What Is Startup India Scheme: Registration, Action Plan and How To Apply
Startup India scheme is an initiative by the Government of India to “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.” Its main aim is to aid the growth of start-ups across sectors and cities, including urban and rural areas.
If you are a budding entrepreneur, understanding the key details of the Startup India scheme could be of great advantage. Read on to know its action plan, benefits, eligibility and the registration process.
Startup India Scheme – A brief Introduction
The Startup India programme was announced by Prime Minister Narendra Modi on the Independence Day of 2015, which became effective in January 2016. The main goal of this initiative is to boost entrepreneurship, generate employment opportunities and provide new ventures access to easy capital. Under this scheme, individuals belonging to SCs and STs and women entrepreneurs can avail of business loans between Rs.10 lakh and Rs.1 crore.
Key Details of the Startup India Scheme
The government has laid out a comprehensive plan for the startups in India to become operational as smoothly as possible. The plan includes:
1. Smooth running of the application process
The Startup India scheme has made the application process simple by accumulating the formalities involved in one place. There is one specific department for each task, such as registration, accounting, and obtaining a patent. A policy introduced in 2015 also mandates every entity to begin its operation within 90 days of registration.
2. Funding of new ventures
The government has offered several loans, grants and tax facilities under this scheme. All of these are aimed to make capital accumulation easier for startups. Our government has managed to gather funding of Rs.10,000 crore, which is set to be rolled out in a span of four years. As per the programme, the startups are also exempted from paying Income Tax for the first three consecutive years of their operation.
Action Plan of Startup India Scheme
The action plan of startup India is segmented into three stages- simplification & handholding, funding support & incentives, and industry-academia partnership & incubation. These three stages are rolled out in multiple steps. They are briefly discussed below:
Stage 1: Simplification and handholding
This includes the following facilities:
- Compliance regime based on self-certification: As per the scheme, this facility will help young entrepreneurs save time and effort by keeping compliance costs and regulations low and self-serviceable. Startups have been offered flexible compliance in terms of environment and labour laws to give them a head start. Also, there will be zero inspection for the first three years unless there is any complaint or violation of the guidelines.
Additionally, startups certified by Central Pollution Control Board (CPCB) under the white category can avail of self-certifying compliance services. - Startup India Hub: This initiative has put effort into bringing all the Indian startups under one administration, also referred to as a startup ecosystem, in order to enable knowledge exchange and get easy access to funds.
- Rolling out online application and website: Government also plans to roll out a mobile app and online portal to create a formal, collaborative platform for all startups. These platforms will include tasks such as registration process and tracking, access to digital registration certificate, and also communication and exchange of information with the other ventures available on the platform.
- Legal support and fast-tracking patent examination at a lower cost: This arrangement will provide for easy access to products and services such as assisting a panel of facilitators, fast-track examination of a patent application and rebate in fees. These are necessary for start-ups so that they get habituated to Intellectual Property Rights.
- Relaxation of public procurement norms for start-ups: The support offered by the scheme will make it easier for start-ups to have their own manufacturing facilities in India.
- Easier exit for start-ups: With this rule, startup companies can exit within 90 days after applying for their registration. This enables startups to bring out their innovative ideas upfront without the fear of failure
Stage 2: Funding support and incentives
The facilities offered under this stage are as follows:
- Funding support with a corpus of Rs.10,000 crore: The government has made arrangements to support with funds amounting up to Rs.10,000 crore in the course of four years. The fund will be distributed to the startups through Venture Funds registered under SEBI.
- Credit guarantee fund for startups: This initiative is to make sure that there is enough funding for the startups and to encourage banks and lenders to support them through venture debts.
- Tax exemption on gains accrued: Startups that have invested capital gains in Government approved Fund of funds or purchased assets for the new venture will enjoy tax exemption benefits.
- Tax exemption to new ventures for 3 years: As most new ventures struggle during their initial years, the Government has decided to give them the privilege of tax exemption for three initial consecutive years.
- Tax exemption on investments above Fair Market Value: Startups will be given the benefit of tax exemption on investments above fair market value. This is to support seed capital investments.
Stage 3: Industry-academia partnership and incubation
Benefits available under this section are as below:
- Organising startup fests for showcasing innovation and providing a collaboration platform: Government has decided to collaborate with the startup community to organise a startup fest. This will include the active participation of academia, investors, shareholders and industrialists. These activities aim to gather both national and international interest and attention.
- Launch of Atal Innovation Mission (AIM) with Self-employment and Talent Utilisation (SETU) Program : This collaboration between AIM with SETU will open gates for world-class innovation hubs, startup hubs and many other self-employment opportunities.
- Using private sector expertise for incubation: Government has taken the initiative to support and connect private sector expertise such as the Department of Science & Technology, Department of Higher Education, Department of Electronics and Information Technology, Ministry of Micro, Small & Medium Enterprises and NITI Ayog to set up incubators all over the country. Through this effort, entrepreneurs will gain access to physical infrastructure, networking access, and mentorship support.
- Building innovation centres at national institutes: The scheme aims to set up 31 innovation centres at national institutes all across the country. This includes financial support of Rs.50 lakhs for 13 startup centres and 18 Technology Business Incubators at IITs/NITs/IIMs.
- Setting up 7 new research parks: Government plans to build 7 new research parks by investing approximately Rs.100 crore to welcome new technologies and advancements. These parks will be modelled after the research park set up at IIT Madras.
- Promoting new ventures in the Biotechnology sector: This innovative program aims to raise interest among the school kids with respect to the field of science & technology. The aim is to encourage students to develop 10 lakh innovations from 5 lakh schools. Shortlisted innovations will be showcased at the Annual Festival of Innovation at Rashtrapati Bhavan.
- Launching of innovation-focused programs for students: The government has taken initiatives to launch innovation-focused programs for students and has introduced Ucchattar Avishkar Yojana and NIDHI (National Initiative for Developing & Harnessing Innovations) for the same.
- Annual incubator grand challenge: Setting up world-class incubators will help the startups in their business lifecycle by creating a startup ecosystem.
Eligibility Criteria for Registration under Startup India Scheme
Startups who register under Startup India Scheme enjoy several benefits. Following is the list of the eligibility criteria an entity has to satisfy in order to avail of the benefits:
- Only a private limited company or a limited liability partnership can apply for this scheme.
- The business should not be more than 10 years old from the date of registration.
- The net turnover of the firm should not exceed Rs.25 crore.
- The firm should obtain consent from the Department of Industrial Policy and Probation, which is possible only if it is getting funding from an Incubation fund, Private Equity fund or Angel fund.
- It should obtain a recommendation letter by incubation.
- The company must provide innovative products or services.
- The venture must not have been formed by reconstruction or splitting up of an older business.
How to Register for Startup India?
Follow these steps to complete your registration:
- Visit the homepage of Startup India
The first step is to visit the Department for Promotion of Industry and Internal Trade or Startup India.
- Click on the ‘Register’
Scroll down and click on the ‘Registration Process’ tab. From the menu, select ‘Register at Shram Suvidha Portal and then login’
- Enter your details
A new window will open. Enter your details such as name, mobile number, email id and verification code. Click on ‘Signup’.
- Enter OTP for verification
you will receive an OTP. Enter it and set a new password using the link provided.
- Sign in
Now sign in using the credentials and create a profile of the shareholder(s) of the startup.
Benefits of the StartUp India Scheme
The primary aim of this scheme is to provide facilities and benefits to startups. There are numerous benefits from different aspects, such as tax benefits, financial support and networking opportunities. Some of them are as below:
1. Financial and tax benefits
Among the various financial and tax benefits, some are significant such as an 80% rebate on Patent cost and exemption from Income Tax for the first 3 years of operation.
2. Registration and tender benefits
Generally, the process of registration for startup companies used to be quite lengthy and time-consuming. To make this process simpler for the startups, the scheme has launched mobile apps and websites for the same in addition to arranging meetings for queries and doubts.
Additionally, startup companies are prioritised for government tenders under this scheme.
3. Networking opportunities
Government arranges two startup fests annually, both on national and international levels, for all shareholders from different industries to meet in one place. These provide huge networking opportunities for everyone and also a good place to exchange ideas.
Challenges Faced by Startup India
Despite helping start-up companies in terms of development and expansion, here are a few challenges that this scheme is facing:
- Startups usually have difficulty in making their place in the market due to a lack of faith and confidence in their innovation and ideas.
- The startup India initiative mostly focuses on the initial stages of the development of a company. Unfortunately, it doesn’t consider the long-term plans of the startups.
- In any new business, it is important to have a proficient team to work with; it is mostly not possible due to the lack of funding.
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Final Word
The Startup India initiative by the Government of India has helped new ventures to come up with their ideas and innovations. The Startup India programme aims to make this path smoother and boost the economy by creating employment opportunities. For entrepreneurs, this is a huge opportunity and support from the government. Register today to make your entrepreneurial dreams come true.
FAQs
Ans: Only private limited companies, partnerships firms or limited liability partnership firms can apply for Startup India registration.
Ans: Here are the documents one requires for Startup India registration:
• PAN card
• Certificate of registration
• Pitch deck
• Revenue model
• IT returns for the last three financial years
Ans: No, foreign firms are not eligible to register under the Startup India scheme. However, an Indian subsidiary of a foreign company can go ahead with the registration.
Ans: Yes, GST registration is mandatory for Indian startups in many cases, such as startups under Reverse Charge Mechanism, companies that had pre-GST tax registrations and start-ups that have an annual turnover exceeding Rs.40 lakh.
Ans: No, individual entrepreneurs are not eligible for this scheme. Only startups approved by the Department for Promotion of Industry and Internal Trade can apply for this scheme.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
