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Startups are becoming very popular in India. The government under the leadership of PM Narendra Modi has started and promoted Startup India. Startup India initiative intends to build a strong ecosystem that is conducive for the growth of startups. It aims to empower startups to achieve growth through innovation and technology.
To promote growth and help Indian economy, many benefits are being given to entrepreneurs establishing startups. The startups recognised through the Startup India initiative are provided ample benefits for starting their own business in India.
As per the Startup India Action plan, the followings conditions must be fulfilled in order to be eligible as Startup :
It is important to note that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’. Also, an entity will not be called a startup after:
The government of India has launched a mobile app and a website for easy registration for startups. Anyone interested in setting up a startup can fill up a simple form on the website and upload certain documents. The entire process is completely online.
The government also provides lists of facilitators of patents and trademarks. They will provide high-quality Intellectual Property Right Services including fast examination of patents at lower fees. The government will bear all facilitator fees and the startup will bear only the statutory fees. They will enjoy 80% reduction in the cost of filing patents.
A 10,000 crore rupees fund is set-up by government to provide funds to the startups as venture capital. The government is also giving guarantee to the lenders to encourage banks and other financial institutions for providing venture capital.
Startups will be exempted from income tax for 3 years provided they get a certification from Inter-Ministerial Board (IMB).
Startups can apply for government tenders. They are exempted from the “prior experience/turnover” criteria applicable for normal companies answering to government tenders.
Seven new Research Parks will be set up to provide facilities to startups in the R&D sector
Various compliances have been simplified for startups to save time and money. Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and 3 environment laws.
People investing their capital gains in the venture funds setup by the government will get exemption from capital gains. This will help startups to attract more investors.
After this plan, the startups will have an option to choose between the VCs, giving them the liberty to choose their investors.
In case of exit – A startup can close its business within 90 days from the date of application of winding up
The government has proposed to hold 2 startup fests annually both nationally and internationally to enable the various stakeholders of a startup to meet. This will provide huge networking opportunities.
Startups are being highly encouraged by the government. The benefits enjoyed by them are immense, which is why more people are setting up startups.