Startup India

CONTEXT:

India is a country of a billion entrpreneurs. A strong sense of ingenuity and the finding of unique solutions to daily problems is ingrained in the India psyche. We can not only create opportunities for ourselves but also for many others. Entrepreneurship in India is about innovation, creatvity and job creation. It is about creating the future of India. The main goal of Startup India is: 

a) Make India the Startup Capital of the World
b) Create world class entrepreneurs and companies
c) Support the next economic wave of upcoming startups and compnies

SUPPORT MECHANISM:
  • Government recognition for startups to qualify them for benefits and tax exemptions
  • Financial support and incentives for startups
  • Ecosystem development, industry-academia partnerships and incubation facilities 
IMPLEMENTING AGENCIES:
  • Department of Industrial Planning and Promotion, Ministry of Commerce and Industry
  • NITI Aayog
  • Ministry of Electronics and Information Technology
  • Department of Science and Technology, Ministry of Science and Technology
  • Ministry of Finance
  • Small Industrial Development Bank of India (SIDBI)
ELIGIBILITY:

 An entity shall be considered as a ‘startup’ if it meets the following criteria-

  1. a)  Up to five years from the date of its incorporation/registration. After 5 years of registration or incorporation, the entity will cease to be a startup. Entity here is a Privite Limited Company as defined under the Companies Act 2013. Registered Partnership as defined under the Partnerships Act 1932 or Limited Liability Partnership as defined under Limited Liability Partnership Act 2002. 
    b)  If its turnover for any of the financial years has not exceeded Rupees 25 crore. If tunrover exceeds 25 crore, the entity ceases to be a startup. Turnover as defined in the Companies Act 2013
    c)  It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. An entity is considered to be working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property if it aims to develop and commercialize a
     new product or service or process; or a significantly improved existing product or service or process, that will create or add value for customers or workflow.
    d) Such entity should not be formed by splitting up or reconstruction of an existing business
     

In order to obtain tax benefits, a startup as per the above definition shall be required to obtain a certificate of an eligible business from the Inter-Ministerial Board of Certification consisting of:

  1. a)  Joint Secretary, Department of Industrial Policy and Promotion
    b)  Representative of Department of Science and Technology
    c)  Representative of Department of Biotechnology

The process of recognition as a ‘startup’ shall be through mobile app/portal of the Department of Industrial Policy and Promotion. Startups will be required to submit a simple application with any of following documents:

  1. a)  a recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator established in a post- graduate college in India
    b)  a letter of support by any incubator which is funded (in relation to the project) from Government of India or any State Government as part of any specified scheme to promote innovation
    c)  a recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator recognized by Government of India
    d)  a letter of funding of not less than 20 per cent in equity by any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network duly registered with Securities and Exchange Board of India that endorses innovative nature of the business. Department of Industrial Policy and Promotion may include any such fund in a negative list for such reasons as it may deem fit
    e)  a letter of funding by Government of India or any State Government as part of any specified scheme to promote innovation
    f)  a patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of business being promoted.

 

RESULTS:

a) More than 80 startups recognized
b) Continuous engagement with startups
c) Sanction of funds for the Fund of Funds,
d) Incubar Challenge by NITI Aayog 
e) Setting up of tinkering labs

CHALLENGES + LESSONS TO DATE:

The definition of a startup and the criteria for qualifying a startup is very restrictive. Moreover it only disincentiivizes bootstrapped starups as they loose out on benefits. Startups in India are not very keen to engage with government or make full use of the benefits offered. 

KEY ADVISOR(S) OR LEADER(S):
  • Nirmala Sitharaman, Minister for Commerce and Industry
  • Ramesh Abhishek, Secretary, DIPP
  • Shailendra Singh, Joint Secretary, DIPP
  • Amitabh Kant, Chairman, NITI Aayog
  • Hemang Jani, Officer On Special Duty to the Prime Minister on Innovation and Knowledge
  • Deepak Baghla, CEO, Invest India
  • Dr. Harshwardhan, Minister for Science and Technology
  • Aruna Soundararajan, Secretary, Ministry of Electronics and Information Technology
NOTES + ADDITIONAL CONTEXT:

The policy advisor(s) or leader(s) who have been key in introducing and/or designing this policy instrument:
●    Nirmala Sitharaman, Minister for Commerce and Industry
●    Ramesh Abhishek, Secretary, DIPP
●    Shailendra Singh, Joint Secretary, DIPP
●    Amitabh Kant, Chairman, NITI Aayog
●    Hemang Jani, Officer On Special Duty to the Prime Minister on Innovation and Knowledge
●    Deepak Baghla, CEO, Invest India
●    Dr. Harshwardhan, Minister for Science and Technology
●    Aruna Soundararajan, Secretary, Ministry of Electronics and Information Technology

Type of support offered via this policy instrument:

Non-financial Support:

  • Startup India Hub to provide information for startups and to connect different players in the ecosystem
  • Creation of incubators, tinkering labs, business technology parks 

Direct Financial Support:

  • Rs, 10,000 crore Fund of Funds for startups
  • Credit Guarentee Scheme for banks to provide non-collateral loans for startups

Indirect Financial Support: 

  • Tax holiday for 3 years, recommendation made for 5 years extendable to 7 years
  • Relaxation of qualification criteria for startups for government procurement

 

 

 

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