Last year on the occasion of the Independence Day, Prime Minister Narendra Modi had announced the ‘Startup India, Standup India’ initiative. On January 16, he unveiled a 30-page action plan which aims to boost start-ups in the country by removing hurdles from their path and help them flourish. We take a look at some of the most important points from the plan and how it will affect start-ups.
Setting up a start-up: The government will launch an app and an online portal for start-ups on April 1. This will allow start-ups to set up and register their ventures easily by filling up a short form. Regulatory burden will also be reduced for start-ups by letting them self-certify with labour and environment laws. In case of labour laws, no inspection will be made in the first three years. For environment laws, start-ups under a certain category can self-certify.
Patent process: The patent protection and intellectual property rights procedure will be made easier and more transparent for start-ups, and there will be methods to fast-track patent applications. The government will set up a panel of legal facilitators that will help a start-up file for patents. Start-ups will also be given a 80 per cent rebate in filing patent applications to reduce costs during the initial years.
Funding: The government will set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over a period of four years to fund innovation-driven enterprises. The government will also roll out a credit guarantee fund of Rs 500 crore per year for the next four years through the National Credit Guarantee Trust Company and Small Industries Development Bank of India (SIDBI).
Tax exemption: All start-ups set up after April 1, 2016, will be exempt from income tax for a period of three years. Plus exemptions will be given in case of capital gains if invested in Fund of Funds (FoF) recognised by the government. Investments in start-ups by incubators over the fair market value will also be exempted from tax.
Incubators and innovation programs: The Atal Innovation Mission has been launched to help incubate start-ups. This would include establishment of sector-specific incubators, offer pre-incubation training to entrepreneurs, strengthen existing incubation facilities and provide seed funding to high growth start-ups. Funding support will also be given by the central government for establishing new incubators in existing institutions. Plans include setting up of 13 start-up centres and 18 technology business incubators that will help start-ups to set up as well as grow. 31 centres of innovation will be set up at national institutions. Seven research parks, 50 new bio-technology incubators, 150 technology transfer offices and 20 bio connect offices will also be created. There will also be start-up fests and school kids will be encouraged to innovate. A program will be set up to support and award Rs 10 lakh to 20 student innovations from Innovation and Entrepreneurship Development Centres. Funds have also been allocated to encourage high quality research in the IITs.
Are you eligible? There are some eligibility criteria for availing these benefits. One must be registered as a private limited company, partnership fund or limited liability partnership. The product or service should be new, innovative and add value to a customer’s experience. Further, the yearly turnover of the company cannot exceed Rs 25 lakh.