Startup India is an initiative of the Government of India.

Startup India is a flagship initiative of the Government of India, intended to build a strong
eco-system for nurturing innovation and Startups in the country that will drive sustainable
economic growth and generate large scale employment opportunities. The Government
through this initiative aims to empower Startups to grow through innovation and design.

The campaign was first announced by Indian Prime Minister, Narendra Modi during his 15
August 2015 address from the Red Fort, in New Delhi. The action plan of this initiative, is
based on the following three pillars:

1. Simplification and Handholding.

2. Funding Support and Incentives.

3. Industry-Academia Partnership and Incubation.

Simplification and Handholding

 Compliance Regime based on Self-Certification - Startups shall be allowed to self-

certify compliance (through the Startup mobile app) with 9 labour and environment
laws. In case of the labour laws, no inspections will be conducted for a period of 3
years. Startups may be inspected on receipt of credible and verifiable complaint of
violation, filed in writing and approved by at least one level senior to the inspecting
officer. In case of environment laws, Startups which fall under the ‘white category’ (as
defined by the Central Pollution Control Board (CPCB)) would be able to self-certify
compliance and only random checks would be carried out in such cases.
 Startup India Hub - To create a single point of contact for the entire Startup
ecosystem and enable knowledge exchange and access to funding.
 Rolling-out of Mobile App and Portal - To serve as the single platform for Startups for
interacting with Government and Regulatory Institutions for all business needs and
information exchange among various stakeholders
 Legal Support and Fast-tracking Patent Examination at Lower Costs - Under this
scheme, the Central Government shall bear the entire fees of the facilitators for any
number of patents, trademarks or designs that a Startup may file, and the Startups
shall bear the cost of only the statutory fees payable. Rebate on filing of application:
Startups shall be provided an 80% rebate in filing of patents vis-a-vis other
companies. The scheme is being launched initially on a pilot basis for 1 year; based
on the experience gained, further steps shall be taken.
 Relaxed Norms of Public Procurement for Startups - In order to promote Startups,
Government shall exempt Startups (in the manufacturing sector) from the criteria of
“prior experience/ turnover” without any relaxation in quality standards or technical
parameters. The Startups will also have to demonstrate requisite capability to
execute the project as per the requirements and should have their own
manufacturing facility in India.
 Faster Exit for Startups - Startups may be wound up within a period of 90 days from
making of an application for winding up on a fast track basis, as per the recently
 tabled Insolvency and Bankruptcy Bill 2015, which has provisions for voluntary
closure of businesses. This process will respect the concept of limited liability.

Funding Support and Incentives

 Providing Funding Support through a Fund of Funds with a Corpus of INR 10,000
crore - In order to provide funding support to Startups, Government will set up a fund
with an initial corpus of INR 2,500 crore and a total corpus of INR 10,000 crore over a
period 4 years (i.e. INR 2,500 crore per year) . The Fund will be in the nature of Fund
of Funds, which means that it will not invest directly into Startups, but shall participate
in the capital of SEBI registered Venture Funds.
 Credit Guarantee Fund for Startups - 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 Exemption on Capital Gains - With this objective, exemption shall be given to
persons who have capital gains during the year, if they have invested such capital
gains in the Fund of Funds recognized by the Government. In addition, existing
capital gain tax exemption for investment in newly formed manufacturing MSMEs by
individuals shall be extended to all Startups.
 Tax Exemption to Startups for 3 years - The profits of Startup initiatives are
exempted from income-tax for a period of 3 years. The exemption shall be available
subject to non-distribution of dividend by the Startup.
 Tax Exemption on Investments above Fair Market Value - Under The Income Tax
Act, 1961, where a Startup (company) receives any consideration for issue of shares
which exceeds the Fair Market Value (FMV) of such shares, such excess
consideration is taxable in the hands of recipient as Income from Other Sources.
Investment by venture capital funds in Startups is exempted from operations of this
provision. The same shall be extended to investment made by incubators in the
Startups.

Industry-Academia Partnership and Incubation

 Organizing Startup Fests for Showcasing Innovation and Providing a

Collaboration Platform - To bolster the Startup ecosystem in India, the
Government is proposing to introduce Startup fests at national and
international stages.
 Launch of Atal Innovation Mission (AIM) with Self-Employment and Talent
Utilization (SETU) Program - The Atal Innovation Mission will establish sector
specific incubators and 500 'Tinkering Labs' to promote entrepreneurship,
provide pre-incubation training and a seed fund for high-growth startups.
Three innovation awards will be given per state and union territory, along with
three national awards, as well as a Grand Innovation Challenge Award for
finding ultra-low cost solutions for India.
 Harnessing Private Sector Expertise for Incubator Setup - To ensure
professional management of Government sponsored / funded incubators,
Government will create a policy and framework for setting-up of incubators
across the country in public private partnership.
  Building Innovation Centres at National Institutes - In order to augment the
incubation and R&D efforts in the country, the Government will set up/ scale
up 31 centres (to provide facilities for over 1,200 new Startups) of innovation
and entrepreneurship at national institutes
 Setting up of 7 New Research Parks Modeled on the Research Park Setup at
IIT Madras - The Government shall set up 7 new Research Parks in institutes
with an initial investment of INR 100 crore each. The Research Parks shall be
modeled based on the Research Park setup at IIT Madras.
 Promoting Startups in the Biotechnology Sector - 5 new Bio-clusters, 50 new
Bio-Incubators, 150 technology transfer offices and 20 Bio-Connect offices
will be set up in research institutes and universities across India. BIRAC AcE
Fund in partnership with National and Global Equity Funds (Bharat Fund,
India Aspiration Fund amongst others) will provide financial assistance to
young Biotech Startups.
 Launching of Innovation Focused Programs for Students - An innovation core
program targeted at school kids aims to source 10 lakh innovations from five
lakh schools, out of which the the best 100 would be shortlisted and
showcased at an Annual Festival of Innovations, to be held in Rashtrapati
Bhavan. A Grand Challenge program called NIDHI (National Initiative for
Developing and Harnessing Innovations) shall be instituted through
Innovation and Entrepreneurship Development Centres (IEDCs) to support
and award INR 10 lakhs to 20 student innovations. Uchhattar Avishkar
Yojana, a joint MHRD-DST scheme has earmarked Rs. 250 crore annually to
foster "very high quality" research amongst IIT students.
 Annual Incubator Grand Challenge - The government will identify and select
ten incubators, evaluated on pre-defined Key Performance Indicators (KPIs)
as having the the potential to become world class, and give them Rs.10 crore
each as financial assistance to ramp up their infrastructure.

Key points

• 10,000 crore startup funding pool.

• Reduction in patent registration fees.

• Improved Bankruptcy Code, to ensure a 90-day exit window.

• Freedom from mystifying inspections for first 3 years of operation.

• Freedom from Capital Gain Tax for first 3 years of operation.

• Freedom from tax for first 3 years of operation.

• Self-certification compliance.

• Young Entrepreneur of The Year Satyam Kumar, Founder and CEO at Dataoxy

• Created an Innovation hub, under the Atal Innovation Mission.

• To target 5 lakh schools and involve 10 lakh children in innovation related

programmes.
• New schemes to provide IPR protection to start-up firms.

• Encourage entrepreneurship within the country.

• Promote India across the world as a start-up hub.

• Built Start-up Oasis as Rajasthan Incubation Centre

Launch

The event was inaugurated on 16 January 2016 by The Finance Minister of India Arun
Jaitley. Among the attendees were CEOs, start-up founders and venture capitalists.

Government's role

The Ministry of Human Resource Development and the Department of Science and
Technology have agreed to partner in an initiative to set up over 75 such start-up support
hubs in the National Institutes of Technology (NITs), the Indian Institutes of Information
Technology (IIITs), the Indian Institutes of Science Education and Research (IISERs) and
National Institutes of Pharmaceutical Education and Research (NIPERs).

The Reserve Bank of India said it will take steps to help improve the ‘ease of doing business’
in the country and contribute to an ecosystem that is conducive for the growth of start-up
businesses.

Investments

SoftBank, which is headquartered in Japan, has invested US$2 billion into Indian start-ups.
The Japanese firm has pledged to investment US$10 billion. Google declared to launch a
start-up, based on the highest votes in which the top three start-ups will be allowed to join
the next Google Launchpad Week, and the final winner could win an amount of
US$100,000in Google cloud credits. Oracle on 12 February 2016 announced that it will
establish nine incubation centres in Bengaluru, Chennai, Gurgaon, Hyderabad, Mumbai,
Noida, Pune, Trivandrum and Vijayawada.

State initiatives

Kerala has initiated a government start-up policy called "Kerala IT Mission" which focuses on
fetching ₹5,000 crore (equivalent to ₹54 billion or US$750 million in 2018) in investments for
the state's start-up ecosystem. It also founded India's first telecom incubator Start-up village
in 2012. The state also matches the funding raised by its incubator from Central government
with 1:1.

Telangana has launched the largest incubation centre in India as "T-Hub".

Andhra Pradesh has allocated a 17,000-sq.ft. Technological Research and Innovation Park
as a Research and Development laboratory. It has also created a fund called "Initial
Innovation Fund" of ₹100 crore (US$14 million) for entrepreneurs.

The government of Madhya Pradesh has collaborated with the Small Industries
Development Bank of India (SIDBI) to create a fund of ₹200 crore (US$28 million).
Rajasthan has also launched a "Start-up Oasis" scheme.
Higher education alliances

As per the "Industry-Academia Partnership and Incubation" focus of the Start-up India
initiative, the Union Ministry of Human Resource Development has announced plans for the
development of "Research Parks" to be created in partnership with higher education
providers across India. An initial investment of Rs.100 crore, has been set aside for the
program, which aims to provide students with access to funds and mentorship for start-ups.

The Innovation in Mobile App Development Ecosystem (I-MADE) program was also rolled-
out in February 2016. An initiative developed in partnership with The Department Of
Telecommunications (Govt of India), Telecom Centres of Excellence (TCOE), EVC
Ventures, and Unified, it aims to help Indian entrepreneurs create mobile app start-ups. The
program is scheduled to last for 5 years and has collaborated with 11 Indian universities.