STARTUP INDIA: BOOSTING INDIAN ECONOMY

Mr. IRFAN BASHIR

Assistant Professor
(Sanskriti University Mathura UP)

INTRODUCTION

Startup India initiative is nurturing growth and dynamism in the

country's startup ecosystem. Read on to know how!

• Focus Sector
• Startup India

Prime Minister Narendra Modi announced the Startup India

initiative on India’s 69th Independence Day with an aspiration
to impart more “strength and inspiration to the talented young
generation of India to do something new for India and
humanity”. With a vision to create a platform where budding
entrepreneurs could establish themselves without any hassles,
the initiative was set up to provide funding support and
incentives in areas such as patent filing and simplification of
the startup process. Five months in, in January 2016, the Startup
India Action Plan was launched. For a country that boasts of
having the third- largest startup ecosystem in the world, this
initiative provides a further boost to nurture innovation.
The startup movement has traversed a long distance since
then. From being restricted to the digital/technology sector to
growing into a wider range of sectors covering agriculture,
manufacturing, education and healthcare; from being
confined to Tier 1 cities to reaching Tier 2 and Tier 3 cities –
Indian startups are spreading their wings far and wide. The
initiative has managed to instill confidence in the youth, that
that their idea is more than just an idea and that there are
ready opportunities to help nurture it further. India is maturing
as a startup hub with 8% growth registered in the number of
funded startups in 2016.
The Startup India initiative revolves around three pillars:
Simplification and Handholding, Funding Support and
Incentives, and Industry – Academia Partnership and
Incubation. 770 startups have been recognised by the
Department of Industrial Policy and Promotion (DIPP) under the
initiative so far.
Under the ambit of the aforementioned pillars, the following
support was planned and provided. Here’s looking at what
Startup India set out to do and what has been accomplished
so far.

SELF-CERTIFICATION TO REDUCE REGULATORY BURDEN

The Idea: To reduce compliance costs and ease compliance

norms, so that startups can focus on their core business
The Story so Far: Startups that come under the 36 ‘White
Category’ industries (practically non-polluting enterprises)
have been exempt from environmental clearances and are
permitted to self-certify. Additionally, self- certification under
six labour laws has also been permitted, wherein no inspections
will be conducted for a duration of three years.1

STARTUP INDIA HUB

The idea: To create a single point of contact i.e. ‘Startup India
Hub’, to facilitate exchange of knowledge and provide
access to funding. The Hub works as a nodal agency to
aggregate the fragmented startup community, create an
integrated ecosystem, and reduce knowledge asymmetry.
Additionally, the Startup India Learning Programme, a free
four-week online course, provides guidance to aspiring as well
as experienced entrepreneurs on how to formulate business
plans and approach challenges. The

programme helps entrepreneurs with assessment of the idea,

building a legal foundation, understanding financial basics,
introduction to business planning, fundraising and valuation. It
can be accessed at www.startupindia.gov.in.
The story so far: Startup India Hub provides facilitation to all
stakeholders of the startup ecosystem, including startups,
investors, incubators, mentors, Govt. agencies, and industry
partners. The team has addressed over 45,000 queries since
their launch in April 2016 through a toll-free helpline, email and
Twitter. The Hub has also taken up more than 350 bespoke,
one-on- one facilitation cases to provide support related to
financing, business advisory, regulatory advisory, etc. They are
soon launching the Startup India Virtual Hub, a web portal that
will act as a one-stop shop to bring together all stakeholders
on one platform for streamlined knowledge-sharing and
mutual connects.

IPR SUPPORT
The idea: To provide low-cost legal assistance to startups in
filing Intellectual Proper applications and speed up the
process for the same. A panel of 423 facilitators pertaining to
patent and design applications and 596 facilitators for
trademark applications has been established to assist
entrepreneurs in the filing of Intellectual Property Rights (IP)
applications.2
The story so far: As of now, 179 applications have been given
a benefit of up to 80% rebate in patent fee along with free
legal assistance. Additionally, 32 startups have received the
benefit of fee rebate in quicker examination of patents. 50%
rebate in trademarks filing fee for startups under Trademarks
Rules 2017 has been extended to 52 startups.3

RELAXED NORMS OF PUBLIC PROCUREMENT

The idea: To relax norms of public procurement for micro and
small enterprises
The story so far: Earlier, every time the government floated a
tender, there was an eligibility condition either pertaining to
prior experience or prior turnover. With these conditions now
done away with, more startups are now eligible to be a part of
the tendering process. The relaxation has been expanded to
Central Public Sector Undertakings as well.

TAX BENEFITS
The idea: To provide tax exemptions to startups in a bid to
encourage them further
The story so far: As per the Finance Act 2016, startups have
been exempted from income tax for a period of three years in
a block of five years, if they are registered between 1st April
2016 and 31st March 2019. In the Union Budget 2017-18, the
Government announced an extension in the period of profit-
linked deductions to seven years for all startups that are
eligible. To avail this benefit, they have to procure a Certificate
of Eligibility from the Inter-Ministerial Board of DIPP.4
The introduction of a new section 54EE permits the exemption
of investment of long-term capital gains by an investor in a
fund announced by the Central Government. The section
54GB has been amended to provide exemption of capital
gains after the sale of a residential property, if the investment
is made for the shares of a startup company. Tax exemptions
on investments above Fair Market Value have been
introduced for investments made in Startups.

FUNDING SUPPORT AND INCENTIVES

The idea: To provide financial assistance to startups, a ‘Fund of
Funds’ of USD 1.6 Billion has been introduced and is being
managed by Small Industries Development Bank of India
(SIDBI)
The story so far: This Funds of Funds invests in SEBI registered
“Alternate Investment Funds (AIFs)” which in turn invest in
Startups. USD 92 Million has been released to SIDBI with 62
startups having received funding from various AIFs5.

LEARNING AND DEVELOPMENT MODULE

The idea: To educate startups and aspiring entrepreneurs
through various stages of their entrepreneurial journey
The story so far: An interactive learning module has been
launched for this purpose. Over 100,000 applications have
received and 3,400 applicants have completed 100% of this
course, which aims to help entrepreneurs get their ideas and
ventures to the next level through structured learning.
What else shines bright in the Startup India initiative?
• Provision of support infrastructure: New incubation centres
are being set up across India under the Atal Innovation Mission
with an aim to provide the necessary infrastructure or any
other assistance to startups, especially in their initial stage.
Apart from the establishment of new centres, existing centres
are being updated.
Additionally, under the Scheme, research parks, startup
centres, bio-clusters, bio-incubators, technology transfer
offices and bio-connect offices are also being set up. In order
to fuel innovation through incubation and successful
collaboration between academia and industry through joint
research projects, Research Parks are being set up across
India. Huge funds have been allocated towards the same.

Government initiatives undertaken, a spike in academic

incubators, an increased interest among investors and
growing digital consumers are likely to propel the startup
landscape even further. Given the momentum at which the
startup ecosystem is progressing in India, the country is likely to
host 10,500 startups by 2020, employing over 210,000 people.6

Source:
1 http://www.startupindia.gov.in/status.php,
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2 http://www.startupindia.gov.in/status.php,
Pg. 2
3 http://www.startupindia.gov.in/status.php,
Pg. 2
4 http://www.startupindia.gov.in/status.php,
Pg. 2
5 http://www.startupindia.gov.in/status.php,
Pg. 2
6 http://www.nasscom.in/indian-startup-ecosystem-maturing-
%E2%80%93-edition-2016