Funds For Funds: Government Launches EDF Under 'Digital India'
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As an initiative to promote the electronics design and manufacturing in India, the Department of Electronics and Information Technology announced the launch of Electronics Department Fund (EDF). At an event held at Hotel Trident, Mumbai, the first letter of commitment was handed over to a group of Daughter Funds by Ravi Shankar Prasad, Minister of Communications and Information Technology, on February 15th, 2016.
The EDF was first launched by Prime Minister Narendra Modi during the inauguration of Digital India Week on July 1st, 2015. Later, on September 4th, 2015, the government appointed Canbank Venture Capital Fund Pvt. Ltd. (CVCFL) as the Fund Manager of Electronics Development Fund (EDF). They will see to the requests made by applicants and make recommendation to the Ministry. The last date for applicants seeking participation to receive any kind of funding is March 31st, 2016.
Prone to high velocity of technological change, the IT sector requires constant research and development to keep up with the advancements of the world. “Intellectual Property is possible the most critical differentiator and determinant of success for a technology company”, the policy book for EDF states. It is also a sector that permeates in all sectors of economy and has a great economic and strategic importance.
Addressing this need, the government launched EDF as a “Funds of Funds” that will foster to the need of Research and Development and innovation in technology. With the objective to support the Daughter Funds which will then provide risk capital to companies developing new technologies, EDF will also help attract venture funds, angel funds and seed funds in the specifies areas. “It will help create a battery of Daughter funds and Fund Managers who will be seeking good start-ups (potential winners) and selecting them based on professional considerations.”
Digital India initiative emphasizes on e-governance and the need to empower India digitally. Projected at 1.13 Crore, it is also government’s agenda to develop the Electronic System Design and Manufacturing (ESDM) sector under Digital India to achieve “Net Zero Imports” by 2020. Setting up Electronic Development Fund is a way to achieve this goal and enable creating a vibrant ecosystem of innovation, research and development and with active industry involvement at the same time. It will encourage entrepreneurs towards technology development and set up new businesses.
After the success of “Make in India” week, the EDF is a great step by government to indicate that they are very keen on keeping its promise of making India digitally developed. Backed by government, it will definitely increase investors from every spectrum, even foreign investors. It will also provide the budding entrepreneurs with capital support they need to set up their business and also direct them on a path to success. However much this venture might look promising, only time will tell if the government is successful in keeping their end of the promise.