Startup India Scheme

Startup India was launched on 16th January 2016 as a clarion call to the innovators, entrepreneurs, and thinkers of the nation to lead India's sustainable economic growth and create large scale employment opportunities. Startup India laid the foundation for building a self-reliant India and harness the potential of a nation bestowed with the largest youth population in the world. Armed with the philosophy of "innovate, develop and Make-in-India for the world". Startup India, today, has become a globally known journey of India's fast paced, always innovating and resilient entrepreneurial ecosystem. Aimed to make India, one of the largest and vigorous startup ecosystems in the world, a 19-point Startup India Action Plan was launched in January 2016 which paved the way for the introduction of a number of policy initiatives to build a strong, conducive, growth-oriented environment for Indian startups. Launched on 16th January, 2016, the Startup India Initiative has rolled out several programs with the objective of supporting entrepreneurs, building a robust startup ecosystem and transforming India into a country of job creators instead of job seekers. These programs are managed by a dedicated Startup India Team, which reports to the Department for Industrial Policy and Promotion (DPIIT).

In the words of The Prime Minister of India, Narendra Modi:

Startup India is a revolutionary scheme that has been started to help the people who wish to start their own business. These people have ideas and capability, so the government will give them support to make sure they can implement their ideas and grow. Success of this scheme will eventually make India, a better economy and a strong nation.

The action plan of this initiative is focusing on three areas:

·      Simplification and Handholding.

·      Funding Support and Incentives.

·      Industry-Academia Partnership and Incubation.

How will new startups benefit from this scheme?

·      10,000 crore startup funding pool.

·      Reduction in patent registration fees.

·      Improved Bankruptcy Code, to ensure a 90-day exit window.

·      Freedom from inspections for the first 3 years of operation.

·      Freedom from Capital Gain Tax for first 3 years of operation.

·      Freedom from tax for the first 3 years of operation.

My opinion:

This scheme certainly has a lot of benefits of Startups such as, Financial Benefits, Income Tax Benefits, Registration Benefits, Government Tenders, Huge Networking Opportunities although I feel that there are some challenges which are yet to overcome such as:

·      People generally believe startups are just about thinking about a new idea or plan. But in reality, execution of such plan is more necessary than just thinking about it.

·      The view or perspective of the government on startup India plan is quite short-term in nature. It does not look at the long-term path of the startups.

·      For the success of any new business, competent workforce is necessary. But in case of startups, skilled workforce is not possible due to the lack of funds at the initial phase.

·      The risk of reaching failure is greater in the startups as compared to other organizations.

Although it comes with several pros along with its cons, Startup India is a good opportunity for the businesses who want to bloom in the market. This scheme gives you a lot of benefits and also save you from Taxes. I would suggest to start your own business with the help of Startup India scheme.

FAQs revolving around startups.

What is the income tax benefit under the start-up scheme India?

A: Any start-up initiated under this scheme is exempted from paying income tax for the first three years from its incorporation. However, to enjoy this benefit you will have to get a certificate from the Inter-Ministerial Board. Additionally, you will have to make investments in specific funds to enjoy the benefits.

How can I create resources through this scheme?

A: The start-up India scheme offers excellent networking opportunities. Under this scheme every year two festivals are held one for domestic companies and the other internationally. In these festivals, young entrepreneurs get opportunities to connect with other entrepreneurs, network, and develop resources.

What is easy winding up a company?

A: Under the start-up scheme offered by the Government of India, winding up of the company becomes simpler making it easier for re-allocation of resources. This means you can easily close your start-up and allocate the resource to a more productive source. This is encouraging for a young entrepreneur who can now invest in an innovative idea and not worry about the complex exit process in case his business fails to become a success.

What are the two basic criteria that you have to fulfill to register for the scheme?

A: The company you form should be a private limited company or a limited liability company. The company you register for should be new and not more than 5 years old.

What qualifies as a “Startup” for the purpose of Government schemes?

·      Upto a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.

·      Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees.

·      Entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation. Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.

For how long would recognition as a “Startup” be valid?

An entity shall cease to be a Startup on completion of ten years from the date of its incorporation/ registration or if its turnover for any previous year exceeds one hundred crore rupees.

Can an existing entity register itself as a Startup?

Yes, an existing entity that meets the criteria can get itself recognized for various benefits.

What documents are required?

·      Certificate of incorporation/registration.

·      PAN

·      Company details

·      Details of directors/partners

·      pitch deck

·      Revenue model