The Ministry of Industry, Commerce and Supplies is yet to finalise the working procedures of the subsidized loan scheme for startups planned for this fiscal year after it failed last fiscal year.

Insiders say that nearly six months into the current fiscal year, the government has yet to draft the working procedures for the scheme.

In the last fiscal year, the Industry Ministry approved the Start-up Enterprises Credit Fund Working Procedures. However, the selected start-ups could not get loans as the Department of Industry did not receive the pledged budget. A budget of Rs250 million had been pledged for the programme in the last fiscal year, but the government did not provide the money.

“The Start-up Enterprises Credit Fund Working Procedures has been revised now. It may take two weeks to be approved,” said an official at the Industry Ministry.

In the current fiscal year that started in mid-July 2022, the government continued the scheme by allocating a budget of Rs250 million, he said.

“We may re-invite proposals or include the already shortlisted start-ups under the new provision,” said the official. “We are discussing it.”

This year, the subsidized loan scheme is to be executed by the Industrial Enterprise Development Institute.

In the last fiscal year, the Department of Industry implemented the subsidised loan scheme.

Addressing the CNIYEF Nepal Start-up Fest 2023 on December 23, Industry Minister Ramesh Rijal said that to promote innovative enterprises and start-ups, his ministry would fully support the policy that is introduced to promote start-ups.

Rijal said that the draft of the working procedures has been in the final stage for approval.

With the implementation of the working procedures, a legal provision will be made to provide the start-up entrepreneurs with subsidised loans of up to Rs2.5 million at 3 percent interest.

On March 30 last fiscal year, the Industry Department invited start-ups with innovative knowledge, ideas, skills and capacity to submit proposals by April 19 of the same year.

The department selected 212 proposals out of the total 425. It took more than a month to evaluate the proposals that had passed the first screening. But the department did not receive the pledged budget allocation of Rs250 million from the Industry Ministry last fiscal year.

The department even requested the allocation of human resources with the Ministry of Industry, Commerce and Supplies for a temporary period to fast-track the process last fiscal year. But nothing was done.

The officials involved in shortlisting the start-ups at the Industry Department said as the last year’s procedures had not clearly defined innovative business ideas, they are working to prepare standard operating procedures to evaluate the applications that have been shortlisted.

Start-ups, meanwhile, have criticised the government for making an empty promise.

The plan, as originally announced by the National Planning Commission in May 2020, was to provide Rs5 million each at 2 percent interest. The planning commission, which creates the country’s development plans and policies, had received more than 600 proposals, but the scheme unravelled.

Start-ups say the government has been duping them since the beginning.

Some start-up entrepreneurs who applied for the subsidized loan claimed that they never received the money, and asserted that despite the annual announcement of such a scheme, it never really materialises.

Ramesh Timilsina, co-founder of home inspection company Skill Sewa, told the Post in a recent interview that they had submitted a 60-page proposal to the National Planning Commission seeking the subsidised loan.

But the scheme was a non-starter, Timilsina had said, adding that they stopped applying after that.

The entrepreneurs said that it’s a political stunt rather than help for start-ups.

Start-ups say that failure to implement programmes and projects to promote innovation is the result of announcing the scheme without any proper internal preparations.

This shows that the government plans are half-baked and the decision-makers lack understanding of start-ups, they say.

The fast turnover of government officials has also hindered the proper implementation of the programme.

The loan scheme for young entrepreneurs was introduced in 2018 by the KP Sharma Oli administration to encourage self-employment.

The government then began to draw up work procedures to distribute the funds. It’s been years, but the work procedures remain a work-in-progress.

In October 2021, the then-finance minister Janardan Sharma said the work procedures would be implemented soon to help start-ups and innovators.

The budget for the fiscal year 2021-22 had announced issuing Rs2.5 million in seed capital at 1 percent interest to encourage youth entrepreneurs.

Banks and financial institutions are confused about making investments because of the absence of a clear definition of a start-up, according to young entrepreneurs.