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Read to Know: The Startup India Policy

Startup India is the latest initiative taken up by Narendra Modi’s Government. The initiative is completely youth oriented and wants the GenX to come forward with creative entrepreneurship ideas. The basic idea behind the initiative is to give stimulus to the young talent peeps by removing arduous government regulation and red tape.

The government wants to boost ventures of startup entrepreneurs as such ventures will become cradle of job opportunities and wealth creation. With the help of the initiative PM Narendra Modi has entrusted his believe on the youth to do exceptionally good for the homeland. In one of the speeches he said, “I see startup, technology and innovation as exciting and effective instruments for India’s transformation”.

Key Feature of Startup India Initiative

There are three major areas which have been focused in the Startup India action plan.

  • Simplification and Handholding.
  • Funding support and incentives
  • Industry – Academia Partnership and Incubation

These parameters will give a comfortable environment for birth of Startups and nurture them well so that they deliver extraordinary results.

Action Plan for Startup India

  • Compliance regime based on self-certification.

The burden of complaining with regulatory formalities of labor and environmental laws is onerous. Therefore, the government has reduced the regulatory burden on the Startups, thus allowing them to focus on their core business and cost management.

  • Startup India Hub

A single platform will be created where young entrepreneurs can pool in and exchange ideas. It will facilitate funding as well.

  • Rolling out mobile app and portal

Startups need to register themselves with relevant regulatory authorities, if the registration can be done via internet, the registration process become easy and fast reducing the burden of filling forms and submission. Therefore, a single platform of interaction with Government and regulatory institutions for all business and innovation exchange becomes viable.

  • Legal support and fast-tracking patent examination at lower cost

Intellectual Patent right has become an important instrument in any organization to enhance industrial competitiveness. Government has taken the initiative to promote IPR awareness among the startups and speed up patent approvals.

  • Relaxed norms on public procurement for startups

Government is encouraging startups to participate in public procurement by easing norms of minimum “prior experience” or “prior turnover”. This will facilitate startups to participate in public procurement.

  • Faster exit for startups

Government will ease the procurement process for startups, so that they can wind up operations quickly. Time bracket decided for the process is 90 days.

  • Providing Funding Support through a Fund of Funds with a Corpus of INR 10,000 crores.

The most critical challenge faced by startups in India is finance therefore the government has lent its hand to support the innovative thought of startups.

  • Credit Guarantee Fund for Startups

Government has ensured Credit guarantee mechanism through National Credit Guarantee Trust Company (NCGTC)/ SIDBI is being envisaged with a budgetary Corpus of INR 500 crore per year for 4 years.

  • Tax exemption on capital gains

In the initial stage startups are not able to attract investments, hence the profit earned on capital becomes there asset. With this objective, exemption shall be given to persons who have capital gains during the year, if they have invested such capital gains in the Fund of Funds recognized by the Government.

  • Tax exemption for 3years
  • Tax Exemption on Investments above Fair Market Value

Under The Income Tax Act, 1961, where a Startup (company) receives any consideration for issue of shares which exceeds the Fair Market Value (FMV) of such shares, such excess consideration is taxable in the hands of recipient as Income from Other Sources. The move has done in order to encourage seed-capital investments.

  • Organizing Startup Fests for Showcasing Innovation and Providing a Collaboration Platform

A compatible ecosystem is needed initially for the startups to collaborate with each other nationally and internationally. To strengthen the Startup ecosystem in India, the Government is advising to introduce Startup fests at national and international stages.

  • Launch of Atal Innovation Mission (AIM) with Self-Employment and Talent Utilization (SETU) Program

To create a platform for promoting a world-class Innovation Hubs, Grand Challenges, Startup businesses and other self-employment activities, particularly in technology driven areas.

  • Harnessing Private Sector Expertise for Incubator Setup

35 incubators will be set up across the country via PPP model.

  • Building Innovation Centres at National Institutes
  • Setting up of 7 New Research Parks Modeled on the Research Park Setup at IIT Madras
  • Promoting Startups in the Biotechnology Sector
  • Launching of Innovation Focused Programs for Students

Innovation Core program shall be initiated to target school kids with an outreach to 10 lakh innovations from 5 lakh schools

NIDHI: A Grand Challenge program (“National Initiative for Developing and Harnessing Innovations) 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: A joint MHRD-DST scheme which has earmarked INR 250 crore per annum towards fostering “very high quality” research amongst IIT students.

  • Annual Incubator Grand Challenge

Startup India initiative will accelerate spreading of digital technology into agriculrural, manufacturing, social, healthcare and education sector. And this in turn will upgrade tier1 cities into tier2 and tier3 cities in rural and urban areas.




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