What do you understand by ‘Startup India Scheme’? What benefits are available under this scheme? (HPAS Mains Question Paper 2022 – GS 2, Q.5)
The Start-up India Scheme is a flagship initiative launched by the Government of India in 2016 to promote and support entrepreneurship and innovation in the country. The scheme aims to create a conducive environment for start-ups to flourish and become engines of economic growth and job creation.
The primary objective of the Start-up India Scheme is to encourage and facilitate the development of start-ups in the country and to provide them with a range of benefits and incentives.
It is done by discarding some of the restrictive state government policies, which include:
- License Raj
- Land Permissions
- Foreign Investment Proposals
- Environmental Clearances
The Start-up India scheme is based majorly on three pillars which are:
- Providing funding support and incentives to the various start-ups of the country.
- To provide Industry-Academia Partnership and Incubation.
- Simplification and Handholding.
Some of the key features of the scheme include:
- Simplified registration process: The government has simplified the registration process for start-ups with a single-page registration form available on the Start-up India website.
- Tax benefits: Start-ups registered under the scheme are eligible for a range of tax benefits, including a three-year income tax exemption and exemption from capital gains tax.
- Funding and incentives: The government has established a fund of INR 10,000 crore to provide funding support for start-ups and also offers a range of incentives for businesses in areas such as research and development, patent filing, and international collaborations.
- Regulatory support: The scheme provides start-ups with a range of regulatory support services, including help with compliance, intellectual property protection, and legal assistance.
Registration for Start-up India:
A person must follow the below-mentioned steps that are important for the successful registration of their business under the Start-up India scheme:
- A person should incorporate their business first either as a Private Limited Company or as a Limited Liability Partnership or as a Partnership Firm, along with obtaining the certificate of Incorporation, PAN, and other required compliances.
- A person must log in to the official website of Start-up India, where they have to fill in all the essential details of the business in the registration form and upload the required documents.
- A letter of recommendation, an Incorporation/Registration Certificate, and a brief business description are some of the essential documents required for registration purposes.
- Since start-ups are exempted from income tax benefits, they must be recognised by the Department of Industrial Policy and Promotion (DIPP) before availing of these benefits. Also, they should be certified by the Inter-Ministerial Board (IMB) to be eligible for IPR-related benefits.
- After successful registration and verification of the documents, you will be immediately provided with a recognition number for your start-up, along with a certificate of recognition.
Start-up India Benefits:
After the launch of the Start-up India scheme, a new program was launched by the government named the I-MADE program, which focused on helping Indian entrepreneurs build 1 million mobile app start-ups. The government of India had also founded the Pradhan Mantri Mudra Yojana, which aimed to provide financial support to entrepreneurs from low socioeconomic backgrounds through low-interest rate loans. Some of the critical benefits of Start-up India are as follows:
- To reduce the patent registration fees.
- Improvement of the Bankruptcy Code ensuring a 90-day exit window.
- To provide freedom from mystifying inspections and capital gain tax for the first 3 years of operation.
- To create an innovation hub under the Atal Innovation Mission.
- Targeting 5 lakh schools along with the involvement of 10 lakh children in innovation-related programs.
- To develop new schemes that will provide IPR protection to start-up firms.
- To encourage entrepreneurship throughout the country.
- To promote India as a start-up hub across the world.
Government Measures to Promote Start-up Culture in the Country
1. As part of the “Make in India” initiative, the government proposes to hold one Start-Up fest at the national level annually to enable all the stakeholders of the Start-up ecosystem to come together on one platform. You can learn about the Make In India program on the linked page.
2. Launch of Atal Innovation Mission AIM – to promote Entrepreneurship through Self-Employment and Talent Utilization (SETU), wherein innovators would be supported and mentored to become successful entrepreneurs. It also provides a platform where innovative ideas are generated. Relevant details on Atal Innovation Mission AIM are available on the linked page.
3. Incubator set up by PPP – To ensure professional management of Government-sponsored or funded incubators, the government will create a policy and framework for setting up incubators across the country in public-private partnerships. The incubator shall be managed and operated by the private sector. Read more on Public-Private Partnerships on the link provided here.
- 35 new incubators in existing institutions. Funding support of 40% shall be provided by the Central Government, 40% funding by the respective State Government and 20% funding by the private sector to establish new incubators.
- 35 new private sector incubators. A grant of 50% (subject to a maximum of INR 10 crore) shall be provided by the Central Government for incubators established by the private sector in existing institutions.
4. A Start-up India Seed Fund Scheme has been implemented since April 1, 2021. The scheme aims to provide financial assistance to start-ups for proof of concept, prototype development, product trials, market entry and commercialisation.
In addition to the Start-up India Scheme, the government has taken various measures to promote the start-up culture in India. Some of these measures include:
- Setting up incubators and accelerators to provide start-ups with mentorship, funding, and infrastructure support.
- Launching initiatives to promote entrepreneurship among women and underrepresented communities.
- Funding support for research and development in biotechnology, nanotechnology, and renewable energy.
- Encouraging the use of technology and innovation in critical sectors such as healthcare, agriculture, and education.
The Start-up India Scheme and other measures to promote start-ups have played a key role in encouraging entrepreneurship and innovation in India and have helped to create a vibrant start-up ecosystem in the country.
