The Startup India Scheme – Explained in simple terms

Last Updated at: Sep 24, 2020
Startup India Scheme explained in simple terms
Grant Thornton India, PricewaterhouseCoopers, Ernst & Young, and KPMG Advisory Service are in the process of evaluating the success of Startup India, strengthening India ‘s competitive role on the innovation front and attracting investment into the market.


The efforts of startups now need active government assistance so that a variety of tech solutions can be rolled out, some of which will help reduce the spread of COVID-19 directly by reducing human interaction with the infected.


Entrepreneurship is growing at a rapid pace in India. According to some reports, India is presently the world’s third-biggest technology startup centre; and nearly 17 lakh companies were registered in the country in 2018.

Economic growth is at the centre of the Modi government, which incorporated the ease of doing business, promoting foreign investment, the backing of skill development, employment, and entrepreneurship. Here, we will quickly talk about national government activities that help new businesses as well as key legal and economic factors when setting up such an endeavour in India.

Startup India Scheme 

Startup India Scheme is an initiative of the Indian government, the essential target of which is the advancement of new businesses, that is, startups, employment, and prosperity. It was propelled on 16 January 2016 by our current Prime Minister in New Delhi.

Under this scheme, new companies in India can profit from administrative and tax cuts, capital increases tax exception, and also access to government investment provided that they satisfy certain criteria.

A self-accreditation agreement system is likewise set up concerning the key labour and condition laws, whereby there will be no investigations for the initial three to five years of the commencement of the enterprise.

Other advantages comprise a decrease in patent registration amount by 80 percent and trademarks documenting expenses by 50 percent, also free legal help; less complex entry and exit rules; security of intellectual property rights (IPR); and amenities to advance entrepreneurship among women and communities belonging to SC/ST group.

Register Your Startup

Startup redefined according to Indian legal norms

According to the Indian legal norms, a business unit is recognized as a startup for up to seven years from its date of inception. This desirable period is increased to ten years for the biotechnology division.

A startup firm additionally needs to meet the accompanying criteria set by the DIPP to benefit from government remunerations:

  • The organization’s revenue does not surpass US$3.84 million (Rs 25 crores) in any previous pecuniary year (US$1 = Rs 65.02).
  • Its head office is in India.
  • It is acknowledged as operational in the direction of revolution, growth, distribution, and commercialisation of new products, services and procedures determined by technology or copyright. The system likewise views such endeavours as new companies in the event that they meet above criterion and objective a flexible business model with a lofty capability to produce employment or create wealth.

These arrangements and courses of events are liable to change, and new companies and shareholder ought to be vigilant to administrative and legal signs of progress reported by the legislature.

Highlights of the scheme

The accompanying highlights make the scheme a notable factor:

  • New-entrants are fixed duty time-off for three years.
  • The government has given a subsidy of Rs.2500 crore for startup companies, just as a credit ensure a reserve of Rs.500 crore rupees.
  • The requirement to be eligible for Startup Registration
  •  The organization to be created must be a private limited company or a constrained risk joint venture.
  • It ought to be a new firm or not established before more than five years, and the complete turnover of the organization ought to be not surpassing 25 crores.
  • The organisations ought to have acquired the endorsement from the Department of Industrial Policy and Promotion (DIPP).
  • To get agreement from DIPP, the business ought to be financed by an Incubation subsidize, Angel investor or Private Equity Fund.
  • The firm ought to have gotten a guarantor from the Indian patent and Trademark Office.
  • The firm must have a recommendation letter by slowly and steadily under proper inspection.
  • Capital profit is let off from income tax under the startup India campaign.
  • The firm should provide inventive schemes.
  • Angel investor, Incubation finance, Accelerators, Private Equity Fund, and Angel network must be enlisted with SEBI (Securities and Exchange Board of India).

Register your startup

Enrolment on the startup portal should be possible through for the following firms:

4 Fundraising stages of a startup