Prime Minister Narendra Modi on
Saturday launched the "Start-Up
India Action Plan" that aims to
enable an eco-system to promote
and nurse entrepreneurship across the country. What exactly is the plan and the details of the scheme?
So what exactly is Startup India?
Startup India in an action plan to
develop an ecosystem to promote
and nurture entrepreneurship
across the country. This is based on an action plan aimed at promoting bank financing for start-up ventures to boost entrepreneurship and encourage startups with jobs creation. The campaign was first announced by Prime Minister Modi in his 15 August 2015 address from the Red Fort.
*What is a startup?
A startup is an entity, private,
partnership or limited liability
partnership (LLP) firm that is
headquartered in India, which was
opened less than five years ago and have an annual turnover less than Rs25 crore. To be eligible for
considering as startup, the entity
should not be formed by splitting
up or reconstruction and its
turnover should not have crossed
Rs25 crore during its existence.
*What are the advantages?
Under the Scheme, no inspection
would be carried out on start-ups
for three years regarding labour
laws. In addition, environment law
compliance is required only post-
self certification.
*Are there financial benefits?
In patent costs, the startups can
claim an 80% rebate. That means, if a startup applies for a patent, the government will fund the defence of the patent, and give rebate of 80% in the fees. The government will also pay fees of the facilitator for helping the startup obtain the patent. Faster patent registration and protection for Intellectual Property Rights (IPRs) is provided under the Scheme. Patent filing procedures to be simplified.Significant reduction in fees for filing Patents.
*What are the advantages for
startups regarding registration?
The government is launching a
mobile app on 1 April 2016 and a
portal that will allow companies to
register in a day. In addition, there would be a single point of contact for Start-up India hub. In addition, there will be single window clearance for clearances, approvals,and registrations.
*What is the government’s role in
boosting start ups?
The Ministry of Human Resource
Development (HRD) and the
Department of Science and
Technology have agreed to partner
in an initiative to set up over 75
startup support hubs in the
National Institutes of Technology
(NITs), the Indian Institutes of
Information Technology (IIITs), the
Indian Institutes of Science
Education and Research (IISERs)
and National Institutes of
Pharmaceutical Education and
Research (NIPERs).
*What are the special benefits for
startups in public procurement?
Startups in the manufacturing
sector are exempted from the
criteria of prior ‘experience/
turnover’ without any relaxation in
quality standards or technical
parameters in public procurement
(by government).
*How much funding is available
for this scheme?
Rs10,000-crore fund for new
enterprises, equal opportunity in
government procurement, a Rs500- crore credit guarantee scheme and easier exit norms. Japanese Softbank, which had already invested $2 billion in Indian startups, has pledged total
investments of $10 billion.
*What are benefits under the
provision on Income Tax?
Under the Scheme, Income Tax
exemption is available for first
three years. However, the startup
will be eligible for tax benefits only after obtaining certificate from the Inter-Ministerial Board, setup for this purpose.
*Is there any exemption in capital
gains tax?
Yes. If the money is invested in
fund of funds recognised by the
government, the investor can claim capital gains tax exemptions. In addition, existing capital gain tax exemption for investment in newly formed MSMEs by individuals shall be extended to all startups.
*What is the eligibility for
startups?
To become eligible as a startup and get a green signal from the Inter- Ministerial Board, the entity should be the one which aims to develop and commercialise, a new product
or service or process or a
significantly improved existing
product or service or process that
will create or add value for
customers or workflow. Products,
services or process, which do not have potential for commercialisation or is undifferentiated or have no or
limited incremental value will not
be considered under the Scheme.
To be considered as eligible as
startup the entity, should be
supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator established in a post- graduate college in India an incubator, which is funded (in relation to the project) from GoI as part of any specified scheme to promote innovation a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an Incubator recognized by GoI 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 GoI as part of any
specified scheme to promote
innovation or have a patent granted by the Indian Patent and Trademark Office in areas affiliated with the nature of business being promoted.
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