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11 Benefits to Startups by Indian Government

By Mayashree Acharya

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Updated on: Dec 7th, 2021

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6 min read

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.

Eligibility for Registration under Startup India

As per the Startup India Action plan, the followings conditions must be fulfilled in order to be eligible as Startup :

  • Being incorporated or registered in India up to 10 years from its date of incorporation.
  • Is a private limited company or registered as a partnership firm or a limited liability partnership.
  • Has an annual turnover not exceeding Rs. 100 crore for any of the financial years since incorporation/registration.
  • Is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

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:

  • Completion of ten years from the date of its incorporation/registration, or
  • Achieving turnover in any previous year more than Rs. 100 crore.

11 Benefits Provided under Startup India

Simple process

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.

Reduction in cost

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.

Easy access to Funds

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.

Tax holiday for 3 Years

Startups will be exempted from income tax for 3 years provided they get a certification from Inter-Ministerial Board (IMB).

Apply for tenders

Startups can apply for government tenders. They are exempted from the “prior experience/turnover” criteria applicable for normal companies answering to government tenders.

R & D facilities

Seven new Research Parks will be set up to provide facilities to startups in the R&D sector

No time-consuming compliances

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.

Tax saving for investors

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.

Choose your investor

After this plan, the startups will have an option to choose between the VCs, giving them the liberty to choose their investors.

Easy exit

 In case of exit – A startup can close its business within 90 days from the date of application of winding up

Meet other entrepreneurs

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. 

Related Articles

Benefits of the Startup India Program

Startup India: Eligibility, Tax Exemptions and Incentives

Startup Registration India – 7 Steps to Register your Startup

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About the Author

I am an advocate by profession and have a keen interest in writing. I write articles in various categories, from legal, business, personal finance, and investments to government schemes. I put words in a simplified manner and write easy-to-understand articles. Read more

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Quick Summary

The government of India, under PM Narendra Modi, promotes Startup India to support startups, offering benefits like tax exemption, access to funds, simplified regulations, and more. Criteria for eligibility include being incorporated within 10 years in India, having turnover not exceeding Rs. 100 crore, and focusing on innovation. Benefits include easy registration, cost reductions, access to funds, tax holiday, easier access to tenders, and networking opportunities.

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