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Tag: Startup India Scheme

  • Startup India Campaign: Definition, Eligibility & Tax Exemptions

    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).

    What is a Startup?
    Eligibility for Startup India Campaign
    Tax Exemptions Allowed Under Startup India Campaign

    What is a Startup?

    What is a Startup?
    What is a Startup?

    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
    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.

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    Conclusion

    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.  

  • Startup India: An Initiative by the Government for the Young Entrepreneurs

    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.”

    –Dave Thomas

    What is Startup India?
    What is a Startup as per DIPP?
    Benefits Provided by Startup India
    Current Startup Scenario in India
    Startup India: The Innovation Week
    FAQ

    What is Startup India?

    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.


    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.

  • A Complete Guide on DPIIT Certificate of Recognition for Startups

    With the increased count of startups in India, the Government has put forward a flagship program to empower the startups, which is known as Startup India Scheme, which launched in 2016. As a developing nation, it’s crucial to expand the economy whose best possible method is to fund startups.

    Moreover, it benefits the employment rate with innovation in products and services. The government of India has introduced several beneficiary programs for startups, among which this scheme gives DPIIT recognition to the startups. Here arises a question, what exactly is DPIIT?

    Basically, DPIIT stands for the Department for Promotion of Industry and Internal Trade. Those startups which get recognition under DPIIT gain many benefits, such as access to a host of tax benefits, IPR fast-tracking, easier compliance, and many more.

    The main objective of this Startup India initiative is to reduce the regulatory burden on the startups and to help them expand their core business with low-cost compliance. DPIIT works as the monitoring agency and the Small Industries Development Bank of India (Sidbi), the principal operating agency for funding startups.

    This scheme has indeed helped the nation to increase its employment rate. According to the report of March 2020 given by the Commerce and Industry Minister, Goyal Goyal, states that a total of 3,37,335 employment (sic) has been reported by 27,137 DPIIT-recognized startups.

    This statistic clearly shows that the DPIIT scheme has benefited the nation. Now, let’s move to the main content of this article which is how to gain the DPIIT Certificate of Recognition for Startups.
    Let’s begin!

    Benefits of Registering a Startup With DPIIT
    Eligibility Criteria
    Documents Required for DPIIT Registration
    Applicable Fees for DPIIT Registration
    Steps of DPIIT Registration

    Benefits of Registering a Startup With DPIIT

    This Startup India Initiative is mainly created to reduce the regulatory burden on startups. Therefore, it comes with several benefits through which the Government of India supports the current entrepreneurial ecosystem of the country. These benefits are:

    Exemption of Income Tax Act, 1961 under,

    1. Section 56(2)(vii)(b): This section talks about the tax that imposes on those companies which receive consideration for share issues exceeding fair market value. Now, the DPIIT registration helps startups to get exemptions under this section. The utmost benefit of this exemption is seen at the stage of the angle/VC round.
    2. Section 80-IAC: Under this section, DPIIT-registered startups are benefited by muting the income tax payment for three consecutive years out of the first ten years of the company’s incorporation date.
    3. Section 54(GB): This section discusses the tax imposed on long-term capital profit received on the sale of any residential property. And if the government capital profit is invested in the DPIIT registered startup, then the startup gains exemption from this tax payment.

    Self-certification under labor law and environmental laws

    Typically, all private companies are bound by labor and environmental laws for conducting inspections of the company’s establishment, safety norms, maintenance, and beneficial employee norms.

    However, those startups registered under DPIIT can self-certify for five years (counting from the incorporation date) themselves under six labor and three environmental laws.

    The exemption of six labor laws are:

    • The Building and Other Construction Workers (Regulation and Employment and Conditions of Service Act, 1996)
    • The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1996
    • The Payment of Gratuity Act, 1972
    • The Contract Labour (Regulation and Abolition) Act, 1970
    • The Employees Provident Funds and Miscellaneous Act, 1952
    • The Employees State Insurance Act, 1948

    The Exemption of three environmental laws are:

    • The Water (Prevention & Control of Pollution) Act, 1974
    • The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003
    • The Air (Prevention & Control of Pollution) Act, 1981

    Intellectual Property Registration

    The cost of a trademark registry in India for a trademark in one class is around Rs 9,000. But for DPIIT registered startups, they cost nearly half. The same goes for patent applications as well.

    Public Procurement Norms Relaxation

    Those within the industry know what Public Procurement refers to. It’s the process through which state-owned businesses and the government purchase goods and services from the Private sector.

    These contracts are usually marked with high eligibility requirements, but for the DPIIT-registered startups, the contract offer is relatively low.

    Eligibility Criteria

    Eligibility Criteria
    Eligibility Criteria

    Of course, for DPIIT registration, there are some eligibility criteria. Startups fulfilling the criteria will only get the approval and the one that does not fall perfectly under its eligibility criteria will not receive any exemption. The eligibility criteria are shared below.

    Company Age

    Startups whose existence and operational periods do not exceed ten years, counting from their incorporation date, can apply.

    Annual Turnover

    Startups with an annual turnover of Rs. One hundred crores for any financial year can apply.

    Company Type

    Startups that are incorporated as Private Limited companies or registered partnership firms, or limited liability partnerships can apply.

    Innovative & Scalable

    Startups that work towards product or service improvement and development along with a scalable business model of high potential can apply.

    Original entity

    Startups with original entities not reconstructed from a pre-existing business can apply.

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    Documents Required for DPIIT Registration

    Startups must submit a list of essential documents for registration under the DPIIT scheme. These documents are:

    • The Incorporation or Registration of entity Certificate
    • On receiving funding, Startups need to submit Proof of Funding (a support letter from the state or central government authorities or duly recognized incubator, and the angel funds or incubation fund needs to be 20% or above) to receive the DPIIT certificate.
    • Documents of award or any recognition received by the company.
    • Brief description of the nature of the business, including details of how the company is working towards innovation, scalability in terms of employment count, and product or service development.
    • Document of Patent (published in Patent journals by the company).

    And if the ministry found any of the documents mentioned above forged, the applicant is liable for the penalty of 50% of the company’s paid-up capital and Rs. 25000.

    Applicable Fees for DPIIT Registration

    There are no application fees for the startups to pay for registering with the Ministry of Commerce and Industry to receive the DPIIT Recognition certificate for the startup.

    Steps of DPIIT Registration

    Business Incorporation

    The first and foremost step for DPIIT Registration is to incorporate your business as a limited liability partnership or private limited firm.

    Register on Startup India Portal

    Startup India Registration Form
    Startup India Registration Form

    You need to register your startup on the official Startup India Portal. Fill out the details, like the contact info of your startup, along with the name. After successfully registering, you will get the login credentials on your provided email address.

    Startup India Portal Login

    As you have the login credentials, log in to the Startup India Portal. There you will receive an application that must be filled out and submitted. Then only your startup will be registered.

    DIPP Recognition and Registration

    After submitting the startup registration form application, you will receive a form for DIPP recognition. Please fill out the form and select the tax exemption that you need, and submit the form by attaching the required documents with it.

    Certification of Recognition

    A Sample Certificate of Recognition
    A Sample Certificate of Recognition

    After submitting the application for DIPP recognition to DPIIT, which shall issue the Certification of Recognition to your startup.

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    Conclusion

    The DPIIT certificate is an essential document for startups to gain several benefits from the government. To avail of the certificate, one needs to register their startup companies under the Department of Promotion of Industry and Internal Trade under the sub-category of the Startup India initiative.

    The complete guide for the registration as well as the benefits of the DPIIT certificate, eligibility criteria, documents required, etc is shared above.

    FAQs

    How do I get DPIIT recognition for a startup?

    To get DPIIT recognition for a startup, one needs to log in to the page and look for the option of getting DIPP Certified to select register here under the category of Recognition and Tax Exemption.

    After clicking on the register here, one needs to fill out the form by submitting all the necessary information and documents required. After submitting, the form will then be processed and if found satisfactory, the startup will get a recognition certificate.

    What are the documents required for startup India Registration?

    Some of the essential documents required for startup registration are trademarks, articles of association or incorporation, a non-disclosure agreement, intellectual property assignment agreements, a founders agreement, terms and conditions, etc.

    Who is eligible for DPIIT?

    The basic eligibility criteria for any startup to be registered as DPIIT is to have an annual turnover of about Rs. 100 crores for any fiscal year from its federation.

    Is DPIIT registration mandatory?

    Startup India Registration with DPIIT is mandatory for startups to get the benefits from the recognition certificate like tax exemption, reduced compliances, etc.

  • 7 Ways To Raise Funds For Your Startup or Business Idea

    A business startup comes with a lot of responsibilities. If you’ve got a business idea and you think it could make a change in the market, it’s up to you to make it a reality. Funding is an essential part of any business, as, without the seed money, you’ll be unable to fire the starting gun on your startup.

    Entrepreneurs are an incredibly clever and industrious bunch, but many are in the dark about how to fund their startup business idea, preferring instead to focus their energies on a core offering.

    Ways to Finance Your Business Idea
    1. Personal Money
    2. Seek for Angel Investors
    3. Crowdfunding
    4. Bank Loans
    5. Find a venture capitalist
    6. Pursue startup grants
    7. Family and Friends
    FAQ’s
    Conclusion

    Ways to Finance Your Business Idea

    Great ideas can only fulfill their potential if they are backed by a stable investment. These are some of the ways you can fund your startup:

    How Startup Funding Works.

    1. Personal Money

    For many people, the first inclination is to use personal money to make essential purchases. With a new startup creating so many different needs for money, it can be rather challenging to decide what needs to be funded first.

    Business costs start right from the time you decide on a business name. For instance, to retain that business name, you need to register a company name via a company formation. Registering a new entity costs money, but it is one of the first requirements to legitimizing your idea.

    Personal money can come from savings, and you can finance everything yourself, leaving you with total equity in the organization. One important factor to keep in mind is not only will you need cash for business purchases, but you will need working cash flow. You probably have other financial responsibilities. Therefore, you will need funds to deal with these. If you use up all your savings for your business startup idea, it could leave you in a precarious situation financially as you move forward.

    Money Management Tips

    2. Seek for Angel Investors

    There are some people out there whose sole job is investing in businesses that might help them make even more money going forward. These are known as angel investors and they have plenty of money to spare. These are the people you should be pitching to if you think your business idea is innovative and has the potential to make big money in the future. There are many online angel investment networks, as well as local investor groups you can pitch to in person, so do your research and start submitting your pitches.

    Find the right angel investor and not only will you benefit from their financial support but also their wisdom: oftentimes, they offer mentorship as a side dish alongside their capital. Although they generally offer less financial backing than banks and venture capital funds.

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    3. Crowdfunding

    Crowdfunding has taken off in a big way over the last few years. Crowdfunding is a favorite of the digital economy, and probably the quickest way of obtaining finance for a new business. All you need is a compelling pitch, one which strongly references your start-up’s potential for growth, as well as a knack for interacting with your cash-rich community. The sooner you get started and get creative with your crowdfunding campaign, the sooner you’ll start to draw more people in.

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    As a side benefit, crowdfunding is a nifty form of advertising, a way of stimulating public interest in your company before it’s even made its debut.

    4. Bank Loans

    In the modern age, it almost seems anachronistic to seek a bank loan. But if you have a solid credit history or existing assets that you’re happy to offer as collateral, as well as a workable business plan with clear profit forecasts, it’s still possible to launch your start-up with an infusion of bank cash. If you want to get money, it makes sense to head to a bank where they have lots of it. Their loans might come with harsh interest rates that could cause you plenty of problems further down the line though.

    5. Find a venture capitalist

    Finding a venture capitalist who shares your vision, or at the very least believes in your ability to turn your idea into a successful, profitable venture, is a good way of raising cash. The main con with this option is that venture capitalists are typically looking for the next big thing and so, many entrepreneurs struggle to convey the scale-ability of their enterprise.

    Venture capital funds, by their very nature, have a short shelf life as they generally seek to recover their investment, turn a profit then move on to the next fresh startup.

    6. Pursue startup grants

    Grants are great for people who don’t know where else to turn. If you have an unusual idea that investors and banks are scared of and crowdfunding doesn’t seem like a realistic option for you, it makes sense to apply for startup grants. While you shouldn’t expect to be cut a massive cheque, there are dozens of grants available, offered by national and state governments (as well as private enterprises) in the interests of stimulating the economy and growing the jobs market so it’s worth checking out your options for funding your startup.

    The main drawback is the fierce competitiveness of such grants, as well as the box-ticking involved, it can be a frustratingly drawn-out process, but that’s the tradeoff for retaining equity.

    7. Family and Friends

    Lastly, the idea of hitting friends and family for cash doesn’t sit well with some entrepreneurs, but many of the world’s top magnates readily admit to borrowing from their social network early in their careers. As such, you should have no compunction about doing the same.

    On the other hand, it’s not easy to put together a hefty bankroll relying solely on family and friends; and you have to ask yourself whether you want to risk straining meaningful relationships.

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    FAQ’s

    How difficult is it to get a business loan?

    It is difficult to qualify for a small business loan with a credit score lower than 700. Additionally, you should build a strong personal credit score and drive down any debt prior to applying for a business loan.

    What do startups use the funding for?

    Startups raise funds for various reasons but most often the main purpose is to grow their business. It can take a while for a company to reach profitability and until then, the business needs some cash to keep going.

    Who is eligible for startup India?

    Being incorporated or registered in India for less than seven years and for biotechnology startups up to 10 years from its date of incorporation. Annual turnover not exceeding INR 25 crores in any of the preceding financial years.

    How can I approach angel investors in India?

    Here are a few tips to approach angel investors in India are:

    • Approach angel investors in your niche.
    • Show them how successful your past business ventures were.
    • You’ve got to know the numbers involved.
    • Make it a priority to do proper research.
    • Stay confident.

    How to Get Investors for a Startup in India?

    • Create a profile on AngelList.
    • Prepare a record of investors to share your ideas with.
    • Brush up your networking skills.
    • Have a classy intro.
    • Tell them why they should invest in your startup.

    How can I raise money to start a business in India?

    • Go for Crowdfunding.
    • Consider Self-funding.
    • Get in touch with the Venture Capitalists.
    • Try Angel Investment.
    • Try Angel Investment.
    • Focus on the close.
    • Terms of the deal.

    Conclusion

    Perhaps a combination of funding options is best, but only you will truly know. All these above options require a great deal of consideration and researching because each of the options that have been discussed here has its own benefits and drawbacks, don’t forget that when you’re making your decision.

  • The Startup India Seed Fund—How Will It Help Your Startup?

    Indian Prime Minister Mr. Narendra Modi has from the start of his tenure emphasized the growth of India with the “Made in India” plan. Under his leadership, the central and state governments have been actively incentives for Indian Businesses.

    He was addressing the Prarambh Startup India International summit and said in his address that the target for India’s startups over the next five years should be to become global giants in their respective service areas. And announced the launch of a new seed fund for startups for setting up and growing business subsequently.

    Read on to learn how it can impact your startup.

    When is a Business called a Startup?
    What is Startup India?
    What is Startup India Seed Fund?
    What will the Startup Seed India Fund do for Startups?
    What Advantages would Startups get with Startup Seed India Fund?
    FAQ’s
    Conclusion

    When is a Business called a Startup?

    A business would usually be called a startup when it has been set up, so a young company. It is a venture by the aspiring entrepreneur to create a unique product or provide a service. These usually operate on a tight budget and are funded either by the founder or with association with friends, family, or maybe personal borrowing.

    The very first challenge they face is validating their product or service. They have to convince the consumer that their product/service is worth believing and spending. And convince lenders and investors of the possibility of healthy returns.

    What is Startup India?

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    Startup India Benefits by Government

    Startup India was introduced in 2016 by the Central government with intention of creating a positive environment to encourage innovation and growth of new companies in the country. This would ensure the sustained growth of the nation and provide a continued source of employment.

    The government created the Startup India Action plan to:

    • Simplify establishing business and provide guidance
    • Provide funding schemes and other incentives
    • Be a common ground for industry and academia to work together

    Definition of a Startup under Startup India:

    • Establishment: The company’s date of incorporation should not exceed 10 years
    • Type of Company: The business should be registered as either Private Limited Company; a Registered or Limited Liability Partnership
    • Turnover: The annual turnover should not exceed 100 crores in any year since incorporation
    • Formation: The business should not have been formed by splitting the company
    • Potential: The should a potential to improve existing product or service and creation of wealth and employment in the process

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    What is Startup India Seed Fund?

    The Fund of Funds for Startups was set up in 2016 so that new companies could get assistance in raising equity capital through the Fourteenth and fifteenth Finance commission cycles. The size of this corpus was a huge 10,000 crores and it was mainly designed towards raising equity capital.

    With the announcement of the Startup India Seed Fund, the Government has taken its initiative a step further. Allocating 1,000 crores for gaining access to debt capital by providing the guarantee for these young companies.

    What will the Startup Seed India Fund do for Startups?

    Prime Minister Mr. Narendra Modi announced that the new Startup Seed India fund will assist companies source funds for their growth and operative costs. The main aim is to assist with gaining access to debt capital by providing a guarantee to potential investors and lenders.

    Your undertaking gets a solid back in form of a government guarantee and securing the needed funding. On the other hand, while lenders and investors have peace of mind having secured the return of their money.

    This follows a similar initiative by the Ministry of Electronics and Information Technology in 2020 to select up to 300 startups and provide them financial assistance. This would include funds up to rupees twenty-five lakhs and a host of other benefits.

    The Startup seed India Fund is expected to be designed along similar lines and more details are expected in the forthcoming weeks as the structure is set in place for encouraging new enterprises by the Indian Government.

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    What Advantages would Startups get with Startup Seed India Fund?

    Startup India has a lot of in-store for the new enterprise. And as it sees a new dimension added to it, you can without doubt expect the advantages to be aligned with each other:

    • Simple Process: The government recognizes that setting up a new venture is exhausting; thus, the registration process is simple and straightforward. Most of it can be even completed online and the documentation required is easily accessible.
    • Inexpensive: The government can provide information about facilitators who help in completing expensive processes at lower costs. And the statutory and other fees may be borne by the government or kept very nominal.
    • Access to Funds: A 1000 crores corpus has been set aside by the government for the Startup Seed India Fund. This government will also provide a guarantee to lenders and other investors to help raise debt funding for the undertaking.
    • Simplified compliances: Many compliances and essential requirements have been simplified to save time and money. This makes the process more transparent, easily understandable, secure, and understood by the masses.
    • Tax Benefits: There are usually tax benefits offered to both new companies and investors. The new institution will get either be exempt from tax or reduced tax up to a certain turnover. The lender will have similar facilities for the money invested.

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    FAQ’s

    What is Startup India scheme?

    Startup India Scheme is an initiative by the Government of India for generation of employment and wealth creation. The goal of Startup India is the development and innovation of products and services and increasing the employment rate in India. Startup India was launched by Prime Minister Shri Narendra Modi.

    Who are eligible for Startup India?

    Being incorporated or registered in India for less than seven years and for biotechnology startups up to 10 years from its date of incorporation. Annual turnover not exceeding INR 25 crores in any of the preceding financial years.

    How do I get funding for my Startup?

    One of the most popular forms of startup funding is through venture capital. High-net-worth individuals, giant super funds, corporates and other groups invest in venture funds, which are managed by investors, who invest in startups on their behalf, taking equity stakes in the business.

    How much Fund has the Indian Govt. announced for Startups?

    The Indian Government has taken its initiative a step further by announcing the Startup India Seed Fund and allocated 1,000 crores for the startups.

    Conclusion

    Under the current Regime, India has seen a more robust environment conducive to the establishment and growth of startups. The Indian government has promoted new ventures not only to engage the youth. But also, to bring forth innovation, create employment, strengthen the economy and development of the nation. This new Startup India Seed Fund is another step to make the future brighter and make India self-sufficient.