With a view of improving the Indian economy and increasing the entrepreneurial drive, Indian Government under PM Narendra Modi’s leadership launched Start-up India Initiative in January 2016. The Action Plan shepherd by Department of Industrial Policy and Promotion (DIPP) is aimed at making start-up registration process more seamless and easing way for new entrepreneurs.
Start-up India Action Plan
Start-up India Action Plan benefits are three-fold:
- Simplification: First key benefit is expediting the start-up registration process. The idea is to improve compliance regime support, provide a hub for start-ups in India, registration and access through mobile app / portal, legal support as well as fast-tracking patent examination process.
- Funding, incentives and support: Second advantage is providing necessary funding support for new start-ups. Government has allocated INR 10,000 crores to help new businesses take off. Start-up India Action Plan also provides credit guarantee, tax exemption on capital gains and provides a platform for collaboration wherein new entrepreneurs can leverage the industry knowledge of experienced business professionals.
- Industry partnerships and incubation: Third and most pivotal utility is from the launch of programs that puts start-ups in touch with much needed resources and knowledge bases. Indian Government has set up 7 Research Parks similar to the Research Park setup at IIT Madras. The Action Plan also allows for private sector collaborations for incubator setup. There is a special focus on promoting businesses in the biotechnology sector.
For start-ups to claim some of the resources and advantages set aside by the Indian Government they have to meet the following criteria:
- Start-ups must be private limited companies, limited liability partnerships (LLPs) or partnerships.
- 5 years have not lapsed since its incorporation
- Turnover for each year of operation must be less that INR 25 crores
- Focussed on developing commercial products that add value to customers
- Get approval from DIPP
- Capital gain is exempted from income tax if start-up comes under the purview of start-up India campaign
- Focus on providing innovative products and schemes
- Tax holiday for 3 years is granted to new entrants
- Must have a recommendation letter from
- Incubator in post graduate Indian college
- Funded by incubation fund, angel fund, private equity fund or angel network
- Must have a patent from the Indian patent and trademark office
The importance of start-up registration with DIPP is mentioned below:
- Self-certification: Start-ups can self-certify their compliance with 9 labour laws and environmental laws. Government allows 3 years of break from examination for cases dealing with labour laws in the country.
- Patent application: DIPP process allows for fast tracking of the patent application. Furthermore, they offer a rebate of up to 80% on total value of patent fees.
- Procurement: Start-up registration levels the playing field in terms of opportunities for new start-ups giving them the same connections and scope as that available to experienced entrepreneurs.
- Exit strategy: Once registered start-ups have a 90-day exit strategy as explained in the Insolvency and Bankruptcy Code of 2016.
- Investments: Government has sanctioned funding for start-ups and set aside INR 25 crores to help new start-ups.
- Credit: DIPP registration provides credit help for new entrepreneurs from National Credit Guarantee Trust or Small Industries Development Bank of India (SIDBI) for over 4 years. There is up to INR 2000 crores in credit available for struggling start-ups.
- Tax exemptions: Start-ups can also avail income tax exemption benefit for up to 3 years; there are also exemption on capital gains and investments above fair market value made by incubators or angel investors.
- Collaborative learning: DIPP registration provides a platform for leaders of the industry to get together. This offers a great chance for new entrepreneurs to learn from experienced leaders and helps grow their business.
Additionally, the government has launched a new mobile application to expedite the whole process and provide validation in 24 hours. Companies can now register via mobile app and avail the benefits offered by the Government. Indian Government is playing a vital role in aiding start-ups to cope with the economy. Also, start-ups are getting themselves registered under start-up India regime so as to derive maximum benefits from the government. Generation of employment opportunities is also one of the results of this scheme.
Planning on setting up new business? We can help you in getting yourself registered with DIPP and have the right amount of experience in assisting you throughout the regulatory compliances. To know more about requisites of registering yourself as an entity in India, visit Company Registration in India
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