Govt Has No Plans To Introduce Legislation To Regulate Crowdfunding

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There is no suggestion in it. Ministry of Corporate Affairs: Rao Inderjit Singh, Minister of State for Corporate Affairs

The term “Crowdfunding” has not defined by the Companies Act, 2013 provisions

Crowdfunding has been one of the less well-known alternatives for financing

The central government does not have a plan to pass legislation raising funds for crowdfunding according to Rao Inderjit Singh, Minister of State for Corporate Affairs.

“There are no plans to make such a plan from The Ministry of Corporate Affairs,” Singh informed the Lok Sabha on Monday.

The minister also clarified that’Crowdfunding’ is not defined by the rules in the Companies Act, 2013. He made this statement while responding the question of whether raising funds for privatecompanies, not listed in the market, using crowd funding is common practice that is permitted in India.

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Therefore that the government doesn’t have a detailed record of the total amount of financing that was that was conducted via this route for non-listed private companies in India.

Although the Indian startup scene has grown exponentially over the past couple of years, crowdfunding has been regarded in the background as one of the least well-known options for funding. In many instances retail investors in search of other investment options join a platform, read the business model, and then invest in the company that they prefer.

There are various kinds of crowdfunding like peer-to peer lending, reward-based and donation-based. However, the legality of equity crowdfunding in India is a matter of debate.

Indiegogo, SeedInvest Technology, Mightycause, StartEngine, GoFundMe, Patreon, GripInvest, ImpactGuru are just a few of the most well-known crowdfunding platforms for startups.

According to an Satistia report the size of the market for crowdfunding in India is projected to be $6.91 Mn by 2022. The market is expected to grow to $6.42 Mn, with an annual rate of growth (CAGR 2022-2027) of -1.46percent . The average amount of funding per campaign for the Crowdfunding segment is estimated to amount to $4.52K in 2022.

The year before, during Covid19 an organization of founders of startups named Gurgaon Entrepreneurs launched a crowdfunding campaign with the intention of acquiring oxygen concentrators. The group gathered INR 3 crore to purchase oxygen concentrators in China.

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