Understanding the Startup India Action Plan

The government of India wanted to build a strong ecosystem for nurturing innovation and creative entrepreneurial skills of the youth of India and to drive sustainable economic growth, on the other hand, generate large scale employment opportunities across all industrial sectors existing in India. And then, the story of Startup India began. This article will help you understand the Government's vision and action plan regarding startups in India.

The Government with its well-drafted action plan hopes to accelerate spreading of the Startup movement from digital / technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education, etc. in all major cities including semi-urban and rural areas.

 

To become eligible for the Government scheme announced following are the eligibility criteria:

  • An entity incorporated or registered in India (for ex. A Company under the Companies Act, 1956 / 2013, a Partnership Firm or a Limited Liability Partnership) shall not be more than five years old;
  • Its annual turnover should not have exceeded INR 25 Crore in any preceding financial year; and
  • It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.

 

The Government of India has taken various measures to improve the ease of doing business and is also building an exciting and enabling environment for the Startups.

Some initiatives are underway where relaxations will be provided to the Startups for complying with various labor and environmental laws.

 

After obtaining certification from the Inter-Ministerial Board set up under the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry, the Startups shall be eligible for tax benefits provided under the Income Tax Act, 1961.

 

With a view to stimulate the development of Startups in India and to provide them a competitive platform, the profits of Startup initiatives are exempted from income-tax for a period of 3 years. This fiscal exemption will facilitate growth of business and meet the working capital requirements during the initial years of operations.”

 

Another welcome initiative of the Government is evidenced in the Tendering norms. Typically whenever a tender is floated by a Government entity or by a PSU, very often the eligibility condition specifies either “prior experience” or “prior turnover”.

Such a stipulation prohibits Startups from participating in such tenders. Effective April 1, 2015, Central Government, State Government and PSUs have to mandatorily procure at least 20% from the Micro Small and Medium Enterprise (MSME).

 

One of the key challenges faced by any newcomer/fresher is access to finance. Due to lack of its ability to justify the loans, due to inexperience and lack of order book in the kitty, their investment attractiveness is often poorer.

 

Therefore, in order to provide funding support to Startups, Government has come up with an idea of the creation of a fund with a total corpus of INR 10,000 crore over the period of 4 years where Life Insurance Corporation (LIC) shall be a co-investor in the Fund of Funds.

The Fund shall ensure support to a broad mix of sectors such as manufacturing, agriculture, health, education, etc. Further, credit guarantee comfort will also be provided from the formal Banking System prevailing in India.

 

Innovation is the essence of every Startup. Young minds kindle new ideas every day to think beyond conventional strategies of the existing corporate world. During the initial years, budding entrepreneurs struggle to evaluate the feasibility of their business idea.

Significant capital investment is made in embracing ever-changing technology, fighting rising competition and navigating through the unique challenges arising from their venture. Many Startups do not reach their full potential due to limited guidance and access.

 

The “Startup India Hub” is another initiative of the Government which will assist Startups through their lifecycle with specific focus on aspects like obtaining financing, feasibility testing, business structuring advisory, enhancement of marketing skills, technology commercialization and management evaluation.

 

To all young Indians who have the courage to enter into an environment of unbounded possibilities bundled with risks, the Startup India Hub will be their friend, mentor and guide to hold their hand and walk with them through this journey.

 

Overall, with the geared up initiative of Government and an ever-increasing skilled intellectual young population of India, the picture of Startups looks impressive. On a lighter note, for wishing all the very best for the future of “Startups in India”, LETS FEEL THE START OF SOMETHING NEW.


 


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