Stirring the Entrepreneurial Spirit of India – The Start-Up India Initiative
Are you a young budding student/entrepreneur in India, dreaming of implementing a revolutionary idea to capture tomorrow’s technological market? If so, fear not ‘Start-up India’ is here to hold your hand. The ‘Start-Up India” initiative, came into being on 16th January, 2016 under the mentorship of the Honourable Prime Minister of India. This initiative aims to build a strong eco-system for nurturing innovation and Start-ups in the country and thus fast-tracking economic growth and generating large scale employment opportunities.
The Government of India hopes to fast track the spreading of the Start-up movement in a wide array of sectors from the digital/ technology sector to agriculture, manufacturing, social sector, healthcare, education, etc.; and to reach out from existing tier 1 cities to tier 2 and tier 3 cities including semi-urban and rural areas. The scheme aims to employ private sector partnership for Start-up Incubator setups as well as building Innovation Centres at the national institutes such as the NITs/IITs/IIMs etc. The Department for Promotion of Industry and Internal Trade (DPIIT) is responsible for coordinating the implementation of Start-up India initiative with other Government Departments. Other departments involved in this initiative are – the Department of Science and Technology (DST), Department of Bio-technology (DBT), Ministry of Human Resource Development (MHRD), Ministry of Labour and Employment (MLE), Ministry of Corporate Affairs (MCA) and NITI Aayog.
Is your Enterprise a Start-Up?
The qualifications for an enterprise to be recognised as a Start-Up under by the DPIIT and to avail the benefits under the Government of India are:
- Its date of Incorporation should not exceed 10 years
- It should have been incorporated as a Private Limited Company or a Registered Partnership Firm or a Limited Liability Partnership
- Its annual turnover should not exceed Rs.100 crore for any of the financial years since its Incorporation
- The enterprise should have been formed originally and not have been formed by splitting up or reconstructing an existing business
- It should be involved in the development or improvement of a product/process/service and/or have a scalable business model with potential for the creation of wealth & employment
Benefits gained on being recognised as a Start-Up under DPIIT
The Government of India had announced a Rs 10,000-crore corpus for innovation-driven enterprises, a three-year break from paying income tax on profits, a Rs 500-crore per year credit guarantee mechanism, and exemption from capital gains tax for start-ups. Thus, under the Start-up India Initiative, the companies which are registered under DPIIT are eligible to receive the following:
- Simplification and Handholding
- Funding & Incentives
- Incubation & Industry-Academia
KEY FEATURES OF THE SCHEME
- Self Certification
The purpose of self-certification is to reduce the regulatory burden on Startups so that the Startups can focus on their core business. Startups are permitted to self-certify compliance for 6 Labour Laws and 3 Environmental Laws.
- Tax Exemption under 80IAC
Eligible start-ups are exempted from paying income tax for 3 consecutive financial years out of their first ten years since incorporation.
- Section 56 Exemption
Exemption under Section 56(2) (VIIB) of Income Tax Act i.e., no Angel tax on issuance of shares up to Rs. 25 Crore.
- Easy Winding up of Company
This is to ease the shut down or wind-up operations of the start-ups -to encourage entrepreneurs to experiment with new and innovative ideas without facing complex exit processes.
- Patent Application and IPR Application
The objective is to reduce the cost and time taken for a start-up to acquire a patent, making it financially viable for them to protect their innovations and encouraging them to innovate further. The features include:
- Fast-tracking of Start-up Patent Applications – The applications will be fast-tracked so that the value can be realised sooner.
- Panel of facilitators to assist in the filing of IP applications – The establishment of facilitators to aid in the filing of applications.
- Government to bear facilitation cost – Under this scheme, the Central Government shall bear the entire fees of the facilitators for any number of intellectual property applications that a Start-up may file, with the Start-ups bearing the cost of only the statutory fees payable.
- Rebate on the filing of application – Start-ups shall be provided with an 80% rebate in filing of patents vis-a-vis other companies.
The Start-up India initiative has also announced many incentives to promote women entrepreneurship. SIDBI has been instructed to reserve 10% of the Fund of Funds for women led start-ups. All Alternative Investment Funds (AIFs) have been directed to contribute 20% in businesses which are women led, women influenced, employ women or are women consumption centric. It has also launched a training program for aspiring and existing women entrepreneurs – WING across the country. WING will conduct workshops, provide mentorship support and opportunities to present their start-ups/ideas to stakeholders. The workshops will provide training on: Legal Issues and Compliance, IP and Patent Protection, Financial Management, Marketing Skills. These are workshops providing domain specific knowledge and one-on-mentorship after every session.
These initiatives will go a long way in enabling young enthusiastic students/budding entrepreneurs, and women entrepreneurs to go the start-up route and contribute to technology, innovation and the generation of prosperity and wealth so that ours becomes a burgeoning economy of job creators instead of simply job seekers.
The views are that of author’s own and not necessarily the views of IPTSE Academy. This blog is a platform for academic discussions and hence authors have been given flexibility to convey their thought process.