Raising equity funding is not the only route to early-stage capital. Several Indian government schemes provide grants or soft support to eligible startups without requiring founders to give up equity in exchange. These schemes vary considerably by sector, stage and state, and founders should treat this guide as a starting point for research rather than a complete or current listing of terms.
For context on how non-dilutive funding fits alongside equity fundraising, see the guide to government funding for startups in India and the overview of funding routes for startups.
What makes funding non-dilutive?
Non-dilutive funding does not require the company to issue shares or convertible instruments in exchange for capital. Grants, subsidised loans and certain government schemes generally fall into this category, whereas angel investment, venture capital and convertible notes do not. Non-dilutive funding is useful because it preserves ownership, but it often comes with conditions, reporting requirements or sector restrictions that founders must satisfy.
DPIIT recognition as a prerequisite
Most central government startup schemes require the applicant to be recognised as a startup by the Department for Promotion of Industry and Internal Trade, commonly referred to as DPIIT recognition. The guide to DPIIT recognition for startups explains the eligibility criteria and application process. Founders should secure this recognition before applying to most schemes described below.
Startup India Seed Fund Scheme
The Startup India Seed Fund Scheme provides early-stage financial assistance to eligible startups through a network of approved incubators, rather than disbursing funds directly to founders in most cases. The scheme supports proof of concept, prototype development and market entry. Eligibility criteria, the list of approved incubators, and application windows are published on the official Startup India Seed Fund portal and should be checked directly, since these details are updated periodically. See also the detailed guide to the Startup India Seed Fund Scheme on this site.
BIRAC BIG scheme for biotechnology startups
The Biotechnology Industry Research Assistance Council, under the Department of Biotechnology, runs the Biotechnology Ignition Grant scheme to support early-stage biotechnology innovation, typically delivered through a network of partner incubators called Bio-Incubators. This scheme is sector-specific and relevant primarily to startups working on biotechnology, life sciences or related translational research. Current eligibility and grant terms should be confirmed on the official BIRAC website.
Atal Innovation Mission
The Atal Innovation Mission, under NITI Aayog, supports innovation and entrepreneurship through a range of initiatives, including support for incubators and innovation centres. Some components are aimed at the broader innovation ecosystem rather than providing direct grants to individual startups, so founders should review the current programme structure on the official Atal Innovation Mission website to understand which components, if any, apply to their company directly.
State startup policies
Several Indian states, including Uttar Pradesh, operate their own startup policies that may offer incentives such as reimbursement of certain costs, access to state-level seed funds, or preferential procurement for registered startups. The specific benefits, eligibility and application process differ by state and are periodically revised, so founders should consult their state's official startup portal directly rather than relying on general descriptions.
Hypothetical example: combining grant and equity funding
Consider a hypothetical agri-tech startup, Krishimitra, based in Uttar Pradesh, that receives a hypothetical non-dilutive disbursement of ₹20,00,000 through an approved incubator under a seed fund scheme to build a prototype and validate it with pilot customers. Krishimitra uses this capital without issuing any equity.
Twelve months later, having demonstrated pilot traction, Krishimitra raises a ₹1,00,00,000 angel round at a ₹6,00,00,000 pre-money valuation, issuing roughly 14.3% of the company in exchange. Because the earlier non-dilutive capital funded the prototype stage, Krishimitra's founders retain more ownership at the point of the equity round than they would have if that early capital had come from a priced round. This example is illustrative only and does not represent an actual disbursement or valuation.
Checklist before applying to a government scheme
Founders should confirm each of the following before applying to any non-dilutive scheme:
- DPIIT recognition is in place, where required
- The scheme's current eligibility criteria are checked on the official portal, not a third-party summary
- The application window is currently open
- Reporting and milestone obligations attached to the grant are understood in advance
- The scheme does not conflict with any existing investor or incubator agreement
- Supporting documents, such as incorporation certificates and financial statements, are ready
Sources
Startup India Seed Fund Scheme, official portal (reviewed 4 October 2026): seedfund.startupindia.gov.in
Biotechnology Industry Research Assistance Council, official website (reviewed 4 October 2026): birac.nic.in
Atal Innovation Mission, official website (reviewed 4 October 2026): aim.gov.in
DPIIT, Startup India official portal (reviewed 4 October 2026): startupindia.gov.in
This article is for general educational information only and does not constitute legal or financial advice. Scheme eligibility, benefits and deadlines change periodically and must be verified on the relevant official government portal before applying.
Founders exploring both grant and equity funding routes can apply to the RaiseMoney incubation programme for structured guidance.
Frequently asked questions
Can a startup get government funding without giving away equity?
Yes. Several government schemes, such as the Startup India Seed Fund Scheme and sector-specific grants like BIRAC's Biotechnology Ignition Grant, provide non-dilutive support, though eligibility, sector scope and disbursement processes vary and should be verified on official portals.
Is DPIIT recognition required for government startup grants?
Most central government schemes require DPIIT recognition as a prerequisite for eligibility. Founders should secure this recognition before applying, since application processes and timelines can take time to complete.
How does the Startup India Seed Fund Scheme work?
The scheme provides early-stage financial assistance for proof of concept and prototype development, typically disbursed through a network of approved incubators rather than directly to founders in most cases. Current terms are published on the official seed fund portal.
Are government grants only available to tech startups?
No. While many schemes support technology-led innovation broadly, some are sector-specific, such as BIRAC's grant for biotechnology startups. Eligibility depends on the specific scheme rather than a single blanket policy.
Do state governments in India also offer startup grants?
Yes, several states operate their own startup policies with incentives that may include reimbursements or access to state seed funds, though specific benefits and eligibility vary by state and should be confirmed on the relevant state portal.
Can a startup combine government grants with equity funding?
Yes. Non-dilutive government funding and equity fundraising are not mutually exclusive, and many startups use early grant support to reach a stage where they can raise equity capital on improved terms.