The Telangana government on Friday began work on T-Hub, which promises to be India's biggest incubation facility.

Telangana Information Technology Minister K Tarakarama Rao laid the foundation stone for the facility at the International Institute of Information Technology (IIIT) at Gachibowli in Hyderabad.

Expected to be operational by June this year, it would be the largest centre for start-up and entrepreneurship activities in the country.

The T-Hub is being set up in collaboration with IIIT Hyderabad, the Indian School of Business (ISB) and the NALSAR University of Law.

While NALSAR would help in intellectual property and related areas, ISB and IIIT would provide business mentoring and technology mentoring respectively.

Phase I coming up at IIIT at a cost of Rs.35 crore will be spread over 60,000 square feet and can accommodate 400 start-ups by 2017.

In the second phase, to commence 2017 onwards, the centre would have its own campus of over 300,000 square feet. To be built at an estimated cost of Rs.200 crore, it will house various stakeholders like start-ups, investors and service providers.

The second phase will come up on three acres of land already identified by the government in Raidurgam near Hitec City, the IT hub.

Rao said Union Minister of State for Science and Technology YS Chowdary responded positively to the request for support from the central government for the second phase.

The hub will incubate 1,000 start-ups by 2020.

It is expected to generate annual employment for 3,000 people by 2017 and 10,000 by 2020.

The minister said the fund corpus of T-Hub would be Rs.300 crore by 2017 and would be doubled to Rs.600 crore in three years.

"We are planning a venture capital fund. We are in discussion with various venture fund groups and evolving a model wherein the government may directly contribute some money but expect more from private players to make adequate funds available for start-ups," he said.

To be headed by Harpareet Singh, secretary (IT) of the government of Telangana, the T-Hub will have B.V.R. Mohan Reddy, chairman of Cyient, Sashi Reddy of Sri Capital and C P Gurnani, chairman and managing director of Tech Mahindra, as directors.

The minister said this was one of the key initiatives of the government to make Telangana the most preferred technology investment destination in the country. He was confident that the T-Hub would make Hyderabad the start-up capital of India.

T-Hub will be a platform to accelerate the growth of technology start-ups in Hyderabad by providing them an ecosystem of quality infrastructure, mentors and fund managers.

The facility will cater to three categories of start-ups - launchpad, accelerator and propeller.

Mohan Reddy said new entrepreneurs provided more employment opportunities than existing companies.

IIIT director P J Narayanan and NALSAR vice chancellor Faizan Mustafa also spoke.