Startup India!


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This article was written by Ankita C. Dhabu a student of National Law University Odisha.

Prime Minister Narendra Modi inaugurated the ‘Startup India’ scheme in his Independence day speech this year. The scheme mainly aims at providing a good conducive environment to the growth of new ideas, innovations and entrepreneurship in India. The objective is to convert India from a country of job seekers to job seekers. This scheme which helps in fostering and nurturing startups in the country will not only help in achieving a sustainable economic growth but is also a quicker way of generating employment opportunities in the country. The government aims to accelerate the spreading up of the startup regime in the country. It aims at developing and motivating the startups in a variety of sectors which include agriculture, healthcare, education, social sector etc. The action plan for the scheme is divided into three folds which include simplification and handholding, incentives and funding support and finally partnership between industry and academia.

Compliance Regime- Self Certification:

The various formalities like abiding by the environment and the labor laws is a tedious and time consuming procedure. Small industries which are new to the business do not understand the nuances and the issues that are of such great importance that may lead to adisturbing action taken up by the regulatory agencies. In order to make this process a bit simpler and meaningful, such startups shall be able to self-certify themselves using the startup app along with nine environment and labor laws. With respect to labor laws,there shall be no inspections conduced for a term of three years. However, they may be inspected on the receipt of a credible complaint. In cases of environment laws the startups falling under white category which has been clearly defined by the Central Pollution Control Board will not have to undergo any inspection and such startups shall have only a random inspection check.

Further, the scheme takes into account a model of startup India hub. The main objective of the startup India hub is that it shall work in a hub and spoke model and shall be collaborated with the Central as well as the State governments, various educational institutions across the world, legal partners, banks etc. Assist the startups to assess their lifecycle focusing mainly on financing, business structuring, feasibility, enhancing marketing skills and various other important criteria of business and entrepreneurship. This hub shall also organize mentorship and training programs in collaboration with the educational institutions and government organizations who believe in motivating such innovations.

Moreover, in order to start their business operations, it is essential for a startup to acquire registrations from a regulatory authority. Any delay in such registrations may lead to a delay in the establishment of the startup itself. Government aims at making this registration process easier, so that the loan taking process becomes easier, more employment is created and more income is earned. Thus, a checklist of all the required licenses is provided. Further, the government provides a mobile app which helps to register a business idea, tracking the status of such application, collaborating with other startup ecosystem partners and finally also apply for numerous schemes that are being started by the Startup India scheme.

Fast Tracking Patent Examination at lower cost:

The Startup Intellectual  Property Protection (SIPP) scheme shall help in filing applications for patent, design or trademark by the startups. The applications of startups shall be fast-tracked so that they would be able to realize the value of their IPR as early as possible. There shall be a panel of facilitators appointed by the Controller General of Patents, Designs and Trademarks  and they shall also regulate the conduct and functioning of the startups. Most importantly, the Central Government shall bear all the cost payable for the application of patents, trademarks and other IP’s and the startups shall only be liable to pay the statutory fees.

Relaxed Norms of Public Procurement for Startups:

It is generally seen that whenever a tender is floated by the government or a PSU for that purpose, it requires some previous experience and previous turnover of the applicant. This basically, cuts down all such startups from getting such an opportunity. Under this scheme, it would be mandatory for both Central as well as the State governments and PSUs to give at least 20% chance to the micro level or medium level startups. The startups would only have to show their ability to complete the project and also would have to have a manufacturing unit in India.

Faster Exit for Startups:

In order to remove the fear of a long and tangled process of winding up from the brains of people thinking to implement their innovation in business, the process of winding up has been made easier and quicker. According to the Insolvency and Bankruptcy Bill, 2015, the winding up process for a startup which has simple debt structures or those who meet such criteria, will be over within a span of 90 days only. An insolvency professional shall be appointed and he shall be made in-charge for liquidating the assets and paying off the debts of the creditors within a period of six months from his appointment. Further, on such appointment, the liquidator shall be responsible for smooth closure of the business and repayment of debts. This process shall be based on the concept of limited liability.

Funds, Monetary Support and Incentives

In order to provide monetary support to the startups, the government has setup a fund with an initial amount of Rs 2500 Crores. This would increase to a maximum of Rs 10000 Crores in the coming four years. It shall be in the nature of fund of funds which is to mean that it shall not directly invest in the startups but shall participate in the capital of venture funds which are registered with SEBI. LIC shall act as  co-investor to such fund of funds.

Further, Startups in their initial stages do not attract investment. Thus, it is necessary that the investors must be provided with incentives so as to lure them to invest in the startups. Thuis, persons who have invested in fuind of funds recognized by the government, then, they would be entitled to get an exemption on capital gains arising out of such investment.  Also, a further monetary boost given is that the profits earned by a startup shall be exempted from income tax for a period of three years.  This exemption can be claimed only when the startup has not went on to distribute its dividends.


So, seeing the above scheme we conclude that the government has recognized that startups have a majority share in the future. It has taken steps to help startups grow in a conducive atmosphere in India. The scheme is a huge step taken up so as to achieve the idea of a sound startup ecosystem. With the implementation of this scheme, people having ideas would be attracted to bring them to practice. The scheme provides a wholesome support to the startups as it not only takes into account the procedural hurdles that come in the way but also the monetary problems which are faced by the entrepreneurs. It is only necessary that the scheme is implemented in a way to help the startups grow which is the main objective of the scheme.

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