Start-up India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Start-ups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower Start-ups to grow through innovation and design.
The campaign was first announced by Indian Prime Minister, Narendra Modi during his 15 August 2015 address from the Red Fort, in New Delhi. The action plan of this initiative is based on the following three pillars:
Simplification and Handholding.
Funding Support and Incentives.
Industry-Academia Partnership and Incubation.
An additional area of focused relating to this initiative is to discard restrictive States Government policies within this domain, such as License Raj, Land Permissions, Foreign Investment Proposals, and Environmental Clearances. It was organized by The Department of Industrial Policy and Promotion.
The event was inaugurated on 16 January 2016 by finance minister Arun Jaitley. Among the attendees were CEOs, start-up founders and venture capitalists.
A start-up is defined as under:
An entity that is incorporated in India as.
Private Limited Company (The Companies Act,2013)
One Person Company (The Companies Act,2013)
Registered Partnership Firm (The Indian Partnership Act,1932)
Limited Liability Partnership (The Limited Liability Partnership Act,2008)
2. Not more than sevenyears ago (for Biotechnology Start-ups less than ten years). 3. An annual turnover less than ?25 crore in any preceding financial year. 4.Working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation. 4.Entity should not have been formed by splitting up or reconstruction a business already in existence.
In order for a Start-up to be considered eligible, the Start-up should:
be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP (Department of Industrial Policy and Promotion), from an Incubator established in a post-graduate college in India; or
be supported by an incubator which is funded (in relation to the project) from Government of India as part of any specified scheme to promote innovation; or
be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator recognized by Government of India; or
be funded by an Incubation Fund/Angel Fund/ Private Equity Fund/ Accelerator/Angel Network duly registered with SEBI* that endorses innovative nature of the business; or
be funded by Government of India as part of any specified scheme to promote innovation; or
have a patent granted by the Indian Patent and Trademark Office in areas
The process of registration under the Start-up India Scheme:
Fill all the details of the business in the form prescribed.
Uploading the supporting documents and self-certifications whichever are applicable to the business.
The information required during the registration:
Nature of the Entity
Name of the Entity
Incorporation / Registration No
Incorporation / Registration Date
Full Address (Office)
Authorized Representative Details
Director(s) / Partner(s) Details
Submission of the Application.
Scrutiny of Documents by the Board.
Certificate issued by Inter-Ministerial Board of Certification.
Checklist of Documents that the start-ups should consider before applying:
Certificate of Incorporation
Company Registration with the Income-tax-PAN, TAN, VAT, GST
If the proposed business of Software Development is only for Exports, then the Company should get itself registered with Software Technology Parks India.
If the proposed business is a Service oriented business, the applicable laws would be different.
If the proposed business is a manufacturing business, then there are other enactments that would be applicable.
Company with 20 employees then, the registration with Provident Fund Authorities - Social Security for employees.
Company Registration with Local Authority – Shops & Establishments
If the company is involved in import and export, then Import Export Registration i.e. IEC.
Legal Documents related to the employees.
Legal Documents related to the investors.
Make sure all the above mentioned documents are uploaded correctly.
If it is found by the Authorities that the documents uploaded are incorrect or not uploaded or forged then you shall be liable for fine upto 50% of your paid-up capital upto minimum Rs. 25,000/-
An application for a certificate from the inter-ministerial board shall be processed within a period of 20 to 25 working days.
Benefits for recognized start-ups under the Start-up India Initiative:
No Time Consuming Compliances:
Self Certification and compliance under Nine Environmental and Three Labour Laws.
Intellectual Property Rights Support:
The government provides lists of facilitators of patents and trademarks. They will provide high quality Intellectual Property Right Services including fast examination of patents at lower fees. The government will bear all
facilitator fees and the start-up will bear only the statutory fees. They will enjoy 80% reduction in cost of filing patents.
A fund of Rs. 10,000 crore is set-up by government to provide funds to the start-ups as venture capital. The government is also giving guarantee to the lenders to encourage banks and other financial institutions for providing venture capital.
Tax holiday for 3 Years:
Start-ups will be exempted from income tax and on capital gains & on Investments above Fair Market Value for 3 years provided they get a certification from Inter-Ministerial Board of Certification.
Apply for tenders:
Start-ups canapply for government tenders. They are exempted from the “prior experience/turnover” criteria applicable for normal companies answering to government tenders.
Research & Development facilities:
New Research Parks will be set up to provide facilities to start-ups in the Research & Development sector
Easy Exit Route:
In case of exit – A start-up can close its business within 90 days from the date of application of winding up.
The government has proposed to hold 2 start-up fests annually both nationally and internationally to enable the various stakeholders of a start-up to meet. This will provide huge branding and networking opportunities.
Relaxed norms of Public Procurement:
Start-ups in the manufacturing sector are exempted from the criteria of “prior experience/ turnover”, whenever a tender is floated by a government entity or a PSU, without any relaxation in quality standards or technical parameters.
Few successful Indian Start-ups which will inspire all of us:
No one would be a stranger to this one! Flipkart achieved massive success a few years back owing to its first mover advantage in the online market in India. Sachin and Binny Bansal, both IIT-D alumni, worked with Amazon before, thus they introduced a similar concept into the Indian market. They started with books in 2007 and now sell almost everything, from personal care to jewellery, from CDs to stationery. It acquired Myntra for around INR 2000 crore.
Flipkart.com has made it to the top five global billion dollar start-up club with a valuation of $11 billion, according to the Wall Street Journal and Dow Jones Venture Source report published on Thursday.
Launched in 2008, Zomato hasn’t been anything less of a sensation. It covers over 3,31,200 restaurants in 19 countries. Started as foodiebay.com, in two years, it was named the most promising internet companies in India. In another two years, it went on to get international recognition.
Deepinder Goyal and Pankaj Chaddah, the co-founders always wanted to create their own path, a path with its own obstacles. Zomato had no funding initially, their growth was excruciatingly slow. However, tables turned very soon and it made Zomato what it is now.
Start-up India could be a successful stride by the government towards promoting and developing business ventures that would further promote ‘Make in India’ and ‘Digital India’ campaigns but there are challenges that should be tactfully handled, leaving no room for wastage of fund and ill-distribution of funds.
Someone has rightly quoted, “In India, a chaiwala (tea vendor) can become the Prime Minister but a chaiwala can’t get funded.”
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