Startup India Standup India- initiative was revealed at the Red Fort on 15th of August 2015. Five months later, on 16th January, Startup India, Standup India action plan was released. This groundbreaking initiative by the Modi government to improve startups ecosystem in India got a great response from the business community.
Below are the 8 policy initiatives declared in the event that simplifies entrepreneurship in India.
Single Window Digital Setup Process
Starting up without delay was the big mantra of ‘Startup India, Stand up India’.
From April 1st, startups would be able to set up their firm by just filing a form on the official mobile app or the website. This means getting the clearances, approvals etc. is just a day long process.
Startups will not be inspected for the initial 3 years after setup for labour laws. Employee Provident Fund (EPF), gratuity, contract labour wages or salaries etc. require only self-certification from now thereby, reducing the regulatory burden on Startups. Compliance certification for ‘Water and Air Pollution Act’ is also relaxed.
Comprehensive Intellectual Property Right (IPR) protection
‘Startup India Stand up India’, aims to build the IPR inventory of India. This is why the government is encouraging fast paced patent examination, approval and adoption. The government now has declared an 80 % rebate in the patent registration cost. This will enable startups to protect and commercialize the IPR faster.
Tax Holiday for Young Startups
Boosting the Startup Ecosystem, Government of India has declared a 3 year tax holiday on startup profits. Mr. Amitabh Kant, Secretary of Department of Industrial Policy and Promotion pointed out that: “All startups incorporated in India not prior to five years as per the definition of startup and starting the operations before 2019 can get this benefit for three years.”
“All startups incorporated in India not prior to five years as per the definition of startup and starting the operations before 2019 can get this benefit for three years.” Startups claiming for benefits would not lose the privileges if they don’t make a profit in 2nd or 3rd years. The tax holiday would be provided only for the years wherein startup makes the profit within the 5 year window.
The government has exempted tax on capital gains that will be generated from startup funding. Also, a tax exemption on investments above Fair Market Value has been allowed. Deadline for seeking tax exemption is till March 2019 and scheme cut-off date would be March 2024. But, the exemption will only be available to startups which have not distributed the dividend to investors.
Faster Exits for Startups
Now startups can wind up within 90 days after a request is placed with the authority involved. This helps in reducing the promoter risk associated with exposure to failed ventures. Such delinking of risks strengthens the Limited Liability Principle. Even voluntary closure of businesses is expected to be a part of recent ‘Insolvency and Bankruptcy Bill Of 2015’.
Startup India Hub
Startup India Hub is a single point of contact for the entire startup ecosystem. This includes: VCs, angel networks, banks, incubators, legal partners and consultants. Universities and R&D institutions are also a vital part of Startup hub.
The Startup India ‘Hub and Spoke’ model will connect access and nurture budding startups. This helps young startups get mentored and tap on funding opportunities.
A Startup Credit Guarantee Fund
The Startup Credit Guarantee Fund scheme would be a game changer for those startups which are not in the radar of big investors.
Small Industries Development Bank of India (SIDBI) and National Credit Guarantee Trust Company (NCGTC) with a Rs. 500 crore annual corpus for the next four years will be in-charge of Credit Guarantee Fund.
Rs. 10,000 crore Startup Fund
The government will set in place a Rs. 10,000 crores startup fund. High priority sectors such as manufacturing, agriculture, health, and education would be covered by this fund. The fund will be a part of the Security Exchange Board of India (SEBI) registered venture funds that invest in new businesses.
Initially, it would have the corpus of Rs. 2,500 crores and a total corpus of Rs. 10,000 crores reached in next 4 years. A board consisting of professionals from industry bodies, academia, and successful startups would be managing this fund.
Find the eligibility criteria for availing benefits of Startup India scheme. These are our pick of the best policy initiatives that we think will boost the Indian Startup Ecosystem.
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