Seed Capital Fund Scheme (J&K Self Employment Scheme)

What is the Seed Capital Fund Scheme?

Seed Capital Fund Scheme is a self-employment scheme of the Government of Jammu and Kashmir, implemented by the J&K Entrepreneurship Development Institute (JKEDI) under the Industries and Commerce Department. The scheme runs as a component of the Sher-e-Kashmir Employment and Welfare Programme for Youth (SKEWPY), and it has been in operation since 1 March 2011.

The design is straightforward. A young unemployed resident of Jammu and Kashmir who wants to start a business puts up a project. JKEDI provides non-refundable seed capital equal to 35 per cent of the project cost from the Entrepreneurship Development Fund. A bank; most commonly J&K Bank: provides the remaining 65 per cent as a loan. The two components are disbursed in the 65:35 ratio, phased as set out in the applicant's Detailed Project Report.

That 35 per cent is the heart of the scheme. It is a grant, not a loan. It is never repaid, and because it counts towards the project cost, the borrower usually contributes no margin money of their own unless the project cost exceeds what the seed capital and the bank loan together can fund.

Who the scheme is aimed at

Seed Capital Fund Scheme finances trained, registered first-generation entrepreneurs sponsored by JKEDI to set up environment-friendly ventures in the core economic areas of Jammu and Kashmir. The phrase "first-generation" matters: the scheme exists to bring people into business who have no family enterprise behind them.

How much seed capital can you get?

The seed capital is always 35 per cent of the project cost, but the rupee ceiling depends on the applicant's education:

A graduate whose project costs Rs 10 lakh therefore receives Rs 3.5 lakh as seed capital to 35 per cent, comfortably inside the Rs 5 lakh ceiling. A graduate whose project costs Rs 20 lakh receives Rs 5 lakh, because the ceiling bites before the percentage does. Reading the two rules together is the single most useful thing an applicant can do before finalising the project cost in the DPR.

What are the loan terms?

The 65 per cent bank finance component carries its own conditions:

• Loan ceiling: up to Rs 25 lakh where the loan is covered by CGTMSE guarantee, and up to Rs 65 lakh where collateral property is offered.
• Interest rate: the 3-year MCLR plus 0.50 per cent, fixed, as published by J&K Bank for the scheme.
• Moratorium: up to 2 years before repayment begins.
• Repayment period: 5 years for undergraduates, 6 years for graduates and postgraduates, 7 years for groups, and 8 years for projects involving sophisticated equipment.
• Collateral: generally nil for loans up to Rs 10 lakh, rising with the loan size to 100 per cent of property valuation for amounts above Rs 50 lakh.
• Processing charges: none.
• Primary security: hypothecation of the assets created, and mortgage of the lease deed where applicable.

Who is eligible for the Seed Capital Fund Scheme?

You can be considered if:

• You are an unemployed resident of Jammu and Kashmir and can produce a domicile certificate.
• You are between 18 and 40 years of age. The upper limit is 42 years for a person with at least 40 per cent disability.
• You hold at least a 10+2 qualification.
• You are registered with your District Employment and Counselling Centre.
• You are setting up a new venture as a first-generation entrepreneur, in one of the eligible activity areas.

You cannot apply, or are not eligible, if:

• You or your existing unit have already availed any incentive or subsidy under any scheme of the Government of India or the Government of Jammu and Kashmir. This is an absolute bar, and it is the exclusion that trips up the most applicants.
• You are below 18 or above 40 years, outside the disability relaxation.
• You have less than 10+2 education.
• You are not registered with the district employment and counselling centre.
• You are in regular employment, since the scheme is for the educated unemployed.
• You are a resident of another state or union territory. Seed Capital Fund Scheme is confined to Jammu and Kashmir.

Which businesses qualify?

Eligible activities under the scheme span the services, manufacturing and agri-allied sectors, and include manufacturing units, food processing, horticulture, handloom and handicrafts, poultry, dairy, computer training centres, tourism ventures, e-commerce, software development and import-export businesses.

What documents are required?

How to apply for the Seed Capital Fund Scheme

1. Register with your District Employment and Counselling Centre if you have not already. Registration there is a precondition, not an optional step.
2. Visit the nearest JKEDI office. Applications under the Seed Capital Fund Scheme are made offline at JKEDI offices located across Jammu and Kashmir. Carry your domicile certificate, educational certificates, age proof and employment registration card.
3. Submit the application with a Detailed Project Report. The DPR must set out the activity, the total project cost and the phasing of expenditure, because disbursement of both the seed capital and the bank finance follows that phasing.
4. Complete the JKEDI entrepreneurship training. JKEDI finances trained entrepreneurs, so screening and training precede sponsorship rather than follow it.
5. Receive JKEDI sponsorship to the financing bank. JKEDI forwards the approved project to the bank, usually J&K Bank, which appraises the 65 per cent loan component.
6. Complete the bank formalities; loan documentation, security or CGTMSE cover as applicable, and account opening. There are no processing charges.
7. Draw the funds in phases and set up the unit as described in the DPR. The seed capital and the loan are released in the 65:35 ratio according to the phasing, not as one lump sum.

How to check the status of your application

1. Follow up at the JKEDI office where you filed the application, quoting your application or registration reference.
2. Once JKEDI has sponsored the case, follow up with the branch of the financing bank to which the project was sponsored, for the loan appraisal stage.
3. Ask specifically which stage the file is at, screening, training, sponsorship, bank appraisal, sanction or disbursement — because the remedy is different at each stage.

Why applications get rejected

• An earlier government subsidy was availed, by the applicant or by an existing unit in their name. This disqualifies the case outright.
• No employment exchange registration, which is a stated precondition.
• Age outside 18 to 40, without a valid disability certificate supporting the relaxation to 42.
• Education below 10+2, or certificates that do not support the seed capital ceiling claimed.
• A weak or unrealistic Detailed Project Report, costs that do not add up, or an activity with no demonstrable market, which fails at bank appraisal even after JKEDI sponsorship.
• Insufficient security where the loan sought exceeds the CGTMSE-covered ceiling of Rs 25 lakh and no collateral is available.

Most of these are fixable before filing. Getting the employment registration done, matching the project cost to the seed capital ceiling for your qualification, and building a DPR that a bank will accept are the three steps that decide most cases.

Where to get help and raise a grievance

Applications, queries and grievances under the Seed Capital Fund Scheme are handled by JKEDI through its offices across Jammu and Kashmir, with the official portal at jkedi.org. Loan-stage grievances, delay in appraisal, sanction or disbursement; should be raised with the branch manager of the financing bank first, and escalated through that bank's own grievance channel.

Seed Capital Fund Scheme carries no processing charges, and no agent or intermediary is authorised to charge a fee for getting an application sponsored or a loan sanctioned.