What is Startup India?
The initiative to launch Startup India was taken by the Government of India under the leadership of our Prime Minister Mr. Narendra Modi. The scheme was launched on 16th January, 2016 at Vigyan Bhawan, New Delhi for discarding the rules of License Raj, Land Permission, Foreign Investment Proposals, and Investment Clearances which are based on government policies.
The scheme bestows benefits to the new business which includes start ups, employment, and prosperity. These new businesses or companies which are situated in India will be profited in terms of administration and tax cuts, capital increases tax exemption and also provide the benefits of government investment after the newly set up company fulfils certain criteria for the same.
The scheme has also decreased the patent registration amount by 80 per cent and the trademark documenting expenses were reduced by 50 percent. The newly set up company will also enjoy free legal aid, they will have to comply with less entry and exit rules.
They will get security of intellectual property right (IPR). They will also be provided with basic amenities for advancement in entrepreneurship for those belonging to the Schedule Caste and Schedule Tribe. Not only these communities will be benefited but women will also enjoy these basic services provided to them. This scheme will also make India a country of job provider and not of job seekers.
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Why was Startup India Launch?
Setting up of a company and other business entities was difficult in India. They made the prospectus promoters leave India and start up in other countries. Though the restrictions decreased after the policy of liberalisation in 1991 but still there were many restrictions like License Raj, Land Permission, Foreign Investment Proposals, and Investment Clearances which were imposed by the policies of the government.
There made the procedure were complicated and made a person to think before setting up his own business. The scheme of Startup India will lessen these restrictions and will provide easy methods for setting up of a business entity.
India is a country where the problem of unemployment creates massive hindrance in the development of the country. This scheme will promote setting up of business with fewer restrictions and with this the employment opportunities in the country will increase. So, this scheme is also launched to increase the job opportunities in the country.
The communities belonging to the Schedule Caste and Schedule Tribes will also get certain advantages of this scheme which will in turn help them in their development.
Key Features of the Startup India Scheme
1. Simple Start Up Process: This scheme has simplified the entire start up registration process. There is a portal under this scheme through which a person can fill up a short form from a mobile app or the online portal. There will also be a separate portal which will look into the matters of clearances, approval, and registrations.
2. A Start Up Hub: A single startup India hub is supposed to be created which will be working as a single point of contract and will shelter the entire start up ecosystem under his umbrella for enabling easy and quick knowledge exchange and access to funding.
3. Compliance: The entire compliance is based on self certification which will reduce the regulatory burden on start up.
4. Protection of Patent: Under this scheme, the government is working for providing legal support for fast tracking patent examination at a very low cost.
5. Funds of Funds: The government is raising fund to support the start up and it will set up fund with initial corpus of funds of Rs. 2500 Crore and is aimed to create a total corpus of Rs. 10,000 Crore over four year.
6. The government is also providing credit guarantee scheme.
7. The startup gets exemption from Capital Tax Gain.
8. The scheme also organises much start up fests.
9. It also provides tax exemption for start ups.
10. It promotes entrepreneurship in the field of biotechnology.
11. It will set up 35 new incubators in institutions.
12. The norms are very lenient of public procurement for startups.
13. They also provide for a panel which will in turn provide for legal support and assistance in matters like filing patent application etc.
14. Setting up various programs for students, and much more.
How to Establish Startup India?
The government took a great care that the process of Startup India to be very simple and will only require a few documents to be uploaded for the same. The process for establishing Startup India is given below:
Step 1: Incorporation of Business
The first step is to incorporate the business either as a Private Limited Company or as a Partnership Firm and make it a separate legal entity. The person who wants to establish Startup India should obtain certificate of partnership or incorporation of registration, PAN, and some other necessary details for which are needed for compliance.
Step 2: Registering With Startup India
The individual first log in to the startup India website and must register his business as start up with filling up of form by supplying details of business. After this, all the necessary documents are uploaded in PDF format. The documents which need to be uploaded are given below:
a. Letter of support or recommendation:
A letter of support or recommendation must be supplied along with the registration form. An individual can get a letter from any one of the following;
- An incubator established in post graduate college in India has a duty to provide a recommendation letter in such format as prescribed by the Department of Industrial Policy and Promotion
- A letter which is supported by an incubator to which the Government of India provide funds and is a part of some scheme which promote innovation
- An incubator which is recognized by the government of India is required to provide the letters of recommendation in DIPP specified format
- Any letter which is funded by the Government of India or any State Government as a part of any specific scheme to promote innovation
- Any Incubation Fund or Angel Fund or Private Equity Fund or accelerator or Angel network with not less than twenty per cent in equity which is registered with SEBI that endorses innovative nature of the business and has A letter of funding
- A patent that is filed and published in the journal by the Indian Patent Office in those areas which are affiliated with the nature of business being promoted.
b. Incorporation or Registration Certificate:
An individual needs to upload a certificate of incorporation of his company/ LLP in PDF format.
c. Provide Description of Business:
The individual need to provide a brief description of his product and services and write in what way it is innovative as the product or services should be innovative in nature, original and has new method or must have a new procedure for conventional methods of doing things.
Step 3: Availing Tax Benefits
The startups gets tax relief up to 3 years and these benefits could be granted only if certified by Inter Ministerial Board. There are other certificates also which are provided by the government for enjoying various benefits.
Step 4: Other Necessary Conditions
- The company should be registered Private Limited Company or Partnership Firm or a LLP.
- The business should be incorporated in India for previous five years.
- Turnover must not be more than 25 Crore for a year.
- The business should focus in innovating something new or must upgrade an existing technology.
- The startup business should not be an outcome of renewing an existing business.
Step 5: Getting Recognition Number
After the concerned authority considers and verify documents then a recognition number will be received. Therefore, the documents and the details should be carefully uploaded as the getting recognition number is entirely based on this.
If the authority believes that the supplied information is forged or any wrongful information is supplied then it will lead such person to pay a fine of 50% of the paid up share capital of the startup with a fine not less than Rs. 25,000.
With this the process of registering of startup India comes to end and all the benefits of the scheme will be bestowed upon the one who is getting it registered and it will also makes lives of people easier through affordable and comfortable services and will support development and growth of the economy of the country.
Advantages of the Startup India Scheme
1. SIMPLE PROCESS: The government has simplified the entire process and anyone who is interested to start any innovative startup.
2. COST SAVVY: There is a big list of benefits of under this scheme like patents and trademark at lower fees as the government bear all the facilitator fees and startup fees. The only cost that will be imposed on an individual is the statutory fees.
3. ACCESS TO FUNDS: The government provides easy access to funds to the startup with a guarantee to encourage banks and other financial institutions for providing venture capital.
4. TAX REALISATION FOR THREE YEARS: The startups get tax benefit for three years after they get a certificate from the Inter Ministerial Board.
5. GOVERNMENT TENDER: the startups can apply for government tenders and are exempted from the prior experience and turnover process.
6. RESEARCH AND DEVELOPMENT: Seven new research parks are established for set up facilities to startup.
7. TIME SAVVY COMPLIANCE: The simplified compliance process is time savvy. It support self certified compliance which saves time.
8. EASY EXIT: Like easy entry, the government also benefits with easy exits from the business within 90 days from the date of application of winding up.
Disadvantages of the Scheme
1. HIGHER COST, TAXES AND REGULATIONS FOR STARTUPS: Even with all the benefits, the startup in India is not that easy as compared to other parts of the world. Even these regulations and tax benefits is insufficient to encourage people for startups.
2. DEVELOPING ECO SYSTEM: The ecosystem is developed for a few kinds of surplus only and there are many fields like those of hardware nature which face many problems till now.
3. HIRING NEW EMPLOYEE: Human resource is a problem for every kind of setup. For Startup India only a few people are interested in working for it. They do not trust the new setups and feel secured if they get a job in an existing company.
But, even after certain disadvantages, the scheme proved to be beneficial for the development and the growth of the economy.