The Startup India Program was introduced by Prime Minister Narendra Modi to boost the startup ecosystem in India. Among the many schemes initiated by the government, the Startup India Program is targeted at helping young minds develop new technologies and find innovative solutions to an existing problem.
As of February 2017, the program had ensured 170+ companies received mentoring for funding and incubation. While the program clearly defines ‘A Startup’ and how it can benefit from the scheme, several startups have not been able to gauge the complete advantages of the scheme. If you are one of them, here is everything that you need to know about the Startup India Program.
Cutting the red tape
It is no secret that most startups move at a brisk pace in uncharted territories. The regulatory burden at the initial stages may slow down their growth, if not curtail it completely. The Startup India Program introduced a simple registration process that allows a new startup to register within a day. A Startup India hub has been created that serves as a single point of contact.
The Government of India has also allowed self-certification for laws such as labor, gratuity, provident fund, and pollution acts. The self-certify compliance can be executed via the Startup Mobile app. Under the Startup India Program, patent applications of the startups will also be fast-tracked. The norms for public procurement for the startups have also been eased without any relaxation in the quality standards.
In spite of the growing number of VCs and angel investors that are funding Indian startups, the number of companies that are unable to secure funding is still substantial. Under the Startup India Program, the Government of India has set up a total corpus fund of ₹10,000 crores that will be disbursed over a period of four years. The Life Insurance Corporation (LIC) is the co-investor in this fund.
However, the fund is managed by a board that consists of professionals from industries, startups, and academia. The board will also ensure that funding is provided to different sectors and not only to a particular industry. Startups can even get a credit guarantee so that they can avail venture debt from banks.
Providing tax exemptions is an initiative directed at attracting more investments in the startup economy. The Startup India Program exempts capital gains from long-term capital investment up to ₹50 lakh in the funds recognized by the Central Government. The startups are also exempted from income tax for a period of three years. This applies to only those startups that are registered between 1 April 2016 and 31 March 2019. Tax exemptions are also applicable to investments above the fair market value.
Under the Startup India Program, a provision has also been made for a faster exit strategy. The voluntary closure of business can be completed within 90 days of the application. Apart from this, the Government of India will organize startup fests, build innovation centers at national institutes and set up seven new research parks. These initiatives will go a long way in providing a conducive environment for startups to innovate and develop new technologies without worrying about bureaucratic procedures.