Startup India

Startup India has been one of the biggest buzz words of 2016. Envisioned by the Prime Minister Narendra Modi, Startup India program was announced last year with great expectations. With the program completing one year of its existence, here are some details on how Startup India was able to make an impact on ground zero and help change the face of Indian startup ecosystem.

Defining Startups

Before the Startup India action plan came into existence, there was no clarity on what actually constituted as a startup. Startups did not have a dedicated action plan in various government policies adding to the confusion. Startups are today clearly defined as any entity incorporated in India with an annual turnover of less than Rs. 25 crores in the last 5 financial years and working towards innovation and product development, driven by technology or intellectual property.

Easy compliance with self certification

Increasing ease of doing business and reducing all regulatory burdens, Startups are now allowed to self-certify compliance through the Startup mobile app with 6 labor and environment laws across 11 states.

Increasing interconnectivity via Mobile App and Portal

The Startup India Hub, a mobile application acts as a one stop solution for all queries related to the government initiated Startup India action plan. The website and app provide on-the-go services and information handling over 27000 queries and mentoring 170 startups.

Fast-tracking of Patent

Startup India action plan facilitated a panel of over 422 facilitators for patent and design and 669 facilitators for trademarks applications. As a result, applications received a rebate of up to 80% on patent fees along with legal assistance.

Fund of Funds and funding support provisions

The government initiated a Fund of Funds with a corpus of Rs. 10,000 Crore offers financial assistance to various funds investing in startups. To help startups, Rs. 500 crore was released to SIDBI in FY16 while Rs. 129 crore was sanctioned by SIDBI to Venture Funds.

Easier exits

As startups are a risky affair and may sometimes not work as planned, exits have become easier and streamlined. The new Insolvency and Bankruptcy Code, 2016 allows startups to wind business within a period of 90 days from making an application.

Tax Exemption

• Exemption on capital gains: To facilitate tax exemption on capital gains for startups, the government introduced Section 54 EE under the Finance Act, 2016. This allows exemption of capital gain arising out of transfer of long term capital asset up to Rs. 50 lakhs invested in a fund notified by the central government. Exemption from tax on capital gains arising out of sale of residential house or plot is also offered to startups now.
• Exemptions to startups for 3 years: The Startup India action plan offered startups to avail income tax exemption for 3 years in a block of 5 years provided they were incorporated between 1st April 2016 and 31st March 2019.

• Exemption on investments above fair market value: Startup India action plan introduced tax exemption on investments above Fair Market Value for investments made in startups.

   

Opening research parks and innovation centers: Startup India action plan facilitated the opening of 7 new research parks along with 9 Technical Business Incubators (TBIs). 10 Startup Centers funded by HRD ministry and 6 incubators were sanctioned for scale-up grant by NITI Aayog. Formation and development of over 257 Tinkering Labs was also approved with a vision to ‘Cultivate one Million children in India as Neoteric Innovators’.

Developing student innovation focused programs:

The action plan is also promoting various student programs like Ucchatar Aavishkar Yojana (UAY) to promote industry and outcome-oriented research projects by students. NIDHI a program for nurturing ideas and innovations is also helping technology startups with support and funding.  
The program has made a smooth transition from an idea to an effective program for startups. The year 2017 is likely to offer more consolidation as details of various initiatives are now well known in the startup ecosystem.