculture, food processing, biotechnology, healthcare, energy, mobility, defence, space, railways, oil and gas and textiles — but preference is not exclusion.

Legal form matters indirectly. DPIIT recognition is available to private limited companies, LLPs and registered partnership firms, and the shareholding test in the guidelines refers to the Companies Act and SEBI rules, so most funded startups were private limited companies. If you are setting one up now for future schemes, our private limited company registration guide covers the process.

Incubator eligibility

Incubators had their own bar. They had to be a registered society, trust, private limited company or statutory body; operational for at least two years; able to seat at least 25 people; physically incubating at least five startups; and run by a full-time CEO with a mentoring team. They also had to have been assisted by a Central or State government. Incubators without government support needed three years of operation, at least ten physically incubated startups and two years of audited annual reports. An incubator could not top up seed funds with money from a private third party.

How selection worked

Startups applied online on the Seed Fund portal and could pick up to three approved incubators in order of preference. Each incubator checked eligibility, then its ISMC scored the eligible applications. The guidelines list eight criteria — whether there is a real need for the idea, feasibility of the technical claims and validation plan, potential impact, novelty and IP, the strength of the team, the fund-utilisation plan, any extra parameters the incubator chose, and an overall presentation — and each incubator could set its own weightage for them.

How a startup moved from application to first tranche

1. 1

   Get DPIIT recognition

   Apply on the Startup India portal; recognition was a precondition for applying.

   Startup India registration guide
2. 2

   Apply on the Seed Fund portal

   Fill in the team profile, problem, product, business model, customers, market size, funds needed and a utilisation plan, and choose up to three incubators.

3. 3

   Pitch to the ISMC

   Shortlisted startups presented to the incubator's committee, which had to decide within 45 days of receiving the application.

4. 4

   Sign the agreement

   The incubator executes a legal agreement setting out amount, form of support, milestones and reporting before any money is released.

5. 5

   Receive tranches against milestones

   The first grant instalment must be released within 60 days of the application; later ones follow progress reports and utilisation certificates.

If two incubators both selected the same startup, the one higher on the startup's preference list funded it. Rejected applicants were told by email and could apply again afresh. Founders could track applications on the portal in real time, and DPIIT set up a grievance cell for problems such as slow evaluation or delayed disbursal.

A worked example: grant plus debt for a hardware startup

Take an illustrative agri-tech startup in Pune, incorporated as a private limited company in June 2024 and recognised by DPIIT, building a low-cost soil-moisture sensor for small farmers. It applied to its incubator in 2025, and the ISMC approved a ₹15 lakh grant and, after successful field trials, ₹40 lakh of debt. These numbers are hypothetical, chosen to show how the rules work.

The grant might be released in three tranches tied to milestones: ₹5 lakh on signing, to build ten working prototypes; ₹5 lakh after a lab test report; and ₹5 lakh after a 200-farm field trial. Before each later tranche the startup submits an interim progress update and a utilisation certificate for the previous one. Nothing is repaid.

The debt of ₹40 lakh funds the first commercial batch and dealer onboarding. Suppose the incubator sets the rate at an illustrative 5.50% (the repo rate in October 2026; the guidelines only set a ceiling), a 60-month tenure and a 12-month moratorium. If interest is serviced during the moratorium, that is about ₹18,333 a month for the first year. The remaining 48 months then carry an EMI of about ₹93,026, and total interest over the loan comes to roughly ₹6.85 lakh. The same ₹40 lakh borrowed unsecured from a bank at a typical double-digit rate would cost several times more in interest — if a bank would lend to a two-year-old pre-revenue company at all.

If the agreement is structured as convertible debentures instead, the startup may never repay in cash: the debentures convert into equity for the incubator at a priced round, on terms agreed up front. Read conversion clauses carefully, because they decide how much of your company the incubator ends up owning.

Try it — repayment on Seed Fund debt

Loan AmountInterest Rate (p.a.)Tenure

Loan Amount₹40,00,000.00

Total Interest₹4,65,243.24

Total Payable₹44,65,243.24

Number of EMIs48

Monthly EMI₹93,025.90

Open the full EMI Calculator (PDF, save, compare)

After selection: agreements, reporting and closure

Once funded, a startup has ongoing obligations. It reports progress against the milestones in its agreement, and the incubator tracks a set of outcome indicators for every beneficiary: progress on proof of concept, prototype, product development, field trials and market launch; loans, angel or VC money raised; jobs created; and turnover. Incubators feed this into the Startup India dashboard and present it to the EAC every quarter, so gaps in your reporting show up quickly.

At the end of the project you file a final report and an audited utilisation certificate. The guidelines anticipate that not every startup will succeed: if the venture fails, the founder shares the learnings and reasons for failure along with the utilisation certificate. A failed grant-funded project is not, by itself, a breach. Misusing the money is — spending it on facilities or on purposes outside the agreement exposes the startup to recovery and the incubator to action by DPIIT.

Keep your accounts clean from day one. Use a separate ledger for SISFS money, keep invoices for every rupee claimed in a utilisation certificate, and make sure your statutory auditor is comfortable certifying them. Grants are generally shown as a grant liability or capital receipt depending on their purpose, and debt or debentures appear as borrowings; your chartered accountant should decide the treatment, because it affects your balance sheet when you raise equity later.

Common mistakes that sank applications

Applying too late. The two-year window ran from incorporation. Founders who incorporated early "to be safe" and spent a year building often found themselves outside it.

Counting the wrong support. Founders who had taken state seed grants above ₹10 lakh were ineligible, but those whose support was only prize money, subsidised space or lab access were not. Read the exclusions before ruling yourself out.

A vague utilisation plan. The ISMC scored the fund-utilisation roadmap separately. "Product development — ₹20 lakh" rarely scored well; a month-by-month plan tied to measurable milestones did.

Picking incubators with no money left. By 2025 many incubators had committed their allocations. Founders who listed three popular incubators without checking whether they still had funds often heard nothing useful.

Paying an agent. The guidelines bar incubators and their staff from charging any fee in cash or kind for selection, disbursal, incubation or monitoring under the scheme. Anyone charging a "processing fee" to get you Seed Fund money was breaking the rules.

Alternatives for early-stage founders now

With SISFS closed to new applications, founders need to look elsewhere. These are the main central options DPIIT's own playbook still lists, plus the debt and equity routes that sit above them.

Many states also run their own seed or sustenance grants through state startup missions, often with similar two- to three-year age limits; check your state's startup policy portal. Our Atal Innovation Mission guide explains AIC seed support, and the CGTMSE guide covers collateral-free loans once you register as an MSE.

Official links

• Startup India Seed Fund portalApplication status and notices
• SISFS guidelines (PDF)Eligibility, debt terms, disbursal rules
• Playbook of startup schemes, June 2026 (PDF)SISFS status and 60+ other schemes
• PIB — SISFS figures to 31 Jan 2026Lok Sabha answer, 17 March 2026
• BIRAC — BIG schemeBiotech ignition grant calls
• NIDHI Seed Support ProgramDST seed support via TBIs

What to do next

If you were selected before the cut-off, stay on top of milestones and utilisation certificates so your remaining tranches are not held up. If you are starting out now, get your company incorporated and recognised by DPIIT so you are ready for a successor scheme or a state seed grant, join an incubator that runs NIDHI, AIM or BIRAC programmes, and work out how much runway you need with our startup cost calculator.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Is the Startup India Seed Fund Scheme still open in 2026?

Not for new applicants. DPIIT's June 2026 playbook of startup schemes says the last date for startups to apply under SISFS was 31 May 2026 and that disbursals are ongoing. Startups already selected by an incubator keep receiving their tranches. As of October 2026 no successor seed-fund scheme has been notified, so check seedfund.startupindia.gov.in and DPIIT notices before planning around it.

How much money does the Startup India Seed Fund give?

A startup could get up to ₹20 lakh as a grant for proof of concept, prototype development or product trials, and separately up to ₹50 lakh as convertible debentures, debt or debt-linked instruments for market entry and scaling. Each form of support can be received only once, and both are released in milestone-based instalments by the incubator, not by DPIIT directly.

Who was eligible for the Startup India Seed Fund?

A DPIIT-recognised startup incorporated not more than two years before applying, with a technology-based product, service, business model or distribution model, at least 51% Indian promoter shareholding, and no more than ₹10 lakh of monetary support from other Central or State schemes. Prize money, subsidised workspace, founder allowances and lab access did not count towards that limit.

What interest rate applies to SISFS debt?

The guidelines cap it at the prevailing repo rate — 5.50% as of October 2026. The incubator fixes the tenure at sanction, up to 60 months, and can allow a moratorium of up to 12 months. The loan is unsecured: no guarantee from the promoters or a third party is required, because the startups are at such an early stage.

Can I apply for the Seed Fund directly to the government?

No. DPIIT funds selected incubators, and each incubator's Incubator Seed Management Committee chose the startups. Startups applied online on the seed fund portal to up to three incubators in order of preference. If two incubators selected the same startup, the higher-preference one funded it.

What are the alternatives now that SISFS applications have closed?

Early-stage options still listed in DPIIT's playbook include BIRAC's Biotechnology Ignition Grant (up to ₹50 lakh for biotech), DST's NIDHI Seed Support Program through technology business incubators, seed support from Atal Incubation Centres (up to ₹12.5 lakh per startup), the Credit Guarantee Scheme for Startups for bank debt, and equity from AIFs backed by the Fund of Funds.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Guidelines for Startup India Seed Fund Scheme — DPIIT, Ministry of Commerce and Industry · accessed 9 October 2026
2. 2.Playbook of Government Schemes and Initiatives for Startups (June 2026) — Startup India (DPIIT) · accessed 9 October 2026
3. 3.Over 1 lakh startups have at least one woman director among 2.12 lakh recognised by DPIIT (Lok Sabha answer) — PIB (DPIIT), 17 March 2026 · accessed 9 October 2026
4. 4.Startup India Seed Fund Scheme (SISFS) — India Science, Technology & Innovation portal (Office of the Principal Scientific Adviser) · accessed 9 October 2026
5. 5.Startup India Seed Fund portal — DPIIT · accessed 9 October 2026
6. 6.Reserve Bank of India — current policy repo rate — Reserve Bank of India · accessed 9 October 2026
7. 7.Startup India Seed Fund status: closed, what to do next (secondary) — SRF Capital · accessed 9 October 2026