The railways will invest in startups to get a headstart in procuring innovations directly from them with a promise of up to Rs 1.5 crore of seed money for innovative technological solutions for the national transporter, according to a policy paper.

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The Indian Railway Innovation Policy will identify and enable Indian innovators to engage with the railways for developing cost-effective, implementable, scalable solutions and functional prototypes for the national transporter, officials said.

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"Since there is a major constraint of capital inadequacy in the startup ecosystem, particularly in the seed and 'Proof of Concept' developmental stage, this policy aims at providing the necessary seed fund support of up to Rs 1.5 crore (on matching contribution basis) to the startups that show the capability, intent and promise to produce functional prototypes, based on new innovative concepts, for potential use of the Indian Railways," a senior official said.

One of the major objectives of the policy would be to leverage new innovative technologies, developed by entrepreneurs and startups, for improving operational efficiency and safety on the railway system, the officials said.

The eligible organisations or beneficiaries of the support will include any Indian company incorporated under the Companies Act 1956/2013, primarily micro, small and medium enterprises (MSME) as defined in the MSME Act, 2006, and individual innovators. The policy also encourages research and development institutions to apply for the grant.

The innovators can apply through a dedicated portal, which will be launched later this month, and once chosen for the grant, its disbursement shall be linked to pre-decided milestones.

The funding scheme has been fixed on a cost-sharing basis in equal proportions -- 50:50 by the Indian Railways and the innovator. The maximum amount of grant will be Rs 1.5 crore per innovator, even in cases where the total project cost exceeds Rs 3 crore, the officials said.

Under the policy, the innovator will exclusively retain the ownership of the intellectual property rights generated under the project. However, it can be extended to include any associates as joint owners only after obtaining a prior approval from the Railway Board, the officials said.

The railways shall retain the government purpose rights (GPRs), which shall be an exclusive, transferable, irrevocable licence to use the IP (intellectual property) for internal consumption or manufacture.

The railways may use the GPRs to manufacture either directly or through sub-contractors for its use. In this case, the government shall pay a royalty fee for the use of GPRs in intellectual property or technology or product.

"With innovation through technology becoming more and more significant in the railways, this policy would mean that we would have innovators vying to make products just for our use. They will be the best and the latest. It is a win-win situation for both the railways and the innovators. While we get the latest technology, they will get the railways as a client," said an official.