The National Innovation Council (NIC) and the Ministry of micro, small and medium enterprises (MSME), are jointly launching India Inclusive Innovation Fund (IIIF), with an initial corpus of Rs 500 crore ($80 million) with an aim to grow it ten times within two years.
The fund, which has been approved by the Union Cabinet, will be registered under SEBI’s Alternative Investment Fund Category I guidelines. This category covers venture capital funds among a few others such as infrastructure funds and angel funds.
The Ministry of MSME will commit 20 per cent (Rs 100 crore) to the initial corpus and the balance will come from banks, insurance companies, overseas financial and development institutions.
"The needs of the people at the base of the economic pyramid are today served by philanthropy and government grants/subsidies which can never be either adequate or scalable. IIIF seeks to leverage the model of venture capital to transform the lives of the less privileged," said Sam Pitroda, chairman of NinC and advisor to the Prime Minister on public information, infrastructure and innovation."
The fund would looks to invest in scalable ventures with propositions that would improve the lives of citizens at the base of the economic pyramid catering to areas such as healthcare, food, nutrition, agriculture, education / skill development, energy, financial inclusion, water, sanitation, employment generation, etc. It plans to invest its 50 per cent investments initially to enterprises that fall in the MSME stage.
The IIIF will also partner with other funds, including incubators, angel groups, and public R&D programmes and laboratories to support the commercialisation and deployment of socially relevant innovative technologies and solutions.
The government will not be involved in the day to day operations of the fund and the asset management company will appoint a professional management team for this purpose as also an investment committee comprising professionals of repute, which will take all investment/divestment decisions. A governing council comprising government nominees as well as eminent persons from the fields of public service, industry, finance, entrepreneurship, etc. will provide oversight.
(Edited by Joby Puthuparampil Johnson)