• The Product Development Budget (PDB) is an estimate of the resources required for bringing a product to deployment stage, covering capital and operating expenditures, in accordance to the guidelines issued by DIO. The PDB is the overall project cost including the SPARK Grant and Matching Contribution (Cash, In-Kind and Past Expenditure). The PDB is divided in three broad heads – Prime Costs, Primary Overheads and Secondary Overheads.

• Annexure Y (Product Development Budget - Categories of Expenditures) of SPARK Grant agreement defines all three heads alongwith the limits under each head for SPARK Grant as well as Matching Contribution. Category wise allocation of Matching Contribution is NOT applicable if:  TMC is > 2 times the SPARK Grant approved, and  Cash part of matching contribution is equal to or greater than 2 times the SPARK Grant approved

Since the focus of the framework is to facilitate creating of prototypes and bringing of products/technologies to market (Defence or otherwise), applicants will be encouraged to spend on:

1. Research & Development
2. Prototyping
3. Pilot Implementation
4. Market Assessment

Detailed fund utilization guidelines will be provided to the selected applicants.

•  Startups, as defined and recognised by DPIIT, Ministry of Commerce and Industry, Govt Of India.
•  Any Indian company incorporated under the Companies Act 1956/2013, primarily a Micro, Small and Medium Enterprises (MSME) as defined in the MSME Act, 2006.
•  Individual innovators are also encouraged to apply (research & academic institutions can use this category to apply)

• The project cost is the total cost of the project envisioned, including the SPARK Grant and the Matching Contribution. Matching Contribution (MC) shall mean the cumulative contribution in the form of Cash, In-Kind, and Past Expenditures, made by the SPARK Grantee in accordance to the guidelines of DIO.

• Past Expenditure Matching Contribution corresponds to the monetary value (based on fair market value for intangibles or competitive market prices for others) of all expenditures incurred by the SPARK grantee company in the past specifically related to technology / product development activities, which have been showcased during the SPARK Grant selection process. Point to Note is that actual expenditure on the Product Development starts when PDS defines the problem and SPARK Grant Agreement is signed. Past Expenditure partially covers some of the CAPEX / OPEX used for core product development activities between HPSC and agreement signing period as well as CAPEX upto a year before the HPSC.
• The Past Expenditure should be less than 20% of the MC for the project.

• OPEX incurred before the selection of the winner, with broad limits being adhered to and upto a reasonable proportion of Matching Contribution (less than 20%) may be considered. This form of Matching Contribution can only form a part of Prime Costs, i.e. it should not include any component that would normally be covered in Primary Overheads or Secondary Overheads. 
• Point to note is that iDEX does not endeavour to compensate all technology development activity of the startup. It only tries and cover some of the expenses occurred in developing the technology which will be utilised for creating the product as defined by PDS.
• Past Expenditure needs to be ascertained by PDs/PEs at the time of preparation of Technical Appraisal and supporting documents verified at the completion of Milestone 1.

• In-Kind Matching Contribution corresponds to the monetary value (based on fair market value for intangibles or competitive market prices for others) of all expenditures incurred by the SPARK Grantee company either on actuals or accruals. Note that it is recommended that only upto 25% of the Salary for Founders/Promoters shall be included in the Product Development Budget under the Primary Overheads. The emoluments for the founder will be decided by DIO before signing the agreement.
• It is the responsibility of the SPARK Grantee to prove beyond reasonable doubt that all artifacts or IP generated in the past shall be applied or reused effectively. The Grantee is required to submit the documentary evidence to DIO as and when requested by DIO.

• Any amount linked with Equity of the company cannot be considered as Matching contribution or In-Kind.
• Amount linked with company's own business purpose and not directly related to iDEX-DIO project cannot be considered as In-Kind matching.

• Founders/ promoters who are working employees of the company and are involved in the iDEX Product Development process.
• Founder/ promoter who is contributing to iDEX Product Development activities but are not employees of the company.
• If the said individual is not drawing his salary in cash, then a liability needs to be created in the audited balance sheet of the financial year under consideration.

• Current practices ensure that following ceiling limit is under practice: Salary of promoter/founder/core team has been capped at max Rs 2 Lakh per month each, except in exceptional cases for Core Team, for a maximum of two promoters/founders per startup. This overall limit will be in vogue even if the promoters/founders have more than one ongoing project with iDEX. Hence max Rs.50,000/- per month each for two promoters at 25% of pay will be admissible even if they are undertaking more than one project with iDEX. The consideration of valuation of promoter/founder owned IP would be decided based on criticality in the project and on a case-to-case basis at the time of negotiation of the agreement for Matching Contribution. The amount admissible as MC for IP may be capped at 20% of the total Matching contribution or the amount Rs. 25 Lac whichever is lower.
• PDB at the time of signing of the agreement is tentative which may undergo multiple changes during the course of Product Development. In all cases, SPARK Grant will remain up to Rs.1.5 Cr/10 Cr or half (50%) the product development budget whichever is lower.

• Lab utilization cost has been accepted as part of MC in Kind in case where infrastructure and manpower are not owned by the startup. An agreement with the Lab owner/management and reasonable cost for utilization has been accepted as proof.
• In case where the lab infrastructure is owned by the startup themselves as on the date of the SPARK agreement, a cost equivalent to the rental cost may be accepted as MC in Kind based on the fair and competitive valuation for the same for the duration of the need. The valuation may be based on equipment, physical infra and manpower needed. The requirement and duration of the need may be confirmed by the PI and valuation from an independent agency may be provided by the startup themselves at the time of negotiating the agreement for Matching Contribution.
• For the valuation of the rental cost of Lab equipment, furniture and fixtures (except land/ building), depreciated percentage value to be considered. However, notional depreciation will be accepted in cases where the equipment/ item is already depreciated. It must be noted that the total rental value cannot exceed the total cost of Lab.
• Startup may also explore the availability of such facility with iDEX registered PIs if the same is not owned by them.

• In a PDB, minimum 75% of SPARK Grant should be allocated to the Prime Costs and maximum 25% of SPARK grant may be allocated to Primary Overheads. No fund is allocated to Secondary Overheads from SPARK Grant.

• Matching Contribution (MC) Cash is one of the components of MC. Matching Contribution cash also follows the same category wise percentage as SPARK Grant for Prime Cost and Primary Overhead. Maximum 5% of MC Cash may be used for Secondary Overhead expenses. Within the Matching Contribution, at least 50% of Cash Contribution is mandatory.

• Core team salaries are a part of SPARK Grant/ MC Cash portion of Matching Contribution and is considered under Prime Cost. The salaries should be based on reasonable estimation and market rates.
• In case of In-Kind, if salaries are not paid but salary slips for an individual are generated, they create a legal liability on the company. All these payments shall be verified by External Audit at the completion of Milestone 3 and at the time of disbursement of Tranche-5.
• Past expenditure is limited to prime costs.
• Core team for Product development is expected to be assembled after the conduct of HPSC, hence salary of core team may be considered after being raised till signing of SPARK Grant Agreement.

• Up to 25% of the per month salary for founders / promoters may be included in PDB under Primary Overhead.

• Capital Equipment may be purchased as a part of the project. In case already purchased and is in use before the Agreement, it may be included in the PDB based on guidelines set by DIO. Old/New equipment will be included based on its amortized/depreciated costs.

• Use of existing labs is encouraged to ensure efficient use of funds. Actual expenses paid to use such a lab would be part of primary overhead. For any such expenditure to be considered as part of in Kind expense, a formal agreement between the parties is needed.

• Estimates in terms of proportionate expenditure need to be in line with the project budget of each individual grant.

• The salary may be claimed preferably from only one project and on pro-rata basis if involved in multiple projects.

• The amount in all circumstances will be paid out of exclusive SPARK Grant Account. The exchange rate will be of date when actual transaction has taken place and not the date of delivery of product.

• Yes IP valuation of product prototype can be considered as In-kind expenditure based on valuation performed by a registered valuer. The consideration of valuation of IP would be decided based on criticality in the project and on a case-to-case basis at the time of negotiation of the agreement for Matching Contribution. The amount admissible as MC for IP may be capped at 20% of total Matching contribution or the amount Rs. 25 Lac whichever is lower.