Startup India is a flagship initiative of the Government of India, intended to build a strong ecosystem that is conducive for the growth of startup businesses, to drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower startups to grow through innovation and design.
Several programs have been undertaken since the launch of the initiative on 16th of January, 2016 by Hon’ble Prime Minister, to contribute to his vision of transforming India into a country of job creators instead of job seekers. These programs have catalyzed the startup culture, with startups getting recognized through the Startup India initiative and many entrepreneurs availing the benefits of starting their own business in India. These programs are managed by the Department for Industrial Policy and Promotion (DPIIT)
The company to be formed must be a private limited company or a limited liability partnership.
It should be a new firm or not older than five years, and the total turnover of the company should be not exceeding 25 crores.The firms should have obtained the approval from the Department of Industrial Policy and Promotion (DIPP).
To get approval from DIPP, the firm should be funded by an Incubation fund, Angel Fund or Private Equity Fund.
The firm should have obtained a patron guarantee from the Indian patent and Trademark Office.
It must have a recommendation letter by incubation.
Capital gain is exempted from income tax under the startup India campaign.
The firm must provide innovative schemes or products.
Angel fund, Incubation fund, Accelerators, Private Equity Fund, Angel network must be registered with SEBI (Securities and Exchange Board of India).
Note: An entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘Startup’.
The benefits provided to recognize startups under the Startup India initiative are:
Self-Certification:Self-certify and comply under 3 Environmental & 6 Labour Laws
Tax Exemption:Income Tax exemption for a period of 3 consecutive years and exemption on capital and investments above Fair Market Value
Easy Winding of Company:In 90 days under Insolvency & Bankruptcy Code, 2016
Startup Patent Application & IPR Protection:Fast track patent application with up to 80% rebate in filling patents
Easier Public Procurement Norms:Exemption from requirement of earnest money deposit, prior turnover and experience requirements in government tenders
SIDBI Fund of Funds:Funds for investment into startups through Alternate Investment Funds
STEP 1: Incorporate your business
STEP 2: Register with Startup IndiaSTEP 3: Get DPIIT recognition
STEP 4: Recognition application
STEP 5: Documents for Registration
STEP 6: Recognition Number
STEP 7: Other Areas
- Step 1: Incorporate your Business
You must first incorporate your business as a Private Limited Company or a Partnership firm or a Limited Liability Partnership. You have to follow all the normal procedures for registration of any business like obtaining the Certificate of Incorporation/Partnership registration, PAN, and other required compliances. - Step 2: Register with Startup India
Then the business must be registered as a startup. The entire process is simple and online. All you need to do is log on to the Startup India website and fill-up the form with details of your business. Next, enter the OTP which is sent to your e-mail and other details like, startup as the type of user, name and stage of the startup, etc. After entering these details, the Startup India profile is created.
Once, your profile is created on the website, startups can apply for various acceleration, incubator/mentorship programmes and other challenges on the website along with getting access to resources like Learning and Development Program, Government Schemes, State Polices for Startups and pro-bono services. - Step 3: Get DPIIT Recognition
The next step after creating the profile on the Startup India Website is to avail Department for Promotion of Industry and Internal Trade (DPIIT) Recognition. This recognition helps the startups to avail benefits like access to high-quality intellectual property services and resources, relaxation in public procurement norms, self-certification under labour and environment laws, easy winding of company, access to Fund of Funds, tax exemption for 3 consecutive years and tax exemption on investment above fair market value.
For getting DPIIT Recognition, click on the ‘Get Recognised’ button if you are a new user. If you are an existing user click on the ‘Dashboard button’ and then ‘DPIIT Recognition’. - Step 4: Recognition Application
The ‘Recognition Application Detail’ page opens. On this page click on ‘View Details’ under the Registration Details section. Fill up the ‘Startup Recognition Form’ and click on ‘Submit’. - Step 5: Documents for Registration
- Incorporation/Registration Certificate of your startup
- Details of the Directors
- Proof of concept like pitch deck/website link/video (in case of a validation/ early traction/scaling stage startup)
- Patent and trademark details (Optional)
- PAN Number
- Step 6: Recognition Number
On applying you will immediately get a recognition number for your startup. The certificate of recognition will be issued after the examination of all your documents which is usually done in 2 days after submitting the details online.
However, be careful while uploading the documents. If on subsequent verification, it is found to be obtained that the required document is not uploaded/wrong document uploaded or a forged document has been uploaded then you shall be liable to a fine of 50% of your paid-up capital of the startup with a minimum fine of Rs. 25,000. - Step 7: Other Areas
- Patents, trademarks and/or design registration: If you need a patent for your innovation or a trademark for your business, you can easily approach any from the list of facilitators issued by the government. You will need to bear only the statutory fees thus getting an 80% reduction in fees.
In order to provide funding support, the Government has set up a fund with an initial corpus of INR 2,500 crore and a total corpus of INR 10,000 crore over a period of 4 years (i.e. INR 2,500 crore per year). The Fund is in the nature of Fund of Funds, which means that it will not invest directly into Startups, but shall participate in the capital of SEBI registered Venture Funds.
Units operating under 36 white category industries as published on the website of the Central Pollution Control Board do not require clearance under 3 environment-related Acts for 3 years.
Tax Exemption: Startups are exempted from income tax for 3 years. But to avail these benefits, they must be certified by the Inter-Ministerial Board (IMB). The Startups incorporated on or after 1st April 2016 can apply for the income tax exemption.
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