The Prime Minister of India, Shri Narendra Modi had on 69th Independence Day speech announced the “Start-up India” initiative. This initiative aims at fostering entrepreneurship and promoting innovation by creating an ecosystem that is conducive for growth of Start-ups. The objective is that India must become a nation of job creators instead of being a nation of job seekers. The Prime Minister of India formally launch the initiative on January 16, 2016 from Vigyan Bhawan, New Delhi.
Hear are the top 10 points you need to know about Start up India:
- Compliance: Regulatory burden on Startups to be reduced to allow them to concentrated on their core business and keep compliance cost low. In case of Labour Laws, no inspection for a period of 3 years. Under Environment Laws, to fall under ‘white category’ to self certify the compliances.
- Intellectual Property Rights (IPR): IPR Protection is most importanct to sustain in this compititive world. Ther would be fast-tracking of Startup patent applications, a ‘facilitatior’ shall be empanelled by the Controller General of Patent, Designs and Trademarks (CGPDTM), Govenment will be bearing the facilitation cost and rebate upto 80% in filing patents.
- Faster Exit for Startups: To make it easier for startups to exit, provision for fast-tracking closure of businesses have been included in ‘The insolvency and Bankrupcy Bill 2015’. Startups with simple debt structures may be wound up within a period of 90 days from making of an application for winding up on a fast-track basis.
- Funding Support: Government will set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over a period of 4 years. Credit guarantee mechanism through National Credit Guarantee Trust Company (NCGTC)/ SIDBI is being envisaged with a budgetary Corpus of INR 500 crore per year for the next four years.
- Tax Exemptions:
- Exemptions on Capital Gains – Exemptions shall be given to person who have capital gains. Newly formed manufacturing MSMEs by individual shall be extended to all startups. Investment in ‘computer or computer software’ (as used in core business activity) shall also be considered as purchase of ‘new assets’ in order to promote technology driven Startups.
- Tax Exemptions for 3 years – With a view to stimulate the development of Startups in India and provide them a competitive platform, it is imperative that the profits of Startup initiatives are exempted from income-tax for a period of 3 years.
- Tax Exemption for investment above FMV – In line with the exemption available to venture capital funds to invest in startups above fair market value (FMV), investments made by incubators above FMV shall also be exempted.
- Atal Innovation Mission (AIM): Have two core functions
- Entrepreneurship Promotion via – Establishment of sector specific incubators, Pre-incubation training to potential entrepreneurs, Strengthening of existing incubation facilities, Seed funding for high growth startup
- Innovation Promotion vis – Institution of innovation awards, Providing support to State Innovation councils, Launch of Grand Innovation Challenge Awards.
- Setting up of Incubators: 35 new incubators in existing institutions and 35 new private sector incubators. For existing institutions funding support of 40% by central government, 40% by state government and 20% by private sectors. Where as for private sector incubators 50% of grant by cnetal government.
- 7 New Research Parks: The Government shall setup 7 new Reasearch Parks in institutes below with an intial investment of INR 100 core each. The Research Parks shall be modeled based on the Research Park setup at IIT Madras.
- Innovation Focused Programs for Students: Innovation core program shall be initiated to target school kids with an outreach to 10 lakh innovations from five lakh schools. A Grand Challenge Program (National Initiative for Developing and Harnessing Innovations) to support and award Rs 10 lakhs to 20 student innovations from Innovation and Entrepreneurship Development Centres. Uchhattar Avishkar Yojana has earmarked Rs 250 crore per annum towards fostering ‘very high quality’ research amongst IIT students.
- Definition of Startup: The last but not the least and the most important part. The Flowchart below is the analysis of eligible criteria for startup.
Here one of the most important eligibility criteria is the product or service should be a new one or significantly improved version of existing service or products. The second biggest task for entrepreneurs is to get a recommendation from a recognised incubator or recommended by Government of India or Funded by Incubation fund.
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