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Startup India Initiative – Government of India

What is the Startup India Initiative?

Startup India is an initiative launched by the Government of India on 16th January 2016, to encourage and create an inclusive ecosystem to promote innovation and entrepreneurship in India. It would encourage startups in the country and in turn contribute towards sustainable economic growth and also create employment opportunities.

Eligibility Criteria?

Startups that meet the definition as prescribed under G.S.R notification 127(E) are eligible to apply for recognition under this scheme.

  1. The startup must be incorporated as – a Private Limited Company/Registered as a Partnership firm/Limited Liability Partnership.

  2. Turnover must be less than INR 100 Crores in any of the previous financial years.

  3. An Entity will be considered a startup for up to 10 years from the date of its incorporation.

  4. Startups must be working towards innovation/ improvement of existing products, services, and processes and must have the potential to generate employment/create wealth.

  5. An entity formed by splitting up or reconstruction of an existing business shall not be considered a Startup.

Direct Benefits :

The eight direct benefits of the Startup India Scheme.
1. Self Certification and Compliance Benefits
  • Startups would have a Friendly and Flexible Regulatory Regime.

  • Startups will be able to Self Certify Compliance with 9 labor and environment laws through the Startup mobile app.

  • Labor laws – There would be no inspection for 3 years unless there are any violations found.

2. Fast Tracking Patent Examination at Lower costs

The scheme for Startup Intellectual Property Protection (SIPP) shall facilitate the filing of Patents, Trademarks, and Designs by innovative Startups. Various measures being taken in this regard include:

  • Fast-tracking of Startup patent applications: The patent application of Startups will be fast-tracked for examination and disposal.

  • The government will bear the Facilitation costs: According to this scheme, the central government will bear the entire fees of the facilitators for any number of patents, trademarks, or designs that a Startup may file, and the Startups shall bear the cost of only the statutory fees payable.

  • Rebate on the filing of application: Startups shall be provided an 80% rebate in filing of patents in comparison to other companies.

3. Relaxed Norms of Public Procurement for Startups
  • Startups are given relaxation under the criteria of “prior experience/turnover” in tenders by PSUs or the government, hence giving startups equal opportunities as experienced companies.

4. Faster Exit for Startups
  • Swift and simple process to wind up operations.

  • The Startup can be wound up within a period of 90 days from making an application for winding up on a fast-track basis, as per the provisions of The Insolvency and Bankruptcy Bill 2015.

5. Funding Support – Fund of Funds with a Corpus of INR 10000 Crore.
  • The Government has set up a fund with a total corpus of INR 10,000 crore over a period of 4 years (i.e. INR 2,500 crore per year). The Fund will be like a Fund of Funds, which means that it will not invest directly into Startups, but shall participate in the capital of SEBI-registered Venture Funds.

  • These Funds will ensure support to various sectors like manufacturing, agriculture, health, education, etc.

6. Credit Guarantee Fund for Startups – INR 2000 Crore
  • Startups will be provided with a Credit guarantee mechanism through National Credit Guarantee Trust Company (NCGTC)/ SIDBI, with a budgetary Corpus of INR 500 crore per year for the first four years.

7. Tax Exemptions on Capital Gains
  • Tax Exemptions will be provided to investors on capital gains made by them on investments above Fair market value.

8. Tax Exemption to Startups for 3 years
  • To stimulate the development of Startups in India and provide them with a competitive platform, the profits of Startup initiatives are exempted from income tax for a period of 3 years.

Indirect Benefits :

The Nine Indirect benefits of the Startup India Scheme.
1. Startup India Hub

The motive behind this Startup movement is to improve the ease of doing business and is also to build an exciting and enabling environment for Startups. Startup India Hub is a key stakeholder in this movement.

  • collaborate with Central & State governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities, and R&D institution

  • It will help Startups with aspects like obtaining financing, feasibility testing, business structuring advisory, enhancement of marketing skills, technology commercialization, and management evaluation.

  • Organize mentorship programs in collaboration with government organizations, incubation centers, educational institutions, and private organizations that aspire to foster innovation.

2. Mobile App and Portal
  • Mobile App includes the following facilities :

  • Registering of Startups with agencies of Government.

  • Anytime track and download the registration certificate.

  • Filing of Compliances.

  • Information on various clearances/ approvals/ registrations is required.

  • Collaborating with various Startup ecosystem partners.

  • Applying for Schemes under the Startup India Plan.

3. Startup Fests

To build a strong Startup Ecosystem in India, as a part of the Make in India initiative, the government has planned to have Startup fests at the national and international levels.

4. Atal Innovation Mission (AIM) with Self-Employment and Talent Utilization(SETU)

The Atal Innovation Mission has two core functions:

  • Entrepreneurship promotion through Self-Employment and Talent Utilization (SETU), wherein innovators would be supported and mentored to become successful entrepreneurs

  • Innovation promotion: to provide a platform where innovative ideas are generated

5. Incubator Setup

The setting up of Incubators across the country is in a public-private partnership. The government plans to set up :

  • 35 new Incubators in existing Institutions.

  • 35 new Private sector Incubators.

These incubators will be managed and operated by the private sector.

6. Innovation Centres at National Institutes

The government plans to set up 31 centers of innovation and entrepreneurship at national institutes :

  • Setting up 13 Startup centers: Annual funding support of INR 50 lakhs (shared 50:50 by DST and MHRD) shall be provided for three years for encouraging student-driven Startups from the host institute.

  • Setting up 18 Technology Business Incubators (TBIs) at NITs/IITs/IIMs etc.

7. 7 New Research Parks

The Government plans to set up 7 new Research Parks in institutes all over the country, with an initial investment of INR100 crore each. These parks would be modeled based on the Research park set up at IIT Madras.

8. Promoting Startups in the Biotechnology sector

The Department of Biotechnology shall be implementing the following measures along with its Public Sector Undertaking Biotechnology Research Assistance Council (BIRAC).

Bio-incubators, Seed Fund, and Equity Funding:

  • 5 new Bio-clusters, 50 new Bio-Incubators, 150 technology transfer offices, and 20 Bio-Connect offices will be set up in research institutes and universities across India.

  • Biotech Equity Fund – BIRAC AcE Fund in partnership with National and Global Equity Funds (Bharat Fund, India Aspiration Fund amongst others) will provide financial assistance to young Biotech Startups.

Encouraging and leveraging global partnerships :

  • Bengaluru-Boston Biotech Gateway to India has been formed.

  • Amplification of Bio-entrepreneurship through BIRAC Regional Entrepreneurship Centres (BREC).

9. Innovation Focused Programs for Students

To promote research and innovation among students, the government plans to implement:

  • Innovation Core: This program is for school students, the best 100 innovations by students all over the country will be showcased at the Annual Festival of Innovations in the Rashtrapati Bhavan.

  • NIDHI: A Grand Challenge program shall be instituted through Innovation and Entrepreneurship Development Centres (IEDCs) to support and award INR 10 lakhs to 20 student innovations from IEDCs.

  • Uchhattar Avishkar Yojana: For IIT Students.


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