Make in India and startup India must include Innovate in India- B Sanhrhanam.
To transform India into a country of job creators instead of job seekers, the Government of India launched a flagship initiative “Startup India” on 16th January 2016. The idea is to build a strong and inclusive ecosystem for startup innovation, entrepreneurship, and to catalyze the startup culture in India. The very objective of the scheme is to encourage sustainable economic growth and create employment. Before knowing the benefits of the scheme, let’s understand the eligibility and meaning of startup.
What is a startup?
The government published a notification that stated the Startup India eligibility criteria to avail the benefits of the scheme.
Accordingly, the eligibility criteria for businesses are-
- The startup must be incorporated as a-
- Private Limited Company under the Indian Companies Act,2013 or
- Partnership Firm as per the Partnership Act,1932 or
- Limited Liability Partnership (LLP) as per the Limited Liability Partnership Act,2008
- All business startup in India that is in existence for up to 10 years from the date of their incorporation or registration will be eligible under this scheme.
- Annual turnover should not exceed Rs 100 crores in any of the past years since incorporation or registration.
- The startup must not be formed out of splitting or reconstructing an existing business unit. A business that started out by splitting organizations won’t be eligible.
- Startup’s developing a new product or service or process are eligible under this scheme. Conditions to be fulfilled-
- The startup must drive innovation, development, deployment, or commercialization of a new product, process, or service driven by technology or intellectual property.
- The entity should have a high potential for employment generation or wealth creation.
Benefits of Startup India Scheme
To promote the growth of the Indian economy, a host of benefits are provided to startups. The entity should be eligible and is required to be recognized by the Department for Promotion of Industry and Internal Trade(DPIIT) as a startup for availing-
- Self Certification-
Startups shall be allowed to self-certify their compliance with 9 labor and environmental laws. No inspection will be conducted for a period of 3 years under labor laws.
This will reduce the regulatory burden for startups and keep compliance costs low.
- Income Tax Exemption-
A DIPP recognized startup that has been granted an Inter-ministerial board certificate is exempted from income tax on the profits and gains for three consecutive years.
This will manage the working capital requirements for the initial years of startup.
- Easy winding up of company-A startup can exit the market within 90 days from the date of application of winding up.
- Simple process-
The registration process for setting up a startup is easy now. The government has launched a mobile app and a website for registration. Fill a form and upload the required documents, and the process is done.
- Startup Patent Application and IPR Protection
The government provides high-quality Intellectual property rights services along with a fast examination of patents at lower fees.
- Resources are provided to help startups protect and commercialize their IPR’s.
- Startups are provided an 80% rebate in filing patents and a 50% rebate in filing of trademarks as compared to other companies.
- The government will bear the facilitation costs and startups will cover only statutory fees.
- Relaxation in Public Procurement Norms-
Startups are exempted from prior experience and turnover criteria for applying to government tenders. Government of India Departments, ministries, and PSUs have been authorized to ease the norms for startups.
- SIDBI funds– The government has set up a 10,000 crore rupees fund as venture capital. This fund is managed by SIDBI and is utilized for the Development of innovative enterprises. The government is also encouraging banks and financial institutions for boosting venture capital.
- Investors- Investors who invest their capital gains in the venture fund set up by the government are eligible for exemption from the capital gains. This is an attractive way to get more investors for startups.
India is booming with powerful startups from Zomato to Ola Cabs. The government of India provides immense benefits to startups, from tax exemption to funding. The government offers a host of programs and advantages to boost the startup culture so that entrepreneurs focus on their core business and worry less about the regulatory burden.