Startups urge DoT not to stop DCIS scheme midway

Startups benefiting from the Digital Communication Innovation Square (DCIS) scheme have urged the government not to stop it midway. The Department of Telecommunications is considering closing down the scheme which supports research, development, product design, and intellectual property (IP) creation in the telecom sector.

In a letter to the telecom secretary Neeraj Mittal, close to two dozen startups have said the continuity of scheme and financing is essential as the R&D journey cycles are fairly long. They have pointed to the lack of interest from investors to fund projects. Moreover, they claim that while the majority of the startups is not self-sustaining yet, they are working on promising solutions.

Startups that FE spoke to said they have not even received 20-40% of their grants under the scheme despite reaching the relevant milestones. According to industry executives, one of the reasons DoT is considering a closure and not released pending grants as a few startups have turned profitable.

“We are waiting for a tranche release for the last six months. On December 23, the review was completed. Policy/management change should not lead to redoing the review completely from the beginning,” one startup founder said on the condition of anonymity.

According to the startups, in the last three years, they have been able to develop proof of concepts of their solutions, conducted quality research to better their solutions, and in fact many have generated their own IPs in the telecom solutions from the grants received through the scheme.

“We request that the scheme must not be discontinued midway, as product development activities of more than 50 companies will be hampered and the companies will feel disheartened and discouraged from working on government-led R&D schemes in future,” said Rakesh Bhatnagar, director general, Voice of Indian Communication Technology Enterprises (VoICE).

According to DoT officials, the government will take a decision on the same after discussions. The plan is to accommodate more companies and already there is a telecom technology development fund (TTDF) in place, an official said.

DCIS, which is the first R&D financing scheme for telecom startups, came into effect in 2021 and was meant to stretch across five years. The scheme had 66 startup beneficiaries, which included domestic telecom solutions providers such as Astrome, Lekha Wireless, Coral Telecom, Amantya Technologies, Signaltron, Resonous, among others, in the last financial year ended March. Under the scheme, the government was offering a funding of up to Rs 50 lakhs for startups and Rs 2 crore for micro, small and medium enterprises, which could go up to Rs 10 crore on the basis of the project.

As per the scheme documents, it had a budgetary outlay of Rs 124 crore, and Telecom Centres of Excellence (TCOE) India was the implementing agency.

The DCIS website shows that in FY24, the approved grant was Rs 47 crore, and funds released were Rs 19 crore. In FY23, the approved grant was Rs 51.5 crore and funds released were Rs 36.2 crore. In FY22, the government provided Rs 6.6 crore worth grants to the startup beneficiaries under the scheme.

“DCIS has been the first initiative of DoT that has enabled a product innovation ecosystem in the country and we hope that DCIS would continue to accelerate Product start-ups in the country,” a startup founder said.

To support rural-specific communication applications as well as promote technology ownership and indigenous manufacturing, DoT currently has a TTDF scheme.

In the interim Union Budget, the government also announced a corpus of Rs 1 trillion to promote innovation and startups. The amount will be used to fund research, with interest-free loans for 50 years. Financial Express