In this article we will shed light on some of the features and benefits of the Start-up India Scheme introduced by the government.
Let’s look at a brief history before proceeding to answer “what is startup India scheme” in detail.. Since time immemorial, India has been a country of businessmen and traders. Traders from ancient Greek and Roman empires have come to the shores of India to trade in the wares and goods produced by Indian tradesmen in collusion with craftsmen considered to be one of the finest in the world. And while as an economy we are making our way back to our erstwhile wealthy glory, the intrinsic entrepreneurial spirit of our culture is becoming more and more vibrant.
As of 2022, India is the world’s third-largest startup ecosystem in terms of the number of active startups. And while the startup culture itself cannot be said to be new, there has definitely been a sharp surge in the number of startups being incorporated in the country, especially in the last few years. This is due to the priority given by the government to strengthening indigenous businesses and proliferating self-reliance in terms of technology and other crucial sectors.
In order to boost this sector the government has introduced a slew of schemes and policies to create a nourishing environment for young entrepreneurs and innovators to create their businesses and nurture them so as to strengthen the foundations of the economy. These policies and schemes are all being launched under an umbrella initiative called the ‘Startup India’ Scheme. In this article, we will discuss in detail the various Startup India Scheme features and benefits of this scheme.
Startup India Scheme
Start-up India Scheme is an initiative of the Indian government, the essential target of which is the advancement of startups, employment, and general prosperity. It was flagged off 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 funding, tax exemptions, 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 include a decrease in patent registration amount by 80 percent and trademarks documenting expenses by 50 percent, free legal help, less complex incorporation, and exit rules; security of intellectual property rights (IPR); and amenities to advance entrepreneurship among women and communities belonging to SC/ST group.
Startup Redefined According to Indian Legal Norms
According to 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 organisation’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 endeavors as new companies in the event that they meet the above criterion and objective of 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 shareholders ought to be vigilant to administrative and legal signs of progress reported by the legislature.
Highlights of the Startup India Scheme
The accompanying highlights make the Startup India Scheme a notable factor:
- New entrants are given a fixed duty time-off for three years.
- The government has given a subsidy of Rs.2500 crore for startup companies, just as a credit to ensure a reserve of Rs.500 crore rupees.
- The requirement to be eligible for Startup Registration
- The organisation 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 organisation 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 an agreement from DIPP, the business ought to be financed by an Incubation subsidiary, 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 incentive schemes.
- Angel investors, Incubation finance, Accelerators, Private Equity Funds, and the Angel network must be enlisted with SEBI (Securities and Exchange Board of India).
Benefits of the Startup India Scheme
India’s Startup India scheme is a game-changer, offering a plethora of advantages for emerging businesses. Here, we delve into the core benefits that make this initiative a beacon of hope for aspiring entrepreneurs.
DPIIT Benefits:
Companies registered under the Department for Promotion of Industry and Internal Trade (DPIIT) enjoy a host of perks. DPIIT simplifies compliance, legal, and operational processes, easing the startup journey. Additionally, these startups are exempt from capital gains and income tax, subject to meeting specific criteria. DPIIT injects funds into startup capital and offers valuable grants and partnerships with industry leaders.
Self-Certification:
The scheme empowers startups to self-certify compliance with employment and environmental laws. Employment legislation examinations are waived for five years, and startups are only scrutinised upon the submission of a credible violation complaint. For environmental laws, startups in the ‘white category’ per the Central Pollution Control Board can self-certify compliance.
Streamlined Registration:
The Startup India registration process is a breeze. It’s a one-step procedure with dedicated officials guiding you every step of the way, ensuring a hassle-free experience.
Government Contracts:
Accessing government contracts is the goal of many startups due to their high payouts. The Startup India scheme provides a competitive edge when applying for government tenders, making the acquisition of such contracts more achievable.
Networking Opportunities:
Startup India hosts two startup carnivals annually, facilitating interactions with stakeholders on a global scale. This fosters the development of a vast global network that can be invaluable for startups.
Simplified Business Termination:
The scheme makes winding up or closing business operations a more straightforward process, allowing entrepreneurs to reallocate their capital to more productive ventures with ease.
Patent and IPR Application:
Startups benefit from expedited and cost-effective patent acquisition. Applications for patents are fast-tracked, and a panel of facilitators assists with the filing process. The Central Government covers patent acquisition costs, with startups receiving up to an 80% rebate, making initial expenses more manageable.
Eligibility for Startup India Scheme
Registration under the Startup India scheme is an enticing prospect for budding entrepreneurs. However, to ensure that your venture qualifies, you need to meet specific eligibility requirements. Here’s a breakdown of the key criteria you must consider:
Eligible Business Types:
Registration as a startup is available to the following business entities:
- Partnership Organisations
- Limited Liability Partnership (LLP) Enterprises
- Private Limited Companies
- Startup India Scheme Eligibility Parameters:
DPIIT Approval: Your startup must have received approval from the Department for Promotion of Industry and Internal Trade (DPIIT). This approval is a crucial step to enter the scheme.
Age of the Entity: Your startup should not be older than five years from the date of its incorporation. This condition aims to support newly established ventures.
Annual Turnover Limit: The annual turnover of your startup must not exceed ₹25 Crores. This ceiling ensures that the benefits of the scheme are directed towards small and medium-sized enterprises.
Incubator Reference: To establish your eligibility, you must provide a reference letter from a recognised startup incubator, validating your startup’s innovative and promising nature.
Unique Offerings: Your startup must deliver unique products or services that distinguish it from existing businesses. This requirement encourages innovation and creativity.
Employment Generation: A crucial aspect of eligibility is the potential for employment generation. Your startup should contribute to job creation and promote economic growth.
No Business Dissolution: The startup should not have formed as a result of the dissolution of an existing business. This condition emphasises the promotion of genuinely new ventures.
Startup India Registration Process
Registering your startup under the Startup India scheme is a straightforward process, designed to provide budding entrepreneurs with essential support and recognition. Here’s a concise overview of the steps you need to follow:
- Step 1: Begin your journey by visiting the official Startup India website.
- Step 2: Sign up and create your account, granting you access to the registration page.
- Step 3: Complete the application form, providing your company’s crucial details, including its name, registration information, and category.
- Step 4: Input information about your accredited representative, director, and partner, as required.
- Step 5: Prepare the necessary supporting documents, self-certification, and any other relevant paperwork. Upload these files as part of your application.
- Step 6: Submit your application. Following this, the Department for Promotion of Industry and Internal Trade (DPIIT) will verify your details and approve your registration if all provided information is accurate.
Documents Required
To register your startup under the Startup India scheme, ensure you have the following documents ready for submission:
- Certificate of Incorporation: Proof of your company’s legal registration.
- PAN Card: The company’s Permanent Account Number card.
- Registrations: Provide any available certificates, such as MSME, GST, or Trademark registrations.
- Company Profile: Share your company’s website or profile to highlight your business.
- Director Details: Information about your company’s directors.
- Revenue Details: Documentation of your startup’s revenue.
Difference Between Stand-Up India and Startup India
Startup India and Stand-Up India are both commendable initiatives introduced by the Indian government to support entrepreneurs. Although they share a common goal of fostering entrepreneurship, their objectives and target demographics vary significantly. To clarify the distinctions between these two schemes, let’s examine the differences:
| Aspect | Startup India | Stand-Up India |
| Focus | Businesses that meet startup criteria and low turnover | SC, ST, and women entrepreneurs |
| Funding | Diverse funding sources and tax deductions | Loans ranging from ₹10 Lakhs to ₹1 Crore |
| Eligibility | Firms less than five years old | Greenfield projects only |
| Beneficiaries | Entrepreneurs regardless of caste or gender | SC, ST, and women entrepreneurs |
| Coverage | Up to 80% coverage of patent costs | Approximately 75% coverage of project costs |
| Loan Eligibility | Partnership Organisations, Limited Liability Partnership Enterprises, and Private Limited Companies | Loans for greenfield projects only (first foray into trading/manufacturing services segment) |
Conclusion
The start-up India scheme is an extremely comprehensive scheme taking a lot of current economic factors and future prospects in mind. There is a provision for every type of startup to benefit from the scheme in the right way. However, in order to reap the benefits of the scheme there is paperwork and a good amount of documentary formalities involved. And it is crucial for this initial paperwork to be accurate and error-free.
Hence, it is advisable to seek the help of a professional or an expert who understands the legal language and is familiar with the mechanisms of regulatory provisions. If you have any further queries on the Start-up India Scheme or wish to engage someone to assist you with your requirements, get in touch with us and our team of experts will get in touch with you to understand your requirements.
FAQs
Who is eligible for the Startup India scheme?
Businesses less than five years old, with an annual turnover below ₹25 Crores, are eligible for Startup India. Additionally, they should have DPIIT approval and focus on delivering innovative products or services.
What is the Startup India scheme and what are its benefits?
Startup India is a government initiative promoting entrepreneurship. Its benefits include tax deductions, funding opportunities, self-certification, and easier business closure. It fosters innovation and economic growth.
What are the 3 pillars of Startup India?
The Startup India scheme rests on three pillars: simplification and handholding, funding support and incentives, and industry-academia partnerships and incubation.
Is there a limit to the benefits provided by the Startup India scheme?
While there is no strict limit on benefits, they vary based on the specific needs and potential of each startup, ensuring tailored support.
Who is not eligible for Startup India?
Existing businesses, and those formed as a result of the dissolution of another business, cannot avail of Startup India benefits.
Is Startup India a tax-free initiative?
Startup India offers tax deductions, but it doesn't make startups entirely tax-free.
Can I register with Startup India by myself?
Yes, you can register your startup with Startup India by yourself through the official website.
Who cannot register under the Startup India scheme?
Businesses that don't meet the age and turnover criteria or lack DPIIT approval are not eligible for registration.
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