Startup India is a Government of India initiative to create a conducive eco-system for nurturing innovation and startups in India. Through this campaign, Govt of India promotes entrepreneurship and startups with a goal to reinvigorate economic growth and generate employment opportunities. The Action Plan for Startup India, which was announced on January 16, 2016, outlines several initiatives and incentives to encourage entrepreneurship in India.
Prime Minister Narendra Modi unveiled the Startup India Action Plan on January 16, 2016, at an event conducted by the Department of Industrial Policy and Promotion (DIPP). It contains a 19-point action list, which include setting up of incubation centres, easier patent filing, tax exemption on profits, a Rs.10,000 crore corpus fund, faster exit mechanism, etc. Through the action plan, Govt aims to accelerate the Startup movement in India and spread it from digital or technology sector to other sectors and also from cities to semi-urban and rural areas.
Key initiatives under the Action Plan:
- Self-Certification based compliance system to reduce the regulatory burden. No inspections under labour law for 6 years.
- Setting up a Startup India Hub, which will serve as a single-point of contact for startups.
- Initial corpus fund of Rs. 2,500 crore, which will be increased to Rs. 10,000 crore in 4 years.
- Fast-track patent application and rebate in patent fee.
- Free legal support in filing intellectual property rights (IPR).
- 35 new incubators be set up in existing institutions.
- 31 centres of innovation and entrepreneurship to be setup or scaled up.
- 7 new research parks to be set up with an initial investment of Rs. 100 crore each.
- Credit Guarantee Fund for startups.
- A capital gains exemption mechanism has been proposed for investors.
- Income-tax exemption for 3 years.
- Fast-track exit or voluntary closure of businesses.
- Startups to be exempted from the ‘prior experience or turnover’ criteria in Government tenders.
Definition of Startup:
What do you mean by a startup? The action plan defined startup as an entity incorporated or registered in India, with an annual turnover not exceeding Rs. 25 crore in any preceding financial year, and working towards innovation, development of new products, or services driven by technology or intellectual property.
Criteria for a Startup:
- The firm should not be more than five years old.
- The firm’s annual revenue must be less than Rs. 25 crore.
- The firm should not be formed by splitting up, or reconstruction of an old business.
- The firm should get recommendation from a govt recognized Incubator, domestic venture fund or it should posses an Indian patent.
- In order to enjoy the tax benefits, the firm must get approval from the inter-ministerial board, setup specially for this purpose.
Benefits of Startup India Campaign:
- Proper implementation of the programme would help in economic growth of the country.
- It would generate more employment opportunities in India.
- It would help in development and growth of entrepreneurship culture in India.