An initiative of the Government of India, the Startup India Scheme was started in the year 2016. The primary goals of this government scheme include the promotion of status, employment generation and wealth creation. The Startup India has launched multiple programs for creating a robust startup ecosystem and transforming India into a country of employment generators. These programs are managed by the Department for Industrial Policy and Promotion.
With this program, the government of India intended to empower startups to grow through innovation and design. Let's learn more about Startup India Scheme, its top benefits, eligibility and the registration process:
To apply for this scheme, a startup must be registered as a Private Limited Company under Indian Companies Act 2013, a Limited Liability Partnership under Indian Limited Liability Partnership Act, 2008 or a Partnership firm under the Indian Partnership Act, 1932.
All business startups in India that have been started in the past five years from the effective date of the policy will be eligible for the Startup India Scheme.
Startups that are developing a new product or service or process or anything new are eligible to apply for this scheme. There are three criteria in this condition:
The startup firm must be working for innovation, deployment, development or commercialization of a newly launched product, service driven by technology or intellectual property.
The company should be focused on developing and commercializing a new product o service or significantly improve the existing solution that will create or add value to customers or workflow.
The startup must not be only engaged in developing products or services that do not have the potential for commercialization, undifferentiated product or service with no or limited incremental value for workflow.
The annual turnover of the startup business should not exceed Rs. 25 crore in any of the past 5 years since its inception to be eligible under this scheme.
To get benefit from the Startup India Scheme, every startup has to get the approval from the Inter-Ministerial Board set up by the Department of Industrial Policy and Promotion. In order to obtain approval, the firm needs to submit an application to validate the innovative nature of business with the document.
First, incorporate your business as a Private Limited or Partnership, Limited Liability Partnerships. Follow all the procedures for registration; obtain the certificate of Incorporation/Partnership registration, Pan, and other important compliances.
Now, register your startup with the scheme. The process is simple and you can do it online.
First, log on to the Startup India website and fill the form. Next, enter the OTP sent to your mail and other major details like a startup as the type of users, name and stage of the startup.
After you create your profile on your website, apply for different acceleration, incubator/mentorship programmes and other challenges on the site along with getting access to a resource like Learning and Development Program State Polices for Startups, Government Schemes, and pro-bono services.
The next step is to avail the Department for Promotion of Industry and Internal Trade Recognition. This recognition helps startup companies to avail different benefits such as access to quality Intellectual Property Services and resources, relaxation in public procurement norms, easy winding of company, access of Fund of Funds, self-certification under labour and environment laws and tax exemption on investment above fair market value.
If you are a new user, click on Get Recognized button for getting DPIIT Recognition. In case, you are already registered, click on Dashboard and the DPIIT Recognition.
The Recognition Application page opens, click on the View Details button under the Registration Details section. Now, fill the Startup Recognition Form and click on the Submit button.
Incorporation/Registration Certificate of your startup company
Complete Details of the Directors
Proof of concept like pitch deck/website link/video (in case of a validation/ early traction/scaling stage startup)
Patent and trademark details (Optional)
PAN Number
After you apply, you instantly get a recognition number for your startup. The certificate of recognition is issued after the proper checking of all documents that usually take 2 days after submitting the details online.
You need to be careful in uploading the document. During the verification, if it is found that the required document is not uploaded/the wrong document uploaded or a forged document has been uploaded then you will be liable to pay the fine of 50% of you paid-up capital of the startup with a minimum fine of Rs. 25,000.
Patents, Trademark: If you have come up with something innovative and unique and you need a patent for your creation, approach any form the list of facilitators issued by the government of India. You can also register or your unique trademark for your business. You will need to bear only the statutory feeds thus getting an 80% reduction in fees.
Funding: One of the major challenges startup companies face are to access to finance. Due to lack of experience, security or existing cash flows, entrepreneurs find it tough to attract investors. Also, the high-risk nature of startups, as a significant percentage fail to take-off, puts off many investors.
To support startups financially, the Government of India has set up a fund with an initial corpus of Rs. 2,500 crore and a total corpus of Rs. 10,000 core over a period of 4 years. This Fund is in the nature of a Fund of Funds that means it will not invest directly into a Startup, but shall participate in the capital of SEBI registered Venture Funds.
Tax Exemption: Startups are exempted from income tax for three years. In order to avail this facility, they need to certify by the Inter-Ministerial Board.
Self Certification: As a startup, you can self certify under the Employment and Labor Laws; it will help you to reduce the compliance cost. Startups are allowed to self-certify their compliances under the six labour laws and three environment laws for a period of 3-5 years for the date of incorporation.
There are a host of benefits provided to the startups by the Startup India Scheme. Here is the list of benefits of Startup India Scheme:
The startup is more vulnerable to failure at the initial phase of their incorporation. They always found themselves in a dilemma of protecting their existence against the odds, including government compliances. Thanks to the Startup India Initiative that offers startups a cushion against such turbulence by shredding off some tight regulations. With this scheme, startups are permitted for self-certification with nine labour and environmental laws.
Another great benefit of Startup India Scheme is that under this programme, the government provides lists of facilitators of patents and trademarks. They offer high-quality Intellectual Property Right Services including rapid checking of patents at a lower cost.
The Government of India bears all facilitator feeds and the company has to pay only the statutory fees. It means startups get an 80% reduction in the cost of filing patents.
The startups registered under the Startup India schemes are exempted from tax. They get this facility for a period of the initial three years. Any investment made by incubators of higher value than the market price is exempted.
Further, investments made by angel investors are also exempted under this scheme. A tax holiday for the first three years or reaching a certain threshold limit means, that the startup can completely utilize the revenues for business development purposes.
Earlier, going for public procurement, it was compulsory for a company to have prior experience or a requisite turnover. Today, things have changed. Startup India has paved the way for equal opportunities for startups as well as established enterprises. Public procurement norms have been relaxed for startups; hence, making it easy for them to go for public procurement.
Apart from all these, the research and innovation benefits are great that are provided under Startup India. The initiative encourages research and innovation among those, who have an aspiration to be an entrepreneur.
Proposals are in place to set up seven new research parks. These parks will ensure that all the required facilities are offered to startup companies to research and development of their unique products/ services.
Government projects are usually large and have higher monetary incentives. But it is quite difficult to obtain especially for startup companies because there is a lot of competition.
However, the Startup India Scheme provides startups with incentives to receive government tenders. For these, companies are not required to have any prior experience to be eligible to receive such tenders.
The Startup India scheme provides a platform to a startup where they can interact with other startup stakeholders at a specific place and time. These meetings are held twice in every form of a fest. These fests are being held on domestic and international levels. Such benefits let the startups explore more and more alternatives for funding and business ideas to ensure the progress.
The government of India has launched the Startup India Scheme to encourage entrepreneurship and boost employment in the country. It supports innovation and research work by offering the base for emerging startups seeking funds to thrive in the competitive space. If you are planning to set up your own business or already have established your business, you must take benefits from this scheme.
Hopefully, you found this post helpful and make your business successful with this guide.
For any doubt or questions, feel free to comment below. Our team is always there to answer your confusions. Don't forget to subscribe to The CEO Magazine and get all the latest updates in your inbox.
Follow us on Google News