Startup India scheme: Eligibility, benefits, and objectives

Startup India scheme was established by the Government of India to promote the growth of startups in the nation. It was launched on January 16, 2016, along with several supporting programs that seeks to nurture entrepreneurs and build a robust startup ecosystem. The objective of Startup India scheme is to “transform India into a country of job creators instead of job seekers.” You can learn more by visiting the Startup India website: www.startupindia.gov.in.

What is the Startup India scheme?

The Startup India initiative focuses on providing startups with the necessary support to innovate and grow their core competencies. The government has published the Startup India Action Plan which gives clarity to the Startup India scheme details. The Action Plan for the scheme gives support to a startup in the following areas:

• Simplification and handholding – Simplify compliance regimes
• Funding support and incentives – Provide funding support through Startup India funding scheme
• Industry-academia partnership and incubation – Collaboration and incubator platforms for receiving external expertise

Also read: Learn about the ASPIRE scheme of 2015 that was launched to encourage entrepreneurship by building technology and incubator centres.

Eligibility requirements for Startup India scheme

When the scheme was launched Startup India scheme eligibility was for companies incorporated between April 1, 2016, and 31st March 2021. Budget 2021 has extended this eligibility to 31st March 2022.

Startup India scheme involves multiple programmes under its umbrella that startups can apply for. The eligibility of a business depends on the programme each is opting for.

Benefits of Startup India scheme

The scheme seeks to impact the startups of the nations by providing a slew of programmes for incentivising entrepreneurs. The scheme has a few major programmes that a startup can enrol that translates as the benefits of startup India scheme.

Given below are the various programmes under startup India scheme, their eligibility and how to apply:

1.Relaxed norms of public procurement for startups

Typically, when government tenders are issued the eligibility to participate requires either “prior experience” or “prior turnover”.  This limits the number of startups participating in government tenders. The government has exempted startups in the manufacturing sector from the criteria of “prior experience/turnover” when it comes to eligibility for government tenders.

These are the benefits of the programmme:

• Exemption from “prior experience” or “prior turnover” criteria for participating in government tenders
• Startups can register on Government e Marketplace (GeM) as sellers and sell their products and services directly to Government entities.
• Startups are exempt from submitting Earnest Money Deposit (EMD) or bid security while filling government tenders.

Eligibility

• Startups need to be recognised under the Department for Promotion of Industry & Internal Trade (DPIIT).

How to apply

To participate in government tenders you can register on the GeM portal.

2.Startup India mobile app and web portal

Startup India’s mobile app and web portal acts as a single platform for startups for interacting with government and regulatory institutions for all business queries and needs. The mobile app will provide “on-the-go accessibility” for:

• Registering startups with relevant agencies of the government
• Filing for compliances and obtaining information on various clearances/ approvals/ registrations required
• Collaborating with various startup ecosystem partners including venture funds, incubators, academia, mentors etc.
• Applying for various schemes being undertaken under the Startup India Action Plan

All startups (falling under the specified incorporations date) can register on the portal/mobile app and then proceed to get a DPIIT recognition.

3. A Startup India Hub as a single point of communication for startups under the scheme

This is a platform that will serve as a communication channel for the startup ecosystem under the scheme. It will assist startups with aspects like sourcing finance, feasibility testing, business structuring advisory, enhancement of marketing skills, technology commercialisation and management evaluation.

Startups will get the chance to collaborate with central and state governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions. All startups (falling under the specified incorporations date) recognised by the DPIIT and have registered to Startup India portal can access the platform from the Homepage of Startup India portal under the ‘Network’ section.

4.Simplifying compliance norms for startups

The scheme aims to reduce the regulatory burden on startups so they can keep their compliance costs low. According to the government, new and small firms are unaware of nuances of the issues and can be subjected to intrusive action by regulatory agencies. Therefore, the government has simplified the process of regulatory compliances.

These are the benefits of the program:

• Startups will be allowed to self-certify compliance through the Startup mobile app with 6 labour and 3 environment laws.
• In the case of labour laws, no inspections will be conducted for a period of 5 years.
• In the case of environment laws, startups which fall under the ‘white category’ (as defined by the Central Pollution Control Board (CPCB)) would be able to self-certify compliance and only random checks would be carried out in such cases.

Eligibility

• All DPIIT recognised startups that are within 10 years of incorporation.

How to apply?

• Visit Shram Suvidha Portal of the Ministry of Labour and Employment
• Register to the portal and login
• Click on ‘Is Any of your Establishment a Startup?’
• Follow instructions

5.Startup India Seed Fund Scheme (SISFS)

The SISFS scheme will provide financial assistance to startups for development of a Proof of Concept, prototype development, product trials, market entry, and commercialisation. The Seed Fund is being disbursed to startups through select incubators across India. This is a specific loan scheme for entrepreneurs (under Startup India) who are looking to fund the initial stages of their enterprise.

The incubators can provide eligible startups with up to ₹20 lakh for validation of Proof of Concept, prototype development, product trials to startups. Up to ₹50 lakh can be provided to startups for market entry, commercialisation, or scaling up through convertible debentures or debt-linked instruments. Startups can apply to 3 incubators simultaneously under this scheme.

Eligibility

• A startup, recognised by DPIIT, incorporated not more than 2 years ago at the time of application.
• The startup must have a business idea to develop a product/service with a market fit, viable commercialisation, and scope of scaling.
• Startup should not have received more than ₹10 lakh of monetary support under any other Central or State Government scheme.
• The startup should be using technology in its core product/service.
• Preference would be given to startups creating innovative solutions in sectors such as social impact, waste management, water management, education and agriculture.

How to apply?

1. Visit startupindia.gov.in
2. Login with credentials for Startup India portal
3. Click on the apply now button given on the homepage

6.Fast-tracking patent examination at lower costs

Startup Intellectual Property Protection (SIPP) is a scheme instituted under the Startup India scheme that will facilitate filing of patents, trademarks and designs by innovative entrepreneurs.

These are the benefits of the program:

• The scheme will allow patent applications of startups to be fast-tracked for examination and disposal, so that they can realise the value of their IPRs at the earliest.
• A panel of facilitators will assist in filing IP applications.
• Central Government shall bear the entire fees of the facilitators for any number of patents, trademarks or designs.
• Startups can claim an 80% rebate in filing of patents for tax filing.

Also read: How Udyam portal registration benefits MSMEs get subsidy on patent registration and extended tax benefits

Eligibility

• The startup needs to be DPIIT recognised.

How to apply?

• Login to the Startup India portal
• Navigate to ‘Resources’ option on the hompage
• Select either the ‘List of Trademark Facilitators’ or the ‘List of Patent Facilitators’ as required.
• Choose and facilitator and reach out to him/her for patent/trademark registration

7.Faster exit for startups

According to the government, “Given the innovative nature of startups, a significant percentage fail to succeed”. Therefore, the government will help entrepreneurs to fast track the winding up process by appointing an insolvency professional. He/she will be responsible for liquidating its assets and paying its creditors within six months of the appointment.

The government believes that this will help promote entrepreneurs to experiment with new and innovative ideas, without having the fear of facing a complex and long-drawn exit process where their capital is stuck. You can get more information from the Insolvency and Bankruptcy Board of India.

Also read: Learn about the MSME Innovative scheme, launched in 2022 to drive innovation and help them develop new ideas and designs, and reimburse IP costs.

8.Tax exemption under 80IAC

Startups can be exempted from paying income tax for 3 consecutive financial years out of their first ten years since incorporation.

Eligibility

• The entity should be a DPIIT recognised startup.
• Only private limited companies or limited liability partnerships are eligible for tax exemption under Section 80IAC.
• The startup should have been incorporated after April 1, 2016.

How to apply?

• Login to Startup India portal.
• Click on ‘Recognition’ on the homepage
• Click on ‘Apply for tax exemptions’
• Click on ‘Income tax exemption’ after scrolling down to the section ‘Startup India: 80 IAC Tax exemption’
• Access the Section 80 IAC exemption application form here
• Fill in all details, upload specified documents and submit the application form

Documents required for Startup India scheme

All the programmes mentioned above require certain documents to be submitted along with the application. Here are some common documents required of the programme applicants:

• Memorandum of Association for Pvt. Ltd. / LLP Deed
• Board Resolution (If Any)
• Annual Accounts of the startup for the last three financial years (or the period specified)
• Income Tax returns for the last three financial years (or the period specified)
• Aadhaar card
• Business PAN
• DPIIT recognition certificate

What should you know about DPIIT recognition?

To access the programmes mentioned above, startups should possess ‘DPIIT Certificate of Recognition for Startups’. This will officially prove that you are a DPIIT recognised startup eligible for all Startup India schemes. Follow the steps below to apply for a DPIIT certificate:

• Visit Startup India portal’s homepage
• Hover the mouse on Recognition
• Select ‘Apply for DPIIT Recognition’ from the drop-down menu
• Fill in the form and upload the necessary documents

To be a recognised as a startup by DPIIT, a startup should satisfy the following conditions:

• Age of the company- Period of existence and operations should not be exceeding 10 years from the date of incorporation
• Type of the company – Should be incorporated as a Private Limited Company, a Registered Partnership Firm or a Limited Liability Partnership
• Original entity – A company should not have been formed by splitting up or reconstructing an already existing business
• Annual turnover – Annual turnover should not exceed ₹100 crore for any of the financial years since its incorporation
• Scope for development – Should work towards development or improvement of a product, process/service and/or have a scalable business model with high potential for creation of wealth and employment

Startup India scheme tries to boost the startup ecosystem with funding, advisory help and reduced compliance procedures. Since startups are businesses without business experience, funding and guidance are key pillars of success in their growth story.

There are several other government schemes for businesses like subsidy schemes, loan schemes, credit guarantee schemes, etc., tailored for small businesses.

If you are a small business looking for help with unsecured business loans, finding and participating in government tenders or even looking for an excellent logistics solution visit Tata nexarc, a platform with expert solutions to grow your MSME business.

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