CivilsDially:: Govt. Schemes & Programs:: Start-up Ecosystem In India
What is Start up India programme and its mandates? Let's cover the parts in brief.
START-UP India Launch by Prime Minister Modi on 16th January, 2016, aimed at celebrating the entrepreneurship spirit of country’s youth and has been attended by CEOs and founders of top startups (over 1500) from across the country. Let’s see this in brief!
<In Part I, we have taken a glance on Simplification and Handholding of Start up Plan, rest part will be covered in Part II of this series>
What is Start up India programme and its mandates?
Startup India is a flagship initiative, intended to build a strong ecosystem for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities.
In order to meet the objectives of the initiative, Government of India is announcing this Action Plan that addresses all aspects of the Startup ecosystem.
How can this Action Plan help accelerate the Startup movement?
It is spread across movement from digital/ technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education, etc.
From existing tier 1 cities to tier 2 and tier 3 cities including semi-urban and rural areas.
The Action Plan is divided across the following areas:
Simplification and Handholding
Funding Support and Incentives
Industry-Academia Partnership and Incubation
What is the exact definition of a Startup ?
Startup means an entity, incorporated or registered in Indianot prior to 5 years, with annual turnover not exceeding INR 25 crore in any preceding financial year.
Provided that such entity is not formed by splitting up, or reconstruction, of a business already in existence.
What will be the Action plan for Simplification and Handholding task?
#Compliance Regime based on Self-Certification
To reduce the regulatory burden on Startups thereby allowing them to focus on their core business and keep compliance cost low.
Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and environment laws (refer below).
In case of the labour laws, no inspections will be conducted for a period of 3 years.
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. [Can you think of question on white category in Prelims?]
#Startup India Hub
To create a single point of contact for the entire Startup ecosystem and enable knowledge exchange and access to funding.
How will “Startup India Hub” be a key stakeholder in this vibrant ecosystem?
Work in a hub and spoke model and collaborate with Central & State governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions.
To all young Indians who have the courage to enter an environment of risk, the Startup India Hub will be their friend, mentor and guide to hold their hand and walk with them through this journey.
#Legal Support and Fast-tracking Patent Examination at Lower Costs
To promote awareness and adoption of IPRs by Startups and facilitate them in protecting and commercializing the IPRs.
By providing access to high quality Intellectual Property services and resources, including fast-track examinationof patent applications and rebate in fees.
The scheme for Startup Intellectual Property Protection (SIPP) shall facilitate filing of Patents, Trademarks and Designs by innovative Startups.
Various measures being taken in this regard include:
#1. Fast-tracking of Startup patent applications:
Patent application of Startups shall be fast-tracked for examination and disposal, so that they can realize the value of their IPRs at the earliest possible.
#2. Panel of facilitators to assist in filing of IP applications:
Facilitators will be responsible for providing general advisory on different IPRs as also information on protecting and promoting IPRs in other countries.
#3. Rebate on filing of application:
Startups shall be provided an 80% rebate in filing of patents vis-a-vis other companies. This will help them pare costs in the crucial formative years.
#Relaxed Norms of Public Procurement for Startups
At present, 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).
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.
#Faster Exit for Startups
To make it easier for Startups to wind up operations.
The Insolvency and Bankruptcy Bill 2015 (“IBB”), tabled in the Lok Sabha in December 2015 has provisions for the fast track and / or voluntary closure of businesses.
In terms of the IBB, Startups with simple debt structures or those meeting such criteria as may be specified may be wound up within a period of 90 days from making of an application for winding up on a fast track basis.
Let us know what do you think on this question?
#Q. How will start ups create an ecosystem that can flourish with ‘Digital India’ initiative? Discuss with examples.
------------------------------------------------------------------------------------------------------------------- Key News and Op-Eds::
The textiles made from it were first woven in Kashmir
Origin: Wool comes from changthangi or Pashmina goat, which is a special breed of goat indigenous to high altitudes of the Himalayas in India, Nepal and Pakistan
Significance: Pashmina shawls are hand spun, woven and embroidered in Nepal and Kashmir, and made from fine cashmere fibre
News: Srinagar-based start-up aims to sell pashmina shawls, woven from rare wool extracted from chiru in upper reaches of the state
Protection with GI tag: Help to protect new buyers from being cheated into purchasing fakes
What’s the Problem? J&K is battling a high level of unemployment with about 7 lakh educated youth left looking for jobs
State ranks at number 29 on Ease of Doing Business indicator according to a World Bank survey, reflecting the lack of government support for new start-ups
What’s Requirement? Start-ups require an incubation centre where youngsters can toy with their ideas with minimum risk factor
Need of a mechanism to allow free-flow of investment in Kashmir without any fear and hurdles
Dr Harsh Vardhan recently met with leaders and team members of CSIR-Tech Pvt Ltd atCSIR-NCL’s campus in the city of Pune.
Dr Harsh Vardhan keenly asked questions about the successful work of technology commercialization that CSIR-Tech was involved with for the last 3 years.
CSIR-Tech was doing which directly aligns with the government of India’s programs like ‘Start-up India’ and ‘Make in India’
How technology and intellectual property being developed at CSIR, BARC, IITs, DST labs, DRDO, etc. is finding its way to touch common lives
CSIR-Tech invests in science based start ups and spin off businesses through its ‘India Science Venture Fund’, a SEBI registered fund which includes SIDBI as a lead partner
‘Start-up India’ is overdue. But creation of enabling policy environment must not be restricted to start-ups.
It promises swift approvals for starting enterprises, easier exits, tax and fiscal incentives, faster registration of patents and protection of intellectual property rights.
Signals a possible end to the inspector raj.
Tax breaks do help but what is more critical is an enabling regulatory and business environment that will foster innovation and have a cascading impact on entrepreneurship.
Funding now on offer could perhaps be directed more towards segments tough to raise capital in such as food processing, rather than mobile-based applications or e-commerce firms.
Easing of rules and creation of a conducive policy environment should not be restricted just to start-ups. It should be extended to all businesses.
Small entrepreneurs find it difficult to navigate the complex bureaucratic and regulatory maze.
Start-ups hold the potential of creating more jobs at a time when the manufacturing sector is facing a slump.
That may last longer given global economic prospects and the slowdown in China, which has been one of the engines of global growth.
With growing automation, the manufacturing sector may no longer be in a position to create jobs.
The fact is that there is a fundamental problem of demand and the real challenge for the Indian economy now is to fund several large projects — be it roads, highways or railways.
Start-ups are job creators like the large number of self-employed who form a significant part of the country’s labour force.
SBI has unveiled a dedicated advisory services branch for startups.
The branch, named branch InCube, was recently inaugurated in Bengaluru.
InCube’s relationship managers will provide personalised advice to startup founders on investments, taxation and forex transactions, and solutions to optimise the cash conversion cycle.
It will be a one-stop advisory services facility for entrepreneurs. However, it will not offer loans to startups for now.
Investor confidence has been buoyed by the historic landing of SpaceX’s Falcon 9, upright and intact, on December 21.
It was the first ever successful recovery of a reusable rocket.
SpaceX’s successful landing of a reusable rocket booster in December, 2015.
Opens a new frontier for commercial space startups by offering tremendous cost savings and attracting venture capitalists who once shied away from spatial ventures.
Space startups include nano-satellite makers, earth-imaging and weather-tracking technology developers.
SpaceX, founded by high-tech entrepreneur Elon Musk, had one successful rocket landing after multiple failures, and more work to do.
To make it easier for setting up new ventures and closing unviable ones, besides clearing regulatory issues that hamper access to finance.
Around 40 Silicon Valley heavyweights are expected to take part in the inaugural ceremony of Start Up India launch. Photo: @DIPPGOI/Twitter
The Start Up India mission envisages technology business incubators and research parks.
HRD Ministry and Department of S&T have agreed to partner in an initiative to set up over 75 such startup support hubs in the NITs, IIITs, the IISERs and NIPERs.
Programme include a Startups and Entrepreneurship Law.
Google will be offering $15,000 of equity funding for early stage startups at a session called ‘Launchpad Accelerator’ where startups can make live presentations about their business ideas.
With 4,200 enterprises, India already ranks third in the world for the number of start ups after the U.S. and the U.K.
Simplified tax structure, easy compliance process and single window system are some of the issues that startups expect to be addressed through the much-awaited ‘Startup India’ policy.
Ease of doing business is important for any enterprise but critical for startups.
All entrepreneurs look for single window clearances, ease of doing business, incentives to develop regions and clarity on taxation structures.
The problem in most cases is not the regulation but the red tape that makes compliance difficult despite best intentions.
Many startups begin their journey here in India but quickly move abroad as they are intimidated by the complexity of regulation in India.
HRD Ministry, DST to join hands to set up over 75 startup support hubs.
The Start-Up India mission to be unveiled by Prime Minister includes an ambitious plan.
To create a network ofstartup centres, technology business incubators and research parks, to take the startup culture beyond the top-tier education institutions such as IITs and IIMs.
From about 70 incubators set up by the government between 2001 and 2014, we have now crossed 100 incubators.
As per the plan, the HRD Ministry and the Science and Technology Ministry would share the costs for setting up startup centres in these institutions.
The Science and Technology Ministry would bear 100 per cent cost to set up business incubators in institutes like NITs.
The SETU scheme’s resources would be devoted to strengthening incubators and setting up ‘tinkering labs’ where ideas can be shaped into prototypes before they are ripe for funding.
The government can finally start deploying funds from the Self-Employment and Talent Utilisation (SETU) scheme and the Atal Innovation Mission (AIM).
To promote startups and scientific research, after over 10 months of spadework.
AIM would focus on inviting aspiring entrepreneurs to solve India’s contemporary socio-economic problems via ‘grand challenges’.
That offer substantial awards to incubate and scale up winning ideas.
An overarching supervisory body with about 10 members is being formed to oversee the allocation of funds under the schemes to line ministries.
The objective of the IAF is to catalyse tens of thousands of crores of equity investment into start-ups and MSMEs creating employment of lakhs of persons, mostly educated youth.
Rs 2,000-crore fund to be managed by SIDBI.
India’s largest insurance company LIC will be a co-investor in the IAF.
A mechanism known as SETU to support all aspects of start-up businesses and other self- employment activities has been set up by the government.
National Policy for Skill Development and Entrepreneurs envisaged fostering entrepreneurship and grassroots innovation.
By providing support in terms of fiscal incentives, creation of grass root technology innovation hubs, legal support and market linkages.
India Aspiration Fund (IAF) under the Small Industries Development Bank of India(SIDBI) to give a boost to start-up ecosystem.
Department of Electronics and Information Technology is implementing a scheme entitled ‘Technology Incubation and Development of Entrepreneurs’ (TIDE).
Under which 147 start-ups have been supported at 25 TIDE centres established in premier institutes like IITs, NITs, IIMs etc.
The Income-tax Act, 1961 is the charging Statute of Income Tax in India.
It provides for levy, administration, collection and recovery of Income Tax.
Recently the GoI has brought out a draft statute called the “Direct Taxes Code”intended to replace the Income Tax Act,1961 and the Wealth Tax Act, 1956.
PM Modi in his Independence Day speech had given a call for “Start-up India, Stand up India” to encourage innovation and increase employment for the youth.
Exempting start-ups from the levy of minimum alternate tax (MAT), exemptions on earnings from intellectual property rights.
A relief from the anti-abuse provisions with regards to capital gains tax.
In cases where the start-ups have started earning from the commercialisation of IPRs, in those cases royalty income should not be taxed.
Currently, the Income-Tax Act, 1961 provides weighted deduction of up to 200 per cent in certain cases for research and development.
An aim to encourage IPR generation and increase innovation.
SEBI notified a new set of listing norms for start-ups, including e-commerce ventures, on a separate platform of domestic stock exchanges – the institutional trading platform.
The new norms provide significant relaxations in the disclosure requirements.
SEBI has also relaxed its delisting, takeover and Alternative Investment Fund regulations for entities engaged in IT, data analytics, intellectual property etc.
However, the new platform would be open to only institutional investors and HNIs in order to protect small retail investors from the risks involved with the star-ups.
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