Startup India and Start-Up Hubs [ Detailed Analysis (CA/GS) - Policies & Governance ]
Startup India aims to build strong ecosystem for development of startups in the country and for their economic growth. The aim is ultimately to create more job opportunities. Prime Minister of India launched this scheme on 16th January 2016. It main policy direction for this scheme is to control role of states in approval domain and remove “license raj” and red tapism:
- Land permissions
- Foreign investment approval
- Environmental clearances
- Standup India another objective is to encourage entrepreneurship among SCs/STs, and women communities.
- In the rural areas startup India has been recognized as the Deen Dayal Upadhyay Swaniyojan Yojana.
Highlights of Startup India Action Plan
- No tax on profits of start-up units for initial 3 years.
- Rs. 10,000 crore fund to support start-ups.
- 90-day window will be allowed for start-ups to close businesses if it fails under the Bankruptcy and Insolvency Bill, 2015.
- New scheme will provide IPR protection to start-ups and new firms.
- New 5 lakh schools will be formed to target 10 lakh children under Innovation programme.
- Rs 10,000 Crore is reserved for development and growth of innovative enterprises.
- Self-certification arrangement for start-ups across India for initial 3 years getting rid of red tapism.
- No government inspections for initial 3 years.
- Clearance mechanism patents will be quick and sponsored (i.e. 80%).
- Government launched a new mobile app to register start-ups and apply for online clearances on 1st April 2016.
- 500 sector specific incubators will be established across the country including 5 new bio clusters.
- New scheme will be introduced in order to protect intellectual property rights.
- Startups have small team so it takes more time to implement thus losing to completion, especially international competition.
- Require even more time and energy to complete all the regulatory formalities.
- Many taxes are applicable including seed funding (up to 30%) even on small fund.
- Lack of general “Startup Culture” where entrepreneurship is valued and encouraged.
- If the startup fails the closing formalities takes even more more time and fees
The Start-up India Scheme was launched with the two main objectives
1. Ease of doing business in India
2. Providing Funding
Ease of Doing Business
- At the business Index developed by World Bank India has secured 130th rank not because of lack of opportunities of work but because of lack of infrastructure.
- Many start-ups had shifted their businesses out of India just because of the tedious process.
- For example, Flipkart is headquartered in Bangalore but it is registered in Singapore.
- Mostly foreign venture capitalists and PE funds provide funding for almost 90% of Indian start-ups.
- For example, Ola Cabs, which founded as online cab in Mumbai but is funded internationally.
- Start-up Hubs were introduced in April 2016 for emerging entrepreneurs in India. This was done to remedy the situation where many startups fail even before they start.
- Since the launch of the Start-up India Hub it has recorded 728 queries as of 18th July 2016 and total 180 applicants got the DIPP certification. 16 mergers have got tax benefits and 3 of them are considering meeting inter-ministerial board.
Plan of Start-up India Hub
- The focus area of start-up hub is to provide support to the all the start-ups which are currently facing several problems.
- Help to get certificate from DIPP (Department of Industrial Policy & Promotion).
- Provide expertise to solve the problems faced by the start-ups including financial guidance.
- State governments, and start up experts will jointly handle this initiative.
Eligibility for Start-up India Hub
- Must require Start-up certificate.
- Two start up certificates under stand up India scheme
- Certification of recognition from DIPP
- Certification from Inter-ministry board of DIPP
Measurements of Start-up India Hub
- These measures will be applicable to the start-ups registered under the stand up India scheme
Expectation from Start-up India Hub
- 50 leading companies link with start-ups to develop hubs for improvement of start-ups.
Experts for each stage of development
- Introduce state level hubs which will be headed by state and territory officials.
- DIPP has already started preparation to fulfill these requirements
- DIPP has started online learning management system, which gives more information to the start-ups and new entrepreneurs at each stage.
- Published on: September 22, 2016