Startup India – Introduction, Objectives, Benefits, Schemes, other Details

Introduction

Startup India is a scheme of the Government of India which is announced by the Honorable PM Narendra Modi Ji in August 2015 and was launched in 2016. It is playing a very important role in our economy.  it is an initiative of the Government of India. The main objective of such a scheme is to build the startup, generate and develop employment, build and maintain a strong system for nurturing innovation. The startup India scheme provides several benefits such as Financial Support, Networking Opportunities, Ease of Work, and Financial Support, Income Tax Benefits, Government Tenders, etc. and these benefits are available to multiple sectors which include the health sector, agriculture sector, business sector, etc. The startup India scheme is controlled and managed by the DPIIT (Department for Promotion of Industry and Internal Trade). The following government departments are playing an important in taking forward this scheme-

• Department of Science & Technology (DST)
• Department of Biotechnology (DBT)
• Ministry of Labor & Employment and Ministry of Corporate Affairs (MCA).
• Ministry of Human Resource Development (MHRD)
• NITI Aayog

In this article, we will discuss about the “Startup India Scheme”.

What is a Startup

Before understanding this scheme, we will understand what is Startup. As per the notification which is issued by the Department of Promotion of Industry and Internal Trade, Startup is an entity-

That is into the existence for the period of up to 10 years from the date of its registration & date of incorporation. Provided such organization is incorporated in India-

2013. Private Limited Company as per Companies Act 2013.
2014. Partnership Firm as per section 59 of Partnership Act 1932.

• LLP (Limited Liability Partnership Firm) as per LLP Act 2008 (Limited Liability Partnership Firm Act 2008).
• That is working for the innovation, development, and improvement of the products, services, and processes.
• That has a scalable business model, having the high potential of employment generation and wealth creation.
• That has a turnover which is not more than 100crores during the financial year.

If there is any entity that is created by the splitting or reconstruction of an existing business unit, will not be considered as Startup.

If a business entity will cease to exist as a startup-

1. If the amount of turnover in any previous year is more than 100crore and
2. Once such entity completes 10 years from the date of registration or incorporation.

“Startup of India Scheme” – Need of such Scheme and Benefits

There are the many benefits which are provided by such scheme-

1. Financial Support– Under this scheme, the Government will provide financial support to develop the business environment.
2. Government Support– Normally, it is not easy to obtain government tenders, government projects, and government support, but under this scheme, the business will be eligible to get government support very easily.
3. Self- Certification under Labor and Environmental Laws- This scheme allows self-certification compliances, which are required under 6 labor laws and 3 environment laws. This scheme will reduce the statutory and regulatory burden so that the person can be concentrated on their businesses.
4. Ease of Work- Under this scheme, incorporation, registration, handling, etc. is online and very easy so that anyone can register under this scheme at any time and from anywhere.
5. Tax Exemption for 3 years under section 80 IAC of Income Tax Act- Under this scheme, the profit which is earned by the recognized startup, will be exempted from income tax for the 3 consecutive years. The criteria are-
   1. Private limited companies & LLP (Limited Liability Partnership Firm) will be eligible for this exemption.
   2. The companies should be recognized by DPIIT.
   3. The startup should be established after 1^st April 2016.
6. Easy Winding up of Company- The process of winding up of the company is also easy and online. In the case of winding up, the insolvency professional will be appointed by the company for liquidating the assets and making the payments of liabilities.
7. Networking Opportunities- Under this scheme, the government provides network opportunities by conducting 2 startup tests. This scheme also provides intellectual property awareness.
8. Tax Exemption under section 56 of Income Tax Act – Investments which are listed in this eligible startup and the amount of Net Worth is more than 100crore or amount of turnover is more than 250crore, will be exempted from tax under section 56(2) of the Income Tax Act. If there is any investment which is made by accredited investors, AIFs (category-I) and listed companies having the amount of net worth is Rs.100crore or turnover more than 250crore, will be exempted from tax under section 56(2) (VIIB) of Income Tax Act.
9. SIDBI Funds of Funds– The government of India maintained a corpus fund of Rs. 10000crore and such funds are managed by SIDBI. The main objective of this fund is to provide equity funds for the development and growth of the organization.

Process for Registration in Startup India Scheme

Now we will discuss the process of registration for startup India scheme step wise step-

1. Step No.1- Incorporate your Business– First we will create a legal entity i.e. we will incorporate our business as a Private Limited Company, Partnership Firm, or Limited Liability Partnership Firm (LLP). For this step, we will follow all the procedures for the registration of our business. These procedures are obtaining the certificate of registration; obtain PAN and other relevant requirements. We will visit the site of MCA to get a registration.
2. Step No.2- Register under Startup India Scheme– After the incorporation of the business, we will register our business as a startup. For the registration, we will visit the Startup India website and we will log in it then we will fill application form for the registration and we will also upload certain documents as per requirements. It must be noted that all details and data must be correct. After providing all the required details we will receive OTP on our registered e-mail id and we will also obtain other details just like the type of user, name, and the stage of startup, etc. The process of registration is very simple and it is online so any person can complete this process at any time and from anywhere.
3. Step No.3- Documents required to be uploaded in the PDF format- There are the following documents which are required to upload in the PDF format for the registration–
   • We need a recommendation letter as well as a registration form. There is a list of recommendation letters, we will choose any one from the following list-
   • A letter of recommendation is received from an Incubator and it should be in the format which is approved by DIPP, or
   • A letter is issued by incubator backed by the government authority or
   • A letter is issued by the government-oriented incubator or
   • A letter of recommendation which is issued by the angel investor or other authority or entity which is registered with SEBI or
   • A letter is issued from the state or the central government of India.
   • A patent is filed and published in the journal of the Indian Patent Office in the area affiliated with the nature of business being promoted.
   • Incorporation certificate – we need to upload an incorporate certificate of the organization.
   • Description of our business in a detailed form.
4. Step No.4- Obtain DPIIT Recognition– After preparing the profile and update all the relevant documents and details, the next step is to avail of DPIIT recognition. This process is very important and very helpful because it helps to avail/take the benefits. The benefits are –
   • Access to Fund of Funds
   • Self-certification under labor and the environmental laws
   • Relaxation in public procurement norms
   • Access to high-quality intellectual property resources and services
   • Easy winding of company
   • Tax exemption for 3 consecutive years
   • Tax exemption on investment above fair market value
5. Step No.-5 – Startup Recognition – In this step, we will open the ‘Recognition Application page’ and click on the ‘View Details’ and we will fill this ‘Startup Recognition Form’ and then we will click on submit.
6. Step No.6- Documents required for the registration– There are the following documents which are required for the registration-
   • Letter of Incorporation / Registration of Startup.
   • Directors details
   • Patent & Trademark details
   • PAN Number
   • Proof of Concept.
7. Step No. 7- Recognition Number- When we will apply for the registration, we will get a recognition number for such a particular startup. The certificate of startup recognition, we will receive when all the documents are examined by the authority it will take usually 2 days from the date of submission of the application.
8. Other relevant Steps-
   • Need of tax exemption, need to mention it– As per this scheme, the startup does not require to make the payment of tax for the first 3 years but if any entity wants to take such benefit, the entity should be certified by the Inter-Ministerial Board (IMB).
   • Registration of Patent/Trademark and Design– If we want to use a Patent/Trademark, design for our business, need to register it.
   • Self – Certification under Employment and Labor Law- To reduce the compliance cost, self – certification of the startup is mandatory. It will reduce the regulatory burden.

Government Schemes for the Startups

There is a list of government schemes that are launched to develop and encourage entrepreneurship in India-

1. Startup India Seed Fund
2. Startup India Initiative
3. MUDRA Bank
4. ASPIRE
5. ATAL Innovative Mission
6. eBiz Portal
7. Ministry of Skill Development and Entrepreneurship
8. Dairy Processing and Infrastructure Development Fund.
9. Multiplier Grants Scheme (MGS)
10. Support for International Patent Protection in Electronics & Information Technology
11. Credit Guarantee Fund Trust for Micro and Small Enterprises
12. Software Technology Park Scheme
13. Loan for Rooftop Solar Pv Power Projects
14. The Venture Capital Assistance Scheme
15. NewGen Innovation and Entrepreneurship Development Centre
16. Single Point Registration Scheme
17. Modified Special Incentive Package Scheme.

Now we will discuss all these schemes in detail form.

• Startup India Seed Fund Scheme- To boost the startup eco System, Startup India Seed Fund Scheme has been introduced. The main objective of such a scheme is to provide financial assistant/help for the product trails, prototype development, proof of concept, and market entries, etc. In the respect of such a scheme, PM Narendra Modi Ji said that startups in India do not face any capital / financial shortage.
• Startup India Initiative- In 2016, PM Narendra Modi Ji launched Startup India Initiative. This is one of the best government startup schemes for entrepreneurs. The main objective of such a scheme is to increase wealth and develop and maintain employability. As per this scheme, the government will provide tax benefits to the startups and the applicants. Under this scheme, there are several concessions that are available for entrepreneurs.
• MUDRA Bank- MUDRA (Micro Units Development Refinance Agency) Bank has been made to provide credit facility boosts the growth of small business in the rural area. The Micro Units Development Refinance Agency provides loans of up to Rs. 10 lakhs to small enterprises, non – corporate, micro- enterprises so that they can develop their businesses.
• ASPIRE- This scheme has been introduced by the Ministry of Micro, Small & Medium Enterprises to promote the rural industries and entrepreneurship and improve the social as well as economic aspects of life in the rural area. ASPIRE helps to set up a network of technology centers and it is developed to promote the startups for innovation in the agro-industry. The main objectives of such a scheme are-

• • Promote Entrepreneurship
  • Create New Jobs
  • Reduce Unemployment
  • Economic Development in the Rural Area
  • Facilitate Innovative Business Solution

• ATAL Innovative Mission- ATAL Innovative Mission is an initiative, which is set up by the NITI Aayog in 2016. It is introduced to promote innovation and entrepreneurship. The main objective of ATAL Innovative Mission (AIM) is to promote and create an ecosystem of innovation and entrepreneurship at the school, MSME, research institute, university, and industries. This scheme promotes entrepreneurship through talent utilization, skill development, and self-employment so that the person becomes a good entrepreneur.
• e-Biz Portal – e-Biz- Portal is introduced by the ministry of commerce and industry in 2013. The main objective of such a portal is to develop, improve and transform the business environment across the country. This portal is developed by Infosys. This portal reduces the complexity in collecting the business-related information and it also reduces unnecessary time consumption in the various requirements which are required to start and perform the business activities. This portal provides 24*7 online services so that the person can use it at any time and from anywhere.
• Ministry of Skill Development and Entrepreneurship- Ministry of Skill Development and Entrepreneurship is set up in 2014 to promote and develop the skills. The main objective of such a scheme is to build and maintain the demand for skilled person, develop new skills and innovative thinking, etc.
• Dairy Processing and Infrastructure Development Fund-The Government of India has introduced a fund which is known as the Dairy Processing and Infrastructure Development Fund for the benefits of formers. This fund is introduced under NABARD with the amount of a total corpus of Rs.800crore over the period of 3 years.

The main objectives of this scheme are –

1. 1. To bring and maintain efficiency in dairy product processing plants.
   2. To create additional infrastructure for processing milk.
   3. To create additional milk processing capacity for more production of dairy products.
   4. To increase the supply of quality milk to the consumers.
   5. To increase manufacturing facilities for the value addition of dairy products.

• Multiplier Grants Scheme (MGS)- This scheme is introduced by the Department of Electronics and Information Technology. This scheme is introduced to promote industry-oriented research & development in the industries, to encourage and accelerate the development of indigenous products and packages and globalization, etc. As per this scheme, if there is any industry that wants research & development for the development of any product, the government will provide financial help or financial support to such industry for the development of such product.
• Support for International Patent Protection in Electronics & Information Technology – This scheme is launched by the Department of Electronics and Information Technology. This scheme provides financial help to MSMEs for international filing in the Information Communication Technologies and Electronics sectors.
• Credit Guarantee Fund Trust for Micro and Small Enterprises- This scheme is launched by the Government of India for Micro and Small Enterprises. The aim of such a scheme is to provide collateral-free credit to the micro and small enterprises sectors. This scheme is available for new as well as existing enterprises. Under this scheme, the person can take the loan at a very subsidized rate without providing any security.
• Software Technology Park Scheme- This scheme is unique because it focuses on a product or a sector. This scheme is a 100% Export Oriented Scheme for the development and export of computer software and also includes the exportation of professional services. The important feature of this scheme is the provisioning of single point contact services for the member units and allowing them to conduct exports operations.
• Loan for Rooftop Solar PV Power Projects- Loan for Rooftop Solar PV Power Project is introduced by the Government of India to set up 40000 MWp of Grid- Interactive Rooftop Solar PV Plants in the next 5 years. The objective of this project is to build reliance on the non-conventional source of Power. These Rooftop Solar PV Power Plants will be developing in commercial, industrial, institutional sectors, residential sectors. These plants are very economical and will produce electricity by using solar energy.
• The Venture Capital Assistance Scheme-The Venture Capital Assistance Scheme is launched by the Small Farmer’s Agri-Business Consortium. This is one of the best schemes of the government to promote, develop and maintain agricultural entrepreneurship in India. This scheme will provide financial support in the form of an interest-free loan to the qualified projects and such assistance will be provided by the SFAC to meet the capital requirement for such qualified projects.

The main objectives of such a scheme are-

1. 1. It supports the entrepreneurs in developing an agribusiness which will be approved by the Banks, Financial Institutions.
   2. This scheme provides helps the farmers, agriculture graduates, and producer groups to participate in the value chain through the Project Development Facility.
   3. It provides accrued market to the producers to increase rural income and to increase employment.
   4. This scheme promotes training to the entrepreneurs so that they can develop their agribusiness projects.
   5. It provides financial support for the preparation of bankable DPRs by the use of a Project Development facility.
   6. This scheme is for the welfare of farmers to develop their business.

• NewGen Innovation and Entrepreneurship Development Centre- NewGen Innovation and Entrepreneurship Development Centre is a scheme that is launched by the National Science and Technology Entrepreneurship Development Board under the Department of Science and Technology, GOI. It also promotes the development of education institutional mechanisms to create entrepreneurial culture in S&T academic institutions (management institutes, science colleges, engineering colleges, universities, etc.)
• Single Point Registration Scheme- Single Point Registration Scheme is introduced in 2003 and it is managed by the NSIC (National Small Industries Corporation). National Small Industries Corporation registers all the MSMEs under this scheme and enables them to participate in government purchases.
• Modified Special Incentive Package Scheme- This scheme is launched in July 2012 by the Government of India to promote large scale manufacturing in India. This scheme will provide-

1. 1. Capital Subsidy
   2. Incentives for 44 categories/verticals across the value chain
   3. Re-imbursement of CVD/excise duty on capital equipment for the non SEZ units.
   4. Incentives for new units as well as expansion units
   5. Incentives for a period of 5 years
   6. Re-imbursement of central taxes and duties.