Startup India is an initiative taken by the Indian government to empower young entrepreneurs to be job creators rather than job seekers. The goal of the Startup India scheme is to increase the employment rate in India by offering innovative products and services. The Prime Minister Narendra Modi launched the scheme on 16th January 2016.
Action Plan of Startup India Scheme
Startup India initiative boosts the spirit of new entrants in the following way:
- Under this initiative, the government has set up Startup hubs where the officials will address the concerns related to incorporation, registration, grievance redressal, etc.
- The government is offering a single online portal for application and registration from anywhere.
- The startup firm can experience the speedy process related to patent acquisition and registration.
- In case of insolvency, the Insolvency and Bankruptcy bill, 2015, facilitates speedier winding up of the startups. Now, a new startup can windup all its operation within 90 days.
- The government has set up a pool of Rs. 10,000 crores for 4 years (Rs. 2500 crore each year) to invest in various startups.
- It will provide special funds helpful to get income tax exemptions.
- It will provide income tax exemptions to the new startups for the first 3 years from inception.
- It exempts the investment made via venture capital funds or incubators from the application under this arrangement.
Financial Benefits of the Startup India Scheme
Many startups provide unique goods or services. That’s why they need a patent for their business. But to register their patents, they need to pay a heavy cost, commonly known as patent cost. Under the startup India scheme, the government offers 80% rebate on the patent cost. Besides this, the process also speeds up and government pays for the fees of the facilitator.
- Income Tax Benefits for Startups:- Under the Startup India scheme, the startups can enjoy the tax exemption for the 3 years from the inception. But before eyeing to get the benefits of tax exemption, startups need to get a certificate from the Inter-Ministerial Board. Apart from tax exemptions, the startups can claim exemption from tax on capital gains if they make an investment in a specified fund.
- Registration Benefits for Startups:- Whenever an entrepreneur starts a new venture, the complex process of registration haunts them for days. But, under the startup India scheme, a single application is enough to get registered. Besides this, a meeting is held at the Start-up India hub to address any concerns and doubts.
- Government Tenders for Startups:- There are no doubts that the government provides large projects that result in high revenue. This is the reason everyone seeks government projects. But it isn’t easy for a new entrant to get these projects. However, if a startup is registered under the Startup India scheme, it gives them priority while bidding for government orders. The best part is the start up need not have prior experience.
- Networking and Knowledge Sharing Opportunities for Startups:- The government facilitates networking opportunities for startups to gain useful insights from the various stakeholders at a single platform. These kinds of meetings are held twice a year. This scheme also provides an intellectual property awareness workshop.
Various Loan Schemes Under Startup India Scheme
- The venture capital scheme: -The scheme is initiated by the Ministry of Agriculture and Farmers’ welfare to support agripreneurs. Under this scheme, agripreneurs fund their agribusiness project with the interest free loan.
- Stand-up India for Financing SC/ST/ and/or Women Entrepreneurs:- The initiative is taken by the Small Industries Development Bank of India (SIDBI) to empower the SC/ST and women entrepreneurs across the country. Under this scheme, loans starting from Rs 10 lakhs to 1 crore is offered to SC/ST or women entrepreneurs via nationalized banks.
- Coir Udyami Yojna (CUY):- The scheme is initiated by the Coir Board. Under this scheme, a credit-linked subsidy scheme is offered to set up coir units. The main goal of this scheme is to provide sustainable development of the Coir industry in India.
- Pradhan Mantri Mudra Yojna:- This initiative has been taken up by the government of India to support the micro-enterprise sector in the country. Under this scheme, loans can be given to these businesses:
- Business loans for Vendors, shopkeepers, traders and small services businesses.
- Equipment financing for small units
- Working Capital via Mudra Cards.
- Transport vehicle loans.
5. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGFTMSE): The scheme is powered by the Small Industries Development Bank of India and Micro, Small and Medium Enterprises. This scheme aims to offer collateral free credit to the micro and small enterprise sectors. All MSMEs working in the space of manufacturing and service except educational institutions, agriculture, self-help groups (SHGS), and training institutions are eligible for this scheme.
Eligibility Criteria to Get the Benefit of the Startup India Scheme
- The company should be a private limited company or a limited liability partnership firm.
- The company should have got approval from the Department of Industrial Policy and Promotion.
- The firm should have a recommendation letter by an incubation.
- The company should be in the business of offering innovative products and services.
- The age of the firm should not be older than 5 years.
- The company should not have achieved the total turnover over 25 crores.
- The business shouldn’t result from a dissolution.