START-UP INDIA-Coverage and Eligibility

By | July 20, 2016

START-UP INDIA-Coverage and Eligibility

            Till date 728 applications have been received in the Startup India portal. Out of them, 180 applications are complete and have been recognized as startups by Department of Industrial Policy and Promotion (DIPP). Only 16 applicants are incorporated after 1.04.2016 and are thus eligible for consideration for tax benefits, as per the Finance Act 2016. The applications for tax benefits are examined by the Inter-Ministerial Board. 3 applications were considered and one has been recommended for tax benefit in the 2nd Inter Ministerial Board meeting held on 28.06.2016.

            Startups have been defined vide Notification No. 180(E) dated 17th February, 2016 of this Department. To increase the coverage of Startups in the country under the Startup India Action Plan the following steps have been taken:-

(i) Startup India Hub: Startup India Hub has been set up to resolve queries and provide handholding support to Startups. To seek clarifications pertaining to Certificate of Recognition as a “Startup”, Certificate of Eligibility to avail tax benefits, information on incubators or funding, one can get in touch with the Hub on Toll-Free number: 1800115565 or email: id Dedicated professionals are handling over 200 queries per day. DIPP has requested State governments and administration of Union Territories to set up hub as well as incubators to help Startups during various stages of their life cycle.

(ii) Startup Recognition: Till date (18.7.2016), 728 applications have been received for Startup Recognition. Out of them, 180 applications are complete and are recognised as a startup by DIPP. For remaining applications, Startup India Hub provides handholding support to facilitate recognition of more and more Startups.

(iii) Chief Secretaries of all States and Administrators of all Union Territories have been requested to partner with DIPP in taking the Startup India initiative forward;

(iv) Top 50 companies in India have been requested to contribute towards strengthening the incubation facilities in the country through their Corporate Social Responsibility (CSR) initiatives;

(v) List of recognized incubators has been augmented to provide more avenues to Startups to obtain mentoring support. 20 industry bodies and organisations have been recognized by DIPP who will assess the innovative nature of Startups and provide certificates to enable them to get recognition from DIPP.

(vi) For incubators to get recognition by Government of India a module to recognize incubators has been launched. This will allow them to issue recommendation letters to Startups.

(vii) A panel of facilitators has been constituted to assist Startups file Intellectual Property applications. DIPP has decided to bear the facilitation cost on behalf of Startups. To avail this benefit, the certificate of eligibility from the Inter-Ministerial Board was required which has been dispensed with. Now a certificate of recognition is sufficient to avail this benefit.

            Startup India Action Plan envisages  spreading of the Startup movement  beyond the digital/technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education etc. and from existing tier 1 cities  to tier 2 and 3 cities including semi-urban and rural areas.

The measures which have been implemented under Startup India Initiative till date in addition to those mentioned above are as follows:

(i)      Startup India Portal and Mobile App: These have been launched as online platform for providing updates, information, recognition and eligibility certificates to Startups and other stakeholders. Till date (18.7.2016), 728 applications have been received. Out of them, 180 applications are complete and the applicants are recognised as startups by DIPP. Only 16 applicants are incorporated after 1.04.2016 and are eligible for tax benefits. Out of these, 3 applications have been considered in the 2nd meeting of Inter-Ministerial Board (one has been recommended for tax benefits and other two have been disallowed).

(ii)  Fund of Funds: A ‘fund of funds’ (FFS) of INR 10,000 crores to support innovation driven Startups has been established which shall be managed by SIDBI. The fund will invest in SEBI registered Alternative Investment Funds (AIFs) which, in turn, will invest in Startups. It will act as an enabler to attract private capital in the form of equity, quasi-equity, soft loans and other risk capital for Startups. Rs. 500 crore has been released to SIDBI in FY2015-16 and Rs. 600 crore in FY2016-17. First meeting of Venture Capital Investment Committee (VCIC) was held on 12th July, 2016, wherein 13 proposals were examined for funding under FFS. 

(iii) Tax Incentives: The Finance Act, 2016 Section 80- IAC has provision for Startups (Companies and LLPs) to get income tax exemption for 3 years in a block of 5 years, if they are incorporated between 1st April 2016 and 31st March 2019. To avail these benefits one must get a Certificate of Eligibility from the Inter-Ministerial Board. Tax exemption on investments above Fair Market Value have been introduced on 14 June 2016for investments made in Startups. 

(iv) Self-Certification: Central pollution Control Board (CPCB) has exempted 36 industries in “white” category from all the applicable self-certifications under the 3 environment Acts (The water (Prevention & Control of Pollution) Act, 1974; The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003 and The Air (Prevention & Control of Pollution) Act, 1981). 

(v)  Atal Innovation Mission (AIM): The guidelines for harnessing private sector expertise to set up incubator, annual grand challenge for innovative solutions to problems posed by industry and Government Departments, annual grand challenge for incubators and establishments of tinkering labs have been formulated and have been published on NITI Aayog’s and Startup India websites

(vi)   Relaxed Norms for Public Procurement: Relaxed norms for public procurement for micro and small enterprises have been provisioned in the Procurement Policy of Ministry of MSME. 

(vii) IPR Benefits: A panel of facilitators has been constituted for assistance in filing Intellectual Property applications. DIPP would bear the facilitation cost on behalf of Startups and also provide rebate in the statutory fee for filing of application. To avail IPR-related benefits (rebate in fee and free of cost facilitation in filing IPR applications), a Startup is required to obtain a Certificate of Recognition from DIPP. A detailed guideline of the Scheme for Facilitating Start-ups Intellectual Property Protection has been published online whereby Government shall bear the entire fees of the facilitators. Facilitators shall provide assistance for startups in filing and disposal of patent applications related to patents, trademarks and design under relevant Acts. Fast track mechanism of startup patent applications has been enabled to allow startups to realise the value of their IPRs at the earliest possible. Further, to enable startups to reduce costs in their crucial formative years, startups have been provided an 80% rebate in filing patents (Patent Amendment Rules 2016, May 2016).

With the above measures, Government of India envisages to improve the participation of startup entrepreneurs in the Startup India programme across the country.

This information was given by the Minister of State (Independent Charge) in the Ministry of Commerce & Industry Smt. Nirmala Sitharaman in a written reply in Rajya Sabha today.

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