Two States Now Want to Be Your First Customer: UP’s Startup Procurement Scheme and Karnataka’s Government First
Uttar Pradesh approved a Startup Procurement Scheme on 9 October 2026, and Karnataka’s Government First initiative is taking pilot proposals until 23 October. Neither is a grant. Both are a way to get a paid government order.
Two state governments moved on the same idea within two weeks: instead of giving startups money, give them a customer. Karnataka launched its Government First initiative in September, and the Uttar Pradesh cabinet cleared the Startup Procurement Scheme-2026 on 9 October 2026.
If you sell software, hardware or services that a state department could use, this is worth understanding properly, because the money arrives as a paid order rather than a grant.
Uttar Pradesh: the Startup Procurement Scheme-2026
The UP cabinet, chaired by Chief Minister Yogi Adityanath, approved the scheme on 9 October. Its aim is to give eligible startups access to the state’s market and to encourage government departments and agencies to use their products, services and solutions. What the approval coverage confirms:
- A dedicated UP Startup E-Marketplace will list products, services and solutions from eligible startups so departments can buy them.
- The UP Startup Mission will set up, run and maintain the marketplace.
- Departments will pay from their own approved budget provisions.
- Eligible innovative enterprises registered under the Uttar Pradesh Startup Policy can seek work orders from departments.
The numbers: reported in draft, not confirmed after approval
The approval reports we reviewed contain no amounts. Earlier, on 7 September, KNN reported what the draft contained, and one outlet repeated similar figures after approval. Treat these as the likely shape of the rules, not as settled terms:
- Departments could buy directly from registered startups, without inviting tenders, up to ₹50 lakh. The draft contrasted this with today’s limit of ₹25,000 for a purchase without a tender.
- For emerging-technology startups in areas such as deep tech, space, quantum computing, blockchain, agri-tech, med-tech, green energy, AI and drones, the direct-purchase limit would be up to ₹1 crore.
- Registration on the StartinUP portal would be the entry condition.
- Departments could earmark about 0.5% of their annual budgets for innovative products from startups.
The final government order will say which of these survived. Until you have read it, don’t quote a ceiling to your sales team.
If you are not yet registered, start there: the state’s programme is on our page for StartinUP, Uttar Pradesh.
Karnataka: Government First
Karnataka’s approach is more structured and already open. The initiative sits under the state’s Startup Policy 2025–30, aims to support about 100 startups over three years with a total outlay of ₹25 crore, and is run by the Karnataka Innovation and Technology Society (KITS).
- What you get: a direct work order of up to ₹25 lakh to deploy your solution in a government department. The figure is a ceiling, not a fixed amount. It is a paid pilot, not a grant, and it is equity-free and milestone-based.
- Two routes in: respond to a problem statement a department has published, or propose your own solution.
- No prior government experience required.
- Quarterly cycles: proposals received in a cycle are evaluated together, then selected ones go through technical evaluation before approval for a pilot.
The current call closes on 23 October 2026
The open problem statements cover urban water (BWSSB) and citizen services (Praja Seva). They include AI to cut non-revenue water, treated wastewater reuse planning, GIS-based revenue intelligence, a digital twin for water management, AI-based grievance redressal, a unified AI citizen call centre and AI-enabled e-Office workflows.
Who can apply, based on the programme details on our page:
- A Private Limited company, OPC, registered partnership firm or LLP, and registered with KITS.
- An independent entity, not a subsidiary, spin-off or division of another company.
- Non-deeptech startups: within 10 years of incorporation and turnover not above ₹200 crore. Deeptech startups: within 20 years and not above ₹300 crore.
- A solution at TRL 7 or higher, ready to be tested in a real operating environment.
The process is documents and a pitch deck first, then an in-person pitch to an expert panel, then a committee selection for each problem statement. The full details and apply link are on our page for the Karnataka Government First Initiative, and the official application is on the Karnataka government portal.
Why a work order can beat a grant
A grant pays you for having a good idea. A work order is a government department saying it will use your product, which gives you a reference customer, revenue and a case study that opens the next department. The trade-off is that you are now delivering to a government buyer’s timelines.
What to do this month
- Karnataka-eligible and TRL 7+? Read the problem statements this week. The call closes on 23 October.
- Selling in Uttar Pradesh? Register on StartinUP and watch for the marketplace onboarding and the government order.
- Build one page per department. A single paragraph on the problem, your pilot scope, what it costs and how success is measured is what evaluators read first.
Sources: Free Press Journal (agency copy, 9 October 2026) on the UP cabinet decision; KNN (7 September 2026) on the draft procurement rules; YourStory (September 2026) and the Karnataka programme details on our page for Government First.
