The Startup India initiative was introduced by the Prime Minister of India on August 15, 2015, with the goal of fostering innovation and supporting startups in the country. This flagship initiative aims to create a conducive ecosystem that promotes sustainable economic growth and generates significant employment opportunities.
To operationalize the Startup India initiative, an Action Plan was unveiled on January 16, 2016. This Action Plan encompasses 19 key action items that focus on areas such as simplification and handholding, funding support and incentives, and industry-academia partnerships and incubation.
The Government of India, along with the Department for Promotion of Industry and Internal Trade (DPIIT) as the coordinating body, has taken significant strides in implementing the Startup India initiative. Various government departments, including the Department of Science and Technology, Department of Biotechnology, Ministry of Human Resource Development, Ministry of Labour and Employment, Ministry of Corporate Affairs, and NITI Aayog, actively drive the initiatives under Startup India.
Since the launch of initiative in January 2016, there has been a substantial progress under Startup India Action Plan. A detailed progress made on 19 Action Points of Startup India Action Plan is at Annexure-I (350 KB) .
The Startup India Scheme offers several benefits to startups, including:
- Income Tax Benefits: Startups are eligible for income tax exemption for a period of three years from the date of incorporation, subject to certification by the Inter-Ministerial Board of Certification. They may also be exempt from capital gains tax under certain conditions.
- Financial Benefits: Startups receive rebates on intellectual property rights (IPR) costs, such as patents and trademarks. The government provides facilitators to assist with protecting and commercializing IPRs, and fast-tracks the examination and disposal of IPR applications. Additionally, the government pays the fees of these facilitators.
- Registration Benefits: The scheme provides a portal for networking opportunities and assistance to startups, aiming to simplify the complex process of startup registration. The government has also established a problem-solving window for startups.
- Funding Benefits: Some states offer seed funding to startups certified under the scheme. The availability and requirements for such funding vary by state.
- Regulatory Benefits: Startups are allowed to self-certify compliance with six labour laws and three environmental laws through an online procedure. Inspections will not be conducted for a period of five years unless a credible complaint of violation is filed in writing.
- Public Procurement Benefits: Certified startups can be listed as sellers on the Government e-Marketplace portal, gaining access to government procurement opportunities. Exemptions on earnest money deposit and requirements regarding prior turnover and experience may apply.
- Faster Exit Benefits: Provisions have been introduced to facilitate the winding down of startup operations, including the appointment of an insolvency professional to fast-track closure, facilitate the sale of goods, and settle debts. Startups meeting specific criteria can achieve a complete exit within 90 days.
These benefits aim to support startups by providing financial, regulatory, and operational assistance, helping them navigate challenges and promote their growth.
To be eligible for Startup India registration, the following criteria must be met:
- Company Registration: The business must be registered as a private limited company, partnership firm, or limited liability partnership (LLP). Additionally, it should have received funding from an incubation fund, angel fund, or private equity fund, which is approved by the Department for Promotion of Industry and Internal Trade (DPIIT).
- Company Existence: The startup should be a new venture, incorporated within the last five years. Furthermore, its annual turnover or revenue should not exceed ₹25 crores.
- Innovative and Scalable Entity: The startup should be working on innovation, development, or improvement of products, processes, or services. It should demonstrate a scalable business model with the potential for generating employment or creating wealth.
By meeting these eligibility criteria, a startup can qualify for registration under the Startup India initiative, which provides various benefits and support to foster the growth of innovative startups in India.