Detailed Overview of Startup India Plan-What is a Startup According to Start-Up India? (Important) (Download PDF)

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Government of India announced ‘Startup India’ initiative for creating a conducive environment for startups in India. Various Ministries of the Government of India initiated a number of activities under the program.

Image of Start-up India Action Plan

Image of Start-up India Action Plan

Image of Start-up India Action Plan

Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India has come out with a definition for an entity to be considered as a Startup.

How Does Government Recognize a Start-Up?

  1. Recognition as a ‘Startup’ is through an online application made over the mobile app or portal of Department of Industrial Policy and Promotion.

  2. Entities are required to submit the online application along with the Certificate of Incorporation or Registration.

  3. Startups also submit a write-up about the nature of business highlighting how is it working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.

  4. Application with relevant documents is given a real-time recognition number.

  5. Upon subsequent verification if recognition is found to be obtained without uploading the document or uploading any other document or a forged document, the concerned applicant is liable to a fine upto fifty per cent of paid up capital of the startup but not be less than Rs. 25, 000.

Overview of the Startup India Action Plan (Important)

To meet the objectives of the initiative, Government of India Action Plan addresses all aspects of the startup ecosystem. This Action Plan hopes to accelerate spreading of the Startup movement:

  • From digital/technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education, etc

  • From existing tier 1 cities to tier 2 and tier 3 cities including semi-urban and rural areas.

The action is based on the three pillars:

  1. Simplification and Handholding

  2. Funding Support and Incentives

  3. Industry-Academia Partnership and Incubation

An additional area of focus is to discard restrictive States Government policies within this domain, such as license raj, land permissions, foreign investment proposals, and environmental clearances.

Direct Benefits under Startup India Scheme

  • 10, 000 crore startup funding pool.

  • Reduction in patent registration fees.

  • Improved Bankruptcy Code, to a ensure 90-day exit window.

  • Freedom from mystifying inspections for first 3 years of operation.

  • Freedom from Capital Gain Tax first 3 years of operation.

  • Freedom from tax for first 3 years of operation.

  • Self-certification compliance.

  • Create an Innovation hub, under the Atal Innovation Mission.

  • To target 500k schools involving 1m children in innovation related programmes.

  • Schemes to provide IPR protection to startup firms.

  • Encourage entrepreneurship within the country.

  • Promote India across the world as a start-up hub.

Parallel Initiatives for Startup India

  • Earlier government launched the I-MADE program, to help Indian entrepreneurs build 1 million mobile app start-ups.

  • The MUDRA bank scheme (Pradhan Mantri Mudra Yojana) aims to provide micro-finance, low-interest rate loans to entrepreneurs from low socioeconomic backgrounds. Initial capital of ₹200 billion (US $3.1 billion) has been allocated for this scheme.

  • Made in India Scheme goes hand in hand with startup India scheme creating demand for domestic products. Made in India is being promoted by several Ministries, including Defence, Urban and Agriculture.

New Tools by Government of India for Startup India Scheme

Three new tools for States and Union Territories for ranking of startups in the country were launched by Union Minister of Commerce and Industry:

  1. The State and Union Territory Startup Ranking Framework

  2. The Compendium of Good Practices for Promoting Startups in India

  3. The Startup India Kit.

These will act as catalysts to help the Startup India initiative to drive India’s economic growth.

What Is Ranking System Of The Startups?

The key objective of the Startup States and UTs Ranking Framework is to encourage States and UTs to take proactive steps for strengthening the Startup ecosystems at the local level.

  • The Ranking Framework measures impact of each step at the local level for building strong Startup ecosystem.

  • The Ranking Framework enables continuous learning through the dissemination of good practices.

  • The State and UT Ranking Framework is based on the feedback collected from Startup ecosystem.

  • Parameters of feedback focus on actions and initiatives by states on or before March 2018:

    • Having a startup cell or helpline and a mobile or web portal for queries

    • Size of the startup mentor network created by the state government

    • Number of key incubators for incubation support to startups.

    • Areas like seed funding support, women entrepreneurship are given more score.

What is Startup India Compendium of Good Practices?

Startup India Compendium of Good Practices for promoting Startups in India focuses on enriching the Startup ecosystem through ethical behaviour- especially as guidance for State governments

  • Currently followed by 18 States and UTs.

  • Covers 95 good practices across 7 areas of intervention.

  • Distilled into 38 action points including incubation support, seed funding, angel & venture funding, startup policy & implementation, simplified regulations, easing public procurement, and awareness & outreach.

What is Startup India Kit?

  • The Startup India Kit is primarily a one-stop guide on all Startup India offerings.

  • It offers vital information, advice, and assistance through website links, statistics, tools, templates, events, competitions, and a glossary on startup terms.

  • All the benefits available to startups from the Startup India initiative can be found in the kit.

Companies and Organisations Investing in Startup India Scheme

  • Soft Bank headquartered in Japan, has invested US $2 billion into Indian startups. The Japanese firm has pledged an investment of US $10 billion.

  • Google declared to support a startup, based on the highest votes. Top three startups will be allowed to join the next Google Launchpad Week, and the final winner could win an amount of US $100, 000 in Google cloud credits.

  • Oracle has established nine incubation centers in Bengaluru, Chennai, Gurgaon, Hyderabad, Mumbai, Noida, Pune, Trivandrum, and Vijayawada.

States in Startup India Scheme

  • Kerala initiated a government startup policy called “Kerala IT Mission” focussed on fetching ₹50 billion (US $770 million) in investments for the state’s startup ecosystem. It founded India’s first telecom incubator startup village in 2012. The state also matches the funding raised by its incubator from Central government with 1: 1.

  • Telangana launched the largest incubation center in India as “T-Hub”.

  • Andhra Pradesh allocated a 17, 000-sq. ft. Technological Research and Innovation Park as a Research and Development laboratory. It has also created a fund called “Initial Innovation Fund” of ₹100 crore (US $15 million) for entrepreneurs.

  • Madhya Pradesh collaborated with the Small Industries Development Bank of India (SIDBI) to create a fund of ₹200 crore (US $31 million).

  • Rajasthan has also launched a “Start-up Oasis” scheme.

  • Odisha organised a two-day Start-up Conclave in Bhubaneswar.

Educational Institutes Involved in Startup India Scheme

  • As per the “Industry-Academia Partnership and Incubation” focus of the Startup India initiative, the Union Ministry of Human Resource Development has announced plans for the development of “Research Parks” in partnership with higher education providers across India.

  • An initial investment of Rs. 100 crore set aside for the program aims to provide students with access to funds and mentorship for startups.

  • The Innovation in Mobile App Development Ecosystem (I-MADE) program was rolled-out in February 2016 in partnership with The Department of Telecommunications (Govt of India), Telecom Centers of Excellence (TCOE), EVC Ventures, and Unifyed to help Indian entrepreneurs create mobile app startups. The program will last for 5 years, and has collaborated with 11 Indian universities.

Meaning of a Start Up for Start-Up India Initiative

  • Startup is an entity, incorporated or registered in India not prior to seven years (in the case of Startups in the Biotechnology sector, the period shall be up to ten years).

  • The annual turnover of the start-up should not exceed Rs. 25 crore in any preceding financial year.

  • The entity should be working towards innovation, development, deployment, or commercialization of new products, processes, or services driven by technology or intellectual property.

  • The entity is not formed by splitting up, or reconstruction, of a business already in existence.

  • A Startup shall be eligible for tax benefits only after it has obtained certification from the Inter-Ministerial Board, setup for such purpose.

When Will an Entity Not Be A Start-Up?

An entity shall cease to be a startup if

  • Its turnover for the previous financial years has exceeded INR 25 crore

  • It has completed 7 years from the date of incorporation/registration.

What is an Entity?

Entity is any of the following:

  • Private Limited Company (under The Companies Act, 2013)

  • Registered Partnership Firm (under The Indian Partnership Act, 1932)

  • Limited Liability Partnership (under The Limited Liability Partnership Act, 2002)

Turnover is as defined under the Companies Act, 2013

What is a Business?

A business under this definition aims to develop and commercialize:

  • A new product or service or process

  • A significantly improved existing product or service or process to create or add value for customers or workflow.

What is Inter-Ministerial Board?

  • An Inter-Ministerial Board setup by DIPP validates the innovative nature of the business for granting tax related benefits.
  • What Is Scheme For Facilitating Start-Ups Intellectual Property Protection (SIPP)?
  • The scheme for Start-Ups Intellectual Property Protection (SIPP) envisages facilitating protection of patents, trademark, and designs of innovative and interested startups.
  • Intellectual Property Rights (lPRs) are emerging as a strategic business tool for any business organization to enhance industrial competitiveness.

Start-Ups, with Limited Resources and Work Force Cannot Sustain Only through Continuous Growth and Development- Crucial to Protect IP Rs.

  • The vision of SIPP is to protect and promote Intellectual Property Rights of Start-Ups and thus encourage innovation and creativity among them.

  • SIPP aims to promote awareness and adoption of Intellectual Property Rights amongst Start-Ups.

  • Scheme nurtures and mentors innovative and emerging technologies among Start-Ups assisting them in protecting and commercialize by providing them access to high-quality IP services and resources.

  • Any Start-Up certified by the Start-up Certification Board as having an innovative business can apply for SIPP

Facilities and Benefits under SIPP

  • The cost of the statutory fees payable for each patent, trademark, or design applied for in India or abroad by a Start-Up is not to be borne by the Start-Up itself.
  • The scheme shall be run initially on a pilot basis, and shall be applicable for a period of 1 year from the date of launch of Start-Up India.
  • The budget for the scheme shall be provided from the funds available with the Department.
  • This scheme shall in no way transfer, either wholly or partially, ownership rights on the IPR created to the facilitator or the Government, and the Start-Up shall have full rights on the IP generated.
  • The scheme does not entitle the Start-Up or the facilitator to grant or registration, as the case may be, of the IPR; the applications shall be disposed off as per the relevant laws and rules.

States with Most Active Participation in Startup India Scheme

The top 5 states that showed active participation are

  • Delhi

  • Karnataka

  • Maharashtra

  • Tamil Nadu

  • Uttar Pradesh

- Published/Last Modified on: April 19, 2018

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