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SISFS: grant or convertible debt?

₹20 lakh as a grant, or ₹50 lakh as convertible debt — one route, never both. Work out which one your plan falls under.

Eligibility
Grant route — up to ₹20 lakh

building a prototype is squarely within what the grant component funds: validation of proof of concept, prototype development and product trials.

Grant route ceiling
₹20 L
Convertible debt ceiling
₹50 L
You may receive
one route, not both

Trade-off. A grant is not repaid and takes no equity. In exchange the ceiling is lower, disbursal is tranched against milestones you agree with the incubator, and the permitted spending heads are narrower — it funds proving the thing, not selling it.

Guidance, not a decision.The route and the amount are settled by the DPIIT-approved incubator assessing your application, within the scheme’s framework. Conversion and repayment terms on the debt route are set by the incubator and are not standardised.

The ₹70 lakh that does not exist

SISFS provides up to ₹20 lakh as a grant, or up to ₹50 lakh through convertible debentures or debt-linked instruments — one or the other. The ceilings do not add together, and a startup is not funded on both routes. Summaries that present ₹70 lakh as the headline are wrong, and planning runway on that number is how a funding gap appears halfway through a build.

Both routes are disbursed by an approved incubator rather than by the government directly, and both are tranched against milestones — so the money arrives in stages, not up front. Which route you are offered follows from what the money is for, not from what you ask for.

Want this assessed properly?Choosing the wrong route, or the wrong incubator, is the difference between a funded application and a resubmission.
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Two routes, one choice

The Startup India Seed Fund Scheme is frequently described as offering “up to ₹70 lakh”. It does not. It offers a grant of up to ₹20 lakh or convertible debt of up to ₹50 lakh, and which one you are offered follows from what the money is for.

GrantConvertible debt
Ceiling₹20 lakh₹50 lakh
FundsProof of concept, prototype, product trialsMarket entry, commercialisation, scaling
Repaid?NoConverts to equity or is repaid
DilutionNoneOn conversion

Both are disbursed by a DPIIT-approved incubator rather than by the government, and both are tranched against milestones — so the money arrives in stages against delivery, not up front. Plan runway accordingly.

If you are not yet DPIIT-recognised, that is the first step and it is free — see Startup India recognition. If you are weighing the tax side too, the 80-IAC calculator covers the other main statutory benefit.

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