Archive · 13 Sep 2026
ISB Professor Urges Startup Equity Guarantees Over Debt
Prasanna Tantri thinks the government should support some start-up investments instead of mainly guaranteeing loans.
New companies can be risky and may not have enough money for regular loan payments.
He said taxpayers could lose money if some guaranteed investments fail.
However, he believes the losses could be smaller than the cost of a subsidy scheme for nonresident Indians.
He also thinks successful start-ups could create jobs and encourage innovation.
Tantri criticized recent measures involving foreign-currency borrowing and FCNR(B) deposits.
He said these measures brought about $136 billion in borrowed dollars into India.
He warned that India’s external debt might increase to nearly $900 billion.
A sudden need to repay many dollars at once could put pressure on the rupee.
Prasanna Tantri said future government guarantees should support equity investments in innovative start-ups and small firms.
He argued that debt guarantees may not suit risky new businesses unable to manage fixed repayments.
Tantri warned that FCNR(B) deposits, external commercial borrowings and other foreign-currency loans have mobilised about $136 billion.
He said India’s external debt could rise from roughly $765 billion to nearly $900 billion.
Tantri identified clustered dollar outflows as a major risk if geopolitical or market conditions deteriorate before repayments are due.
- Who
- ISB finance professor Prasanna Tantri, with concerns involving the Reserve Bank of India’s measures.
- What
- Tantri proposed partial government guarantees for equity investments in innovative start-ups and small firms, while warning about risks from foreign-currency borrowing.
- When
- Tantri raised the start-up proposal on September 13, 2026, and discussed the FCNR(B) concerns on September 3.
- Where
- The proposals and warnings concern India and were discussed in a series of posts on X.
- Why
- He said equity support could promote innovation, investment and jobs, while foreign-currency borrowing could create repayment and rupee-pressure risks.
Startup Equity Guarantees
Debt Guarantees and Current Measures
Suitable support for new firms
Startup Equity Guarantees
Tantri says risky, innovative firms may be unable to support fixed debt repayments, so partial equity guarantees could be more suitable.
Debt Guarantees and Current Measures
The current approach relies on debt guarantees, which Tantri says does not work well for new and innovative firms.
Risk to taxpayers
Startup Equity Guarantees
Taxpayers could lose money on some equity guarantees, but Tantri says total losses may be smaller than the cost of the NRI subsidy scheme and could bring economic upside.
Debt Guarantees and Current Measures
Debt guarantees and the NRI subsidy approach expose public finances to risk without, in Tantri’s view, offering the same potential benefits for innovation, investment and jobs.
Managing supported companies
Startup Equity Guarantees
Tantri favors having respected corporate leaders manage guaranteed funds rather than giving the government a board seat.
Debt Guarantees and Current Measures
He rejected a government board seat and criticized a SIDBI-type model in which the government tries to invest directly.
- Professor
- Prasanna Tantri, an ISB finance professor
- Proposed guarantee
- Partial guarantees for equity investments in innovative start-ups and small firms
- Foreign-currency funds
- About $136 billion mobilised through FCNR(B) deposits, external commercial borrowings and other foreign-currency borrowing
- Potential external debt
- Could rise from roughly $765 billion to nearly $900 billion
- Main repayment concern
- Large, scheduled dollar outflows could become concentrated and trigger early market exits
- Government involvement
- Tantri opposed giving the government a board seat and suggested respected corporate leaders manage guaranteed funds