DPIIT Secretary Guruprasad Mohapatra said that most of the start-ups actually face problem in raising finance or funds in the ideation to the proof of concept stage.
He said that now the finance minister has announced a proposal in the Budget on Saturday for providing seed fund to start-ups, the department will work on this.
Finance Minister Nirmala Sitharaman proposed to provide early life funding, including a seed fund to support ideation and development of early stage start-ups.
"So now we will move a Cabinet note and create a fund and guidelines in this regard," Mohapatra told .
He said that the department will work on a National Seed Fund policy and creation of the fund.
In their interactions with the department, start-ups have time and again demanded formulation of a national seed fund scheme.
Some states and central government departments like Biotechnology Industry Research Assistance Council have their own seed fund scheme but they are small and are not pan-India, the secretary said.
The department has already held discussions with states, and central government departments that have such schemes in this regard.
The secretary also said that the budget announcement regarding employee stock option plan (ESOP) will help start-ups in further strengthening startup ecosystem in the country.
"In order to give a boost to startup ecosystem, I propose to ease the burden of taxation on the employees by deferring the tax payment by five years or till they leave the company or when they sell, whichever is earliest," the finance minister has said.
ESOP is a significant component of compensation for employees. Currently, it is taxable.
On the budget, Mohapatra said that the need of the hour is to encourage investments and to that extant there are lot of positive things in the budget.
"It is a pro-investment budget," he added. RR MR MR