Govt Has No Plans To Introduce Legislation To Regulate Crowdfunding

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There isn’t any such plan in The Ministry of Corporate Affairs: Rao Inderjit Singh, Minister of State for Corporate Affairs

The term Crowdfunding is not defined in the Companies Act, 2013 provisions

Crowdfunding is still one of the less well-known alternatives for financing

The government of India has no 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 officials from the Ministry of Corporate Affairs, Singh informed the Lok Sabha on Monday.

Minister also clarified that the term Crowdfunding is not defined in the rules in the Companies Act, 2013. He made this statement while responding to the question whether fund raising by companies that are private and not listed through the crowd funding is a common practice that is permitted in India.

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Therefore it is not the case that the government have any information about a history of the total amount of financing that was that was conducted via this route for private, non-listed businesses in India.

Although the Indian startup community has seen a tremendous growth over the last few years, crowdfunding is still seen among the least widely used options for financing. In many instances retail investors in search of alternatives to investing, join a platform, read the business model, and then invest in the company they like.

There are various kinds of crowdfunding like peer-to peer lending, reward-based or donation-based. However, the legality of equity crowdfunding in India is in doubt.

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

According to an Satistia report the size of the market for crowdfunding in India is projected to reach $6.91 Mn by 2022. It is predicted to grow to $6.42 Mn, with an annual rate (CAGR 2022-27) 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 from startups called Gurgaon Entrepreneurs launched a crowdfunding campaign with the intention of acquiring oxygen concentrators. The group raised INR 3 crore to purchase oxygen concentrators in China.

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