As part of its Manufacturing Incubation Initiative, the Department for Promotion of Industry and Internal Trade (DPIIT) recently announced a collaboration with HCLSoftware, a leading global provider of software solutions.
By encouraging cooperation between governmental and corporate institutions, especially in the field of manufacturing innovative products, this effort seeks to propel India’s startup manufacturing ecosystem. At New Delhi’s Vanijya Bhawan, the announcement was made.
Supporting New Business Ideas Through Startup India
The partnership between DPIIT and HCLSoftware is a part of the Startup India initiative, which seeks to provide a setting in which industry participants are essential to the development of new manufacturing enterprises. With more than 80 MoUs inked so far with different industry stakeholders, DPIIT has laid the groundwork for startups to receive vital industry support.
Participating startups will gain access to HCLSoftware’s HCL Sync program, which will give them exposure to the worldwide market and a chance to market their goods abroad.
In Keeping With the Goal of the Indian Government
The collaboration supports the Indian government’s objective of establishing the nation as a significant centre of production. The three primary goals of this initiative are to: (1) support the growth of Indian intellectual property by assisting startups in developing distinctive, India-specific products and solutions; (2) enhance product quality by giving startups the resources and know-how required to satisfy international standards; and (3) establish a robust manufacturing ecosystem by linking startups with suppliers to form a full manufacturing value chain.
Sanjiv Singh, the joint secretary of DPIIT, underlined the value of this collaboration in creating a sustainable manufacturing ecosystem and how HCLSoftware’s experience aligns with DPIIT’s mission. According to Singh, this partnership would foster Indian innovation and give regional companies a better international presence.
Through programmes like Startup India, he reaffirmed DPIIT’s dedication to advancing the manufacturing environment and making India a significant player on the world arena.
The collaboration with HCLSoftware is to boost Indian businesses by giving them access to cutting-edge digital technology and international markets, said Dr. Sumeet K. Jarangal, Director of Startup India. This funding will help the industry flourish and allow manufacturing companies to achieve success in design, development, and marketing, Dr. Jarangal added.
According to HCLSoftware Chief Product Officer Kalyan Kumar, this collaboration marks a turning point in India’s industrial history. He reaffirmed HCLSoftware’s dedication to giving startups the fundamental resources and assistance they require, from design and development to marketing, thereby making a substantial contribution to India’s goal of becoming a major player in the world of manufacturing.
The Startup India campaign, an initiative of the Government of India was first announced on August 15, 2015, by Prime Minister Narendra Modi during his Independence Day speech.
The event was, then, inaugurated on January 16, 2016, by the former Finance Minister of India, the Late Arun Jaitley. Venture Capitalists, Startup Founders, and CEOs of various companies were recorded to attend the event.
The action plan of this initiative primarily focused on three areas –
Simplification and Handholding
Funding Support and Incentives
Industry-Academia Partnership and Incubation
Another primary action area of this initiative was to discard restrictive State Government policies applicable to this domain like License Raj, Land Permissions, Foreign Investment Proposals, and Environmental Clearances. This was organized by The Department for Promotion of Industry and Internal Trade (DPI&IT).
The Indian government defines a startup as an entity that is headquartered in India, has been operating for less than 10 years, and has an annual turnover of less than INR 100 crore (USD 13 million). The Indian government’s I-MADE program, under the Startup India initiative, aims to help Indian entrepreneurs build 10 lakh mobile app startups.
The second program is the Pradhan Mantri Mudra Yojana (MUDRA Bank’s Scheme) which aims to provide micro-finance and low-interest rate loans to business owners from low socio-economic backgrounds. In the year 2020, an initial capital of INR 20,000 crore (USD 3.0 billion) was allocated for this scheme.
Eligibility for Startup India Campaign
To be recognized as a startup under the Startup India action plan, a company must fulfill certain conditions –
Should be less than 10 years from the date of registration/incorporation.
Should be registered as a Private Limited Company, a Partnership Firm, or a Limited Liability Partnership.
Should have an annual turnover not exceeding INR 100 crore for any financial year since incorporation/registration.
Should be working towards innovation, development, or improvement of products, processes, or services.
Should be a scalable business with a high potential for employment generation or wealth creation.
Should not be formed by splitting up or reconstructing a business already in existence.
Tax Exemptions Allowed Under Startup India Campaign
Startup India Official Website
To promote the growth of startups within the country, the Indian government has extended the following tax exemptions for eligible startups.
Three-Year Tax Holiday in a Block of Seven Years
All the startups that have been incorporated between April 1, 2016, and March 31, 2021, are eligible within this scheme which was extended to 31st March 2022 in the Budget of 2021. These startups will be eligible to receive a 100% tax rebate on profits for a period of three years in a block of seven years.
The condition for receiving this benefit is that the annual turnover of the company should not exceed INR 25 crore in any financial year. The aim of this scheme is to help startups to meet their working capital requirements in the initial years of operation.
Tax Exemption on Long-Term Capital Gains
The Income Tax Act’s new section 54 EE specifies that the eligible startups will be exempt from taxes from long-term capital gains if such a long-term capital gain or a part of it is invested in a fund nominated by the central government within six months from the date of transfer of the asset.
INR 50 lakh is the maximum amount that can be invested in the long-term specified asset for a specific period of 3 years. In the event the amount is withdrawn before the time frame of 3 years, the exemption will be revoked in the year that the money has been withdrawn.
Tax Exemption on Investments Above the Fair Market Value
Eligible startups are exempted from the tax levied on investments above their fair market value. These investments include investments made by resident angel investors, family, or funds that are not registered as venture capital funds. Investments made by incubators above fair market value are also exempt from this tax.
Tax Exemption to Individual / Huf on Investment of Long-Term Capital Gain in Equity Shares of Eligible Startups U/S 54 GB
Section 54 GB allows tax exemption from long-term capital gains on the sale of residential property in case these gains are invested in small or medium enterprises as defined under the Micro, Small, and Medium Enterprises Act, 2006.
However, this section has now been amended to include tax exemption on long-term capital gains if the money is invested in eligible startups and such shares are not sold or transferred within 5 years from the date of its acquisition. This exemption helps in boosting investments in startups and promotes their growth and expansion.
Set Off of Carry Forward Losses and Capital Gains Allowed in Case of a Change in the Shareholding Pattern
The government has relaxed the restriction of holding 51% of voting rights under section 79 in the case of eligible startups. The carry forward of losses is allowed if all the shareholders carrying voting power held the shares on the last day of the year in which the loss was incurred continue to hold the shares on the last day of the previous year in which the loss is to be carried forward.
The Startup India Campaign announced by the Indian Government has also received considerable push and support through policy changes and introducing schemes that ensure the growth and expansion of startups. These tax benefits that are available to eligible startups provide encouragement to new business ideas and promote the economy of the country.
FAQs
What is the benefit of a Startup India Certificate?
The startup India certificate is proof of a startup being recognized by DPIIT. It has multiple advantages such as tax benefits, easier compliance, IPR fast-tracking, etc.
What is the tax exemption for startups?
Under section 80-IAC, startups founded after April 2016 are eligible for a 100% tax rebate on making a profit for three years in a block of seven consecutive year period. Given the condition, their turnover should not exceed more than 25 crores in any financial year from the deduction claimed.
What is the benefit of the startup India initiative?
Some of the common benefits of startup India initiatives are relaxed norms, tax exemption, access to funding, cheap patent cost, easier compliance, IPR fast-tracking, etc.
How to get funds from the government for startup businesses in India?
The Indian government has enabled a number of schemes for startups. In order to get funds from them through the government, one needs to apply tp the respective online portal and get registered as required on the website.
The time we are living in, startups are making the loudest noise all over the world. People are being brave and are keen on transforming their ideas into reality. Almost every country is experiencing a rise of startups across industries; young entrepreneurs are striving hard to fulfill their vision without any fear. This is not only about the growth of an individual but it is also contributing to the growth of the countries.
Just like all other countries, India is also experiencing the same rise. Not only that, it has become the biggest hub of Startups in the world. In this article, we will talk about how the initiative by the Government of India to create an ecosystem where Startups can flourish and how in the last six years, this initiative has been able to help young entrepreneurs and their startups. So, without any further ado, let’s get started.
“What do you need to start a business? Three simple things: know your product better than anyone. Know your customer, and have a burning desire to succeed.”
Startup India is an initiative taken by the Indian Government; it was first announced in the year 2015 by the Prime Minister of India, Narendra Modi. The campaign was launched on January 16th of 2016.
Basically, the main aim of this campaign is to provide an ecosystem where the Government will empower all the new Startup ventures and of course to encourage the innovation culture. Overall, this initiative is also in a role to stimulate entrepreneurship, economic growth, technological growth, innovation growth, and the employment of the country.
What is a Startup as per DIPP?
Though most of us more or less know what a startup is, mainly because today we are almost surrounded by startups, the Department for Promotion of Industry and Internal Trade (DIPP) has defined the startup companies, as per the government of India. By the term “startup”, DIPP has mentioned the companies that are within 10 years from the date when they were incorporated/registered. Furthermore, the turnover of the company shall not be exceeding the 100 crore mark for any of the financial years since its incorporation/registration. Besides, it is obvious that the startup should have its headquarters in India to be recognized as an Indian startup. Along with that, DIPP also recognizes the startups that are registered with either of the following legal frameworks:
The registration of the company should be under the Companies Act of 2013; or,
Section 59 of the Partnership Act of 1932, as a partnership firm; or,
Limited Liability Partnership Act, 2002, as a limited liability partnership.
Benefits Provided by Startup India
Some of the benefits that Startup India provides to the young entrepreneurs of the country are:
One has to register through a mobile app or a website for their startup. It is quite easy and anyone who is interested can fill up a form and the whole process is online.
While filing the patents, startups will get an 80% reduction on that cost. Plus, the Government will deal with the facilitator fees and the startup will only pay the statutory fees.
The Government of India as per the initiative has created a ₹10,000 Crore fund and it will be invested in the startups as their venture capitals.
Startups will be free from paying three years of income tax if they get a certificate from Inter-Ministerial Board.
Research parks to be set up and it will give out several facilities in the R&D sector.
A number of compliances are provided to the Startups that will ensure saving of time and money.
People who are investing in startups will receive an exemption from tax, this will help in attracting more investors for the startups in the country.
The startups can choose from the investors, who want to get funds for their business.
One can close their startup within 90 days from the date of application of closing it up.
Every year nationally and internationally the Government has decided to host two fests where the startups will be able to interact with each other.
Current Startup Scenario in India
In the last few years, hundreds of Startups have been founded in the country and it is just increasing with time. Some of them have already made it to the list of Unicorns in India. For those who are not aware of what Unicorn is, basically, the term means a startup that has a valuation of $1 billion.
Top Indian Startup Unicorns in 2021
Right now, the country has over 83 Unicorns and has become the third-largest Unicorn hub in the world. The industries with the most numbers of Unicorns in the country are Fintech, SaaS, and e-commerce.
Bengaluru has emerged to be the city with the most number of Unicorns. Not only that, India has four Decacorns as well. Decacorns are those startups that have a value of $10 billion and above.
Startup India: The Innovation Week
The year 2022 is even bigger than the last year for startups in terms of the rising number of startups and unicorns. The day before the 6thanniversary of Startup India, on the ongoing celebration of innovation week, the Prime Minister of India, Narendra Modi has interacted with over 150 startups from different sectors through video conferencing. He announced that the 16th of January will be observed as the National Startup Day in the country.
Start-ups are going to be the backbone of new India. When India completes 100 years of independence, start-ups will have an important role. Country's innovators are making the country proud globally: PM Modi pic.twitter.com/aggRwUZs0X
The PM also said that the Startups are going to be the backbone of the country. He firmly advised the youth to indulge in the world of startup and “innovate for India and from India” and to also focus on the semi-urban and rural part of the country with their startups. Apart from that, he firmly believes that when India will complete its 100 years of independence, Startups will be playing a major role in the country.
Conclusion
It has been over 6 years since the StartupIndia initiative was launched many have benefited from it and it will continue encouraging the startup world of India. Young entrepreneurs have started dreaming fearlessly and are continuously striving to make those dreams a reality. An initiative like Startup India is just focusing on pushing those dreams to the peak of success.
FAQ
Who are eligible for Startup India?
Any business that has a turnover of not more than ₹100 Crore is eligible for Startup India.
What are the top 10 startups in India?
Unacademy, Udaan, CRED, upGrad, Razorpay, Meesho, Skyroot Aerospace, boAt, Urban Company, AgniKul Cosmos are top startups of India.
What is the main aim of startup India?
Startup India is a flagship initiative of the Government of India, intended to catalyze startup culture and build a strong and inclusive ecosystem for innovation and entrepreneurship in India.
Every entrepreneur feels like working with a small kid while working on their dream project i.e. their startup idea. They want to get all the facilities in order to grow their startup from a grounded level to a full-fledged company. During this period of growing a startup to a company, every government provides all the needed facilities to a startup required by them.
Likewise, the Government of India has also started the ‘Startup India Initiative’ on 16th January 2016. Entrepreneurs can avail the benefits of startup India Initiative for starting and growing their businesses.
All about Startup India Scheme and Registration Benefits
About Startup India Initiative by Government of India
Startup India logo
Likewise, the Government of India has also started the ‘Startup India Initiative’ on 16th January 2016, a pioneering initiative intended to support startups and budding entrepreneurs by providing them with the benefits of Startup India. The program primarily focuses on three major areas:
Simplification and Handholding.
Funding Support and Incentives.
Industry-Academia Partnership and Incubation.
The scheme facilitates the startup to be able to get recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) in order to avail the abundant benefits to start their own business in India.
How to Register Under Startup India Initiative
There are three types of companies in India under which various startups get themselves registered:
Partnership Firm
Limited Liability Partnership Firm (LLP)
Private Limited Company
The firm must fulfil the following eligibility criteria for Registration under Startup India:
A company must be registered as a Partnership Firm, Limited Liability Partnership Firm (LLP) or Private Limited Company.
The existence period of the company must not be more than 10 years from the date of incorporation.
The annual turnover of the company must not exceed Rs.100 crore for any financial year since its incorporation.
The entity should not have been formed by splitting up or reconstructing an already existing business.
The startup must work towards innovation, development, or improvement of products or processes or services and have an extensible business model with a high potential of wealth creation and employment opportunity.
Once the startup fulfils the above-mentioned criteria, they are eligible to avail the following Startup India Scheme Benefits by the Government of India.
Benefits of Startup India Initiative by Government of India
1. Self-certification
The startups shall be allowed to self-certify and comply through the Startup mobile app with 9 Labour Laws and 3 Environment Laws to avoid inspection concerning the registration of the firm, building and construction workers, employees’ provident funds, insurance cover and more.
2. Startup India Hub
By creating a virtual platform, the government facilitates the entire startup ecosystem to connect and engage with each other, enable knowledge exchange and access to funding.
The process of startup registration has become simple with the launch of a mobile app and website. Any firm interested to get registered under Startup India may simply fill the form available at the website and upload the necessary documents. The entire process has become online.
4. Patent Protection
Several measures are taken under this scheme to promote awareness and adoption of the Intellectual Property Right (IPR) by the startup offices to aspiring entrepreneurs. This helps in giving protection or security to the entrepreneur as the dream project is now registered in the name of a single entity.
5. Rs.10,000 Crore Startup Fund
The Life Insurance Corporation of India plays a major role in developing this corpus to give them great startup India benefits. This helps in giving a cover to the startup and to the entrepreneur by giving the benefit of Rs.10,000 crore fund, depending upon the category and the future growth of a startup.
6. National Credit Guarantee Trust Company
The credit guarantees via National Credit Guarantee Trust Company have been planned with a budget of Rs.500 crore per year for the next four years to provide financial support to benefit entrepreneurs.
7. No Capital Gains Tax
The exemption shall be given on capital gains if that amount is invested in the Fund of Funds recognized by the Government. This gives an edge to a startup over getting the maximum amount of fundings from their investors, without paying a single penny in the form of tax due to value addition to the startup.
8. No Income Tax For Three Years
The entrepreneurs are exempted from paying income tax for the initial three years, as it will help the startups to grow in the future. Hence, the startup would be able to minimize the capital flow towards the government till significant growth is achieved.
9. Tax Exemption for the Investment of Higher Value
Investment of higher value than the market price should be exempted from paying tax. This helps startups to get a funding of bigger amount and that too without any problem as they don’t have to pay tax for it.
10. Organizing Startup Fests
Startup fests would be organized at national as well as international stages to provide exposure to budding entrepreneurs. This is just helping in increasing the number of entrepreneurs and successful startups and their businesses in the country.
11. Innovation Focused Programs for Students
It is launched to boost innovation and encourage talented youth. This innovation will help in creating new ideas and jobs along with other beneficial services for the citizens of the country.
12. Setting up Incubators
Various incubation centers have been build at the National Institute of Technology (NITs) to provide startups with necessary guidance, skill development tips, mentoring sessions, tech support, networking, infrastructure, coworking space and more.
The government has set up Research Parks in various Indian institutes of Technology (IITs) with an investment of Rs.100 crore each. The startups can do their research and development work in these research parks.
The government will introduce innovation-related programs for students in school. For this, the government is introducing the subject related to startup and business. This will help in growing the mindset of the students towards the startup that will bring innovative ideas into existence.
16. Legal Support
Through Startup India Initiative, Legal Support will be provided for new startup facilities and other official documents will be given. This could be very beneficial for a startup in its initial stages.
When the startup has to pay too much for tax, rent, or utility then the Startup India scheme provides relaxation by giving a rebate of 80%.
18. Easy Rules
Public procurement and rules of trading have been simplified for the startups in the Startup India Programs. The government has simplified all the rules and regulations of any startup which would further ease the movement of the business.
19. Faster Exits
If the startup fails again, the government will provide an easy way out. This will help the entrepreneur to get an easy exit without any problem. Hence, makes an easy entry and exit for an entrepreneur for his or her startup.
FAQs
What is Startup India?
Startup India is a pioneering initiative of the Government of India intended to support startups and budding entrepreneurs by focusing on three major areas:
Simplification and Handholding.
Funding Support and Incentives.
Industry-Academia Partnership and Incubation.
Who is eligible for Startup India Benefits?
Any company having an annual turnover not exceeding Rs.100 crore for any of the financial years since incorporation/registration.
Why do startups fail in India?
The reasons that are responsible for the failure of a startup:
Lack of innovation.
Lack of funds.
Lack of mentor.
Lack of focus and legal disputes.
Poor customer service and low-quality products.
Highly anticipated model against the nature and lifestyle of the target audience.
What is the best startup business in India?
Best Startup Businesses in India to start with:
Virtual Assistance
Freelancing
Reviewing Products
Affiliate Marketing
Graphic Designing
Podcast
Blog Monetization
Online Course Creation
Selling Products Online
Printing On Demand
How can I start a startup in India?
Steps to start a startup in India:
Check the feasibility of your idea in the market.
Do market research.
Keep an eye on your competitors.
Have a business plan ready.
Look for funds.
Register in Startup India Program.
Do startup companies offer benefits?
Yes, they do provide benefits like work from home, letters of recommendation, incentives and other perks like free meals and lunch.
What are the main benefits of working in a startup?
The main benefits of working in a startup over a corporate job are:
Your work will be acknowledged.
You’ll be given more responsibilities.
You’ll be learning a lot.
You’ll have a great experience working with true innovators.
Bhoraniya Huda Hifzur Rehman
