Uttar Pradesh: Startup Policy 2020 By CS Nishant Mishra


Introduction

The state of Uttar Pradesh came up with the five-year start-up policy, called as start-up policy 2020. The policy aims to establish a world-class start-up ecosystem based on state of art infrastructure and by providing conducive and stable policy environment.

The start-up policy also seeks to develop entrepreneurship at grass route level by inculcating training at school and college level and also creating a direct job for around 50,000 people and self-employment for around 1.5 lakh people in the state.

The state further aims to develop incubators in each district, and create at least 100 incubators in the entire state, and whereas the Lucknow to host the largest incubator of India. The entire ecosystem to be so designed to support at least 10,000 new start-ups.

The policy will cover all the start-up incorporated in the state of Uttar Pradesh and having an innovative idea, subject to the condition that such start-up must be registered with the Government of India start-up program.

Application for Registration

Registration of Incubators: To register themselves incubators need to submit the online application to start-up Nodal Agency. There can be both private and government host incubators, however, government host incubators will not be eligible for the capital grant.

Registration of Start-up: To register themselves start-ups needs to submit their application along with a detailed business plan to incubators.

Incubators will submit the application along with their assessment report, incubation certificate and recommendation letter to Nodal Agency.

Nodal Agency will further submit it to Policy Implementation Unit along with its recommendation for the final approval.

If approved, the financial incentive will be directly credited to the start-up’s bank account.

Governance

The entire governance is divided into four parts i.e. Nodal Agency, Policy Implementation Unit, Policy Monitoring and Implementation Committee, and Steering Committee.

NODAL AGENCY

Nodal Agency will be under the Department of IT & Electronics, Govt. of Uttar Pradesh, the Nodal Agency will be responsible for;

  1. Creating the conducive policy for the growth of the start-up ecosystem in the state.

  2. Single point agency for the engagement of all stakeholders of the start-up ecosystem.

  3. Nodal Agency to develop Project Management Unit (PMU), comprising of professionals and consultant to support the government.

POLICY IMPLEMENTATION UNIT

PIU will be set-up under the chairmanship of Principal Secretary of Department of IT and Electronics, PIU will be responsible for;

  1. Oversee the work of the Nodal Agency with regard to startup policy implementation

  2. Recognition of incubators,

  3. Launch of start-up funds,

  4. Approval of start-up events, etc.,

  5. Providing recommendations and approvals of incentives applicable to startup stakeholders,

  6. Redressal of their grievances and facilitate necessary guidance and support, and

PIU make also seek the help of the Policy Monitoring & Implementation Committee (PMIC) as and when required.

STEERING COMMITTEE

This will be the highest body and will be headed by Honourable Chief Minister of the State. The committee will review the outcome of the policy on an annual basis against the set goals, vision and mission.

Funding the Start-up

Start-ups will be funded from majorly three sources i.e. Government to Create fund of fund, funding by banks, and angel investors’ network.

Fund of Fund

The government will create Rs. Thousand Crore (1000 Crore) fund of fund. The Government will not directly invest in any start-up rather it will invest in other funds which will in turn funds the start-ups.

Funding through Banks and NBFC

The Government will sign MoU with banks and other financial institutions for providing financial assistance to the start-ups. This will be on a similar line as in the case of MSME.

Funding by Angel Investors

The UP Govt. to set-up the angel investors’ network and fund in the state to promote the funding of the start-ups. The State, however, will not make any contribution to this fund.

Online Platform

To bring all the stakeholders of the start-up ecosystem together and to enhance the transparency, the government will develop an integrated single-window web and mobile platform. The platform will act as the digital face of the government start-up policy.

Incentives

Incentives for incubators

  1. Setting-up and Scaling-up: Government will reimburse the expense incurred for establishing the new incubator centre or scaling up the existing centre. Subject to following conditions;

  2. Reimbursement will be 50% of the total expense subject to a maximum of One Crore. However, if such a centre is in Purvanchal or Bundelkhand area sum will be increased to One Crore Twenty Five Lakhs.

  3. Such reimbursement will be in instalment and the first instalment will be capped with 25 percent of the total amount. 

  4. Government incubators: Government-backed incubators will get grant only in exceptional circumstances. However, they will act as the first point contact for start-ups.

  5. Operational Expenditure: The Government will also reimburse the operational expenditure maximum of 30 Lakhs for five year or such period till incubators become self-reliant, whichever is earlier. Subject to the condition that reimbursement will be provided to only those who have incubated at least 10 start-ups. Further performance of incubators will also be assessed on a year to year basis.

  6. Acceleration Programs: To support business expansion of start-ups, the government to provide a fund of Rs. 5 Lakh per year to be given to 25 incubators for supporting such start-ups.

  7. Other incentives for incubators: Other incentive includes an annual ranking of incubators. The top three incubators to get Rs. three lakhs, two lakhs, and one lakh each respectively. Once the government achieve the target of 50 incubators in the state they will identify “Navratna Incubators” out them and they will get an additional grant of 10 Lakhs per annum.

Incentives for Start-ups

  1. Financial assistance to the needy founder of start-ups: The Government to provide Fifteen Thousand Rupees per month to the founder of the needy start-ups for one year. The criteria for finding needy start-ups will be devised by the Policy Monitoring and Implementation Committee (PMIC).

  2. Early Stage Funding/Seed Capital: The government to provide early-stage funding to 10 start-ups up to Rs. Five Lakh per year to help start-ups to launch their product in the market. Amount to be given in instalments, the first instalment to be given in advance of forty percent of total funding and remain amount in two instalments of thirty percent each on successful completion of the desired milestone.

  3. Free Incubation: The start-ups will get free incubation for six months which might be extended for another six months based on the performance of the start-up.

  4. Reimbursement of certain expenses: The Government will reimburse the patent filing cost of Rs. two lakhs for Indian patent and ten lakhs for an international patent on successful registration of the patent. The government will also reimburse the cost of participation in start-up event, Fifty Thousand in case of the national event and One Lakh in case of the international event.

  5. Regulatory Ease for start-ups: The Government allowed start-ups to do self-certification for nine (9) labour and environmental laws, further no inspection for three to five year under labour law for start-ups, however, the inspection may be carried out in case credible written complaint is filed. Further, start-ups are also allowed to carry on three sift operation and women working in the night, subject to the condition that start-ups take the required precautions for the safety of employees.

Establishing the Centre of Excellence

The government also decided to provide fund in form grant in aid to Centre of Excellence for the five years from the date of establishment. The total amount to be provided in five years will be ten crores, however, the grant will be released based on the performance of the CoE.

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