Start-up India Initiative – Boosting the Indian Economy

Prime Minister Narendra Modi propelled an initiative that promises to bring growth to the start-up ecosystem. This flagship initiative that goes by the name of the Start-up India initiative aims to boost the Indian economy by giving new entrepreneurs opportunities. It, in turn, creates employment and adds to the nation’s wealth. It is based on the three pillars – issuing appropriate funding support to the start-ups, providing Industry-Academia partnership and growth. The initiative was hell-bent on restraining land permissions, license raj, environmental clearances, etc. This initiative is seen as the next big thing that would help capable talents grow their ideas, which help to put India on the map of strong economies.

While addressing the nation, the prime minister announced the start-up India campaign on 15th August 2015 at Red Fort, New Delhi. This campaign was introduced under India’s Government as an initiative to develop 75 start-ups support hubs in India. The Start-up India scheme was launched on 16th January 2016 to support the start-ups in India by providing bank finances, inaugurated by the former finance minister, Arun Jaitley.

The major objective of the start-up India Initiative is to discard some of the restrictive policies of the state government, which include license raj, land permissions, foreign investment proposals, and environmental clearances. The start-up India initiative is based on the three pillars, which include providing funding support incentives to the start-ups, simplification, and handholding, and providing Industry-Academia partnership and incubation. The government will help support the new ideas and capabilities of young and aspiring minds and implement their idea to grow. The success of start-up India will eventually help grow the Indian economy and emerge as a strong nation.

What is a Start-Up?

The Department for promotion of Industry and internal trade issued a notification on February 19, 2019, that defines a start-up. A start-up is;

1. An entity that is in existence for up to 10 years from the date of its incorporation. Such an entity must be incorporated in India as
2. A Private limited company as per the Companies Act, 2013
3. A Partnership Firm under section 59 of the Partnership Act, 1932 or
4. A Limited Liability Company under the Limited Liability Partnership Act, 2008
5. An entity which has a turnover less than Rs. 25 crores during any financial years since its incorporation
6. Such an entity must be working towards innovation and development of goods and services or processes.
7. Such an entity must have the potential to create wealth and employment generation.

A business entity shall cease to exist as a start-up after it completes seven years from the date of incorporation or if such start-ups’ turnover exceeds Rs. 25 crores in any of the financial year. An entity that has been created by splitting the existing business will not be considered a start-up.

Perquisites of Start-up India Initiative

1. Exemption in tax on Investment above Fair Market Value – To obtain tax benefits, a start-up must have acquired the inter-ministerial board certificate constituted by the Department of Industrial Policy and Promotion (DIPP). If such recognition is obtained by uploading false information or acquired without uploading the relevant documents, the recognition certificate shall be revoked immediately without any prior notice. Such approval will be acquired through the online application via a mobile app or portal set up by the DIPP.
2. Faster exit for the start-up – with the start-up India initiative, the winding up of companies is possible in an easy and hassle-free manner. The star-up can be wound up within 90 days as against 180 days for other companies. An insolvency professional will be selected for liquidating the assets and paying the creditor within six months of making an application to exit. Thus, the start-ups are also known as Fast track firms as their winding process is quite quick.
3. Patent Application and IPR Protection – start-up India initiative includes the fast-tracking of start-up patent application. It provides an 80% rebate in filing of trademarks and patents as compared to other companies. The government will support the start-ups by bearing their facilitation cost and providing high-quality intellectual property services and resources to commercialize their IPRs.
4. Corpus Funds – The government has created a corpus fund of Rs. 10,000crore to provide equity funding support to innovative enterprises. Such funds will be managed by SIDBI as the government has contributed towards the capital of SIDBI, which will further be invested in the start-ups.

Other Perquisites

• Three years of Tax Exemption – To facilitate the business’s growth, the profits earned by the recognized start-ups are exempted from income tax for three consecutive years. This has been done to cater to the working capital requirements of the start-ups in the initial years.
• Self-certification – with the view to minimize the regulatory burden, the start-ups are allowed to self certify themselves and their compliance under six Labor Laws and three Environmental Laws. This self-certification is allowed for five years from the date of its incorporation so that they can concentrate on their core business and keep low-cost compliance.
• Relaxation in Public Procurement Norms – All PSUs, ministries, all the government departments has been authorized to ease the public procurement norms. Therefore, a start-up can avail of various exemptions in experience requirements in the government tenders, earnest money deposit, and prior turnovers. Now, the start-ups can be listed as sellers on the e-Procurement Portal, which is the Indian government’s largest marketplace.
• Start-up India Hub – a start-up India hub will be created to enable knowledge exchange and funding access at a single point of contact.

Aims of Start-up India Initiative

1. To boost the Indian start-ups and Entrepreneurship.
2. To encourage the Banking and Finance sector.
3. To generate employment opportunities as the core objective.
4. To promote people to start their own business and have the potential to innovate
5. To promote the interest of SC/ST and Women Entrepreneurship.
6. To limit state policy dependency for new businesses.

Impact of Start-up India Scheme on Indian Economy

The Start-up initiative is aiming to create prosperity in India. It is an example of how the government plays an important role in fosters the growth of India’s start-up community. It includes a series of an initiative which is designed to accelerate start-up formation and development. The government is offering financial assistance to start-ups and has allocated Rs. 500crore funding for specifically targeted groups like women entrepreneurs. An additional rebate of 80% and capital gain tax exemptions are provided for the start-ups.

From 2013 to 2018, about 7700 tech start-ups were created, which is equal to an overall base growing at a rate of 15%. Bangalore is India’s primary hub regarding the number of start-ups, investors, and support organizations. Three of the biggest Indian employers in the IT sector are headquartered in Bangalore itself. In addition to this, the Karnataka government is designing and implementing various policies to create a suitable environment for business. Significant start-up activity is also taking place in Mumbai and the National Capital Region (NCR). In a recent report, all these three cities are members of a group called ”Elite Global Start-up Hubs”.

Under the start-up India initiative, as of 2015, an estimated 80,000 jobs have been created by India’s technology start-ups.

Start-up India Initiative Plays a Major Role in Indian Economy

The start-ups are beginning to spread benefits beyond traditional locations into regional economies. It is the start-up that helps create new jobs in any country as they are the core centers of innovation and help enhance employment opportunities. With more and more start-ups, India aspires to be a world leader in skilled work, and the economy stays healthy, vital, and diligent, while individual companies find it harder to fall asleep on their laurels. Start-up India Initiative is crucial in the Indian economy as it brings innovations, new jobs, and competitive dynamics into the business environment. Start-up works in an environment of changing technology and stimulates the process of economic development in India. India is home to almost 3100 start-ups starting per year, standing behind the US, UK, and Israel.

With the continued growth at the same pace, Indian tech start-ups are expected to generate almost 2.5 lakhs jobs in the next five years. It is anticipated that India will be home to 112 million working population falling in the age of 20-24 years by 2020 compared to that of 94 million workers in China. This demographic number is going to boost up the start-ups of the Indian economy. The indigenous start-up India initiative such as handlooms, textiles, agarbatti, Khadi, etc., will not only help in shaping the lives of the people easier but also act as a major booster for the development and progress of the Indian economy.

List of the Government Schemes

The start-up India initiative is one of the best Indian government start-ups schemes for entrepreneurs as it provides various policies for entrepreneurship programs.

The Following are the lists of government schemes for the start-up India initiative.

1. The ASPIRE Scheme aims at increasing employment, improving innovation, and reducing poverty in rural India. Its main idea is to promote the agro-business Industry. The total budget for this scheme is Rs. 62.5crores for the year 2014-2016. It is the step of the government to improve the social and economic life of people in rural areas.
2. MUDRA: Micro Units Development Refinance Agency (MUDRA) has been created to enhance small business credit in rural India. The government has allocated Rs. Ten thousand crores to promote the start-up culture in the country. The MUDRA provides loans for Rs. 10 lakh to small noncorporate and non- farm and micro-enterprises.
3. Atal Innovation Mission:  The Atal Innovation Mission aims to provide a promotional platform that aims to involve academicians and draw national and international experiences to foster research. Its main objective is to develop a conducive environment for business in India. It acts as a communication center for investors and the business communities in India.
4. Dairy Processing and Infrastructure Fund: The government has announced the creation of Dairy Processing and Infrastructure Fund under NABARD with a total of Rs. 8000 crore over three years for the benefit of farmers of India.
5. Credit Guarantee Scheme for Start-ups (CGTMSE): The government has set up to provide business loans to micro and small industries and the start-up business with zero collateral. It provides loans to the new start-ups at highly subsidized rates without providing any security. For the manufacturing units, the loan can be availed in the form of a term loan or working capital loan.
6. The Venture Capital Assistance Scheme: this scheme has been launched for the farmer’s entrepreneurs’ welfare to develop their agri-businesses. The Venture Capital Assistance Scheme intends to provide loans to the farmers to meet their capital requirements to implement their projects. The maximum amount of loans provided under the scheme will be Rs. 50 lakhs.
7. NewGen Innovation and Entrepreneurship Development Centre:  NewGen IEDC is a start-up program of India’s government, which aims to teach the spirit of innovation among young entrepreneurship and encourage start-up creation by proper guidance. It is a five-year program that will be implemented in educational institutions.

The above schemes have been introduced to develop the Indian start-up ecosystem in India.

Key Highlights

1. 10,000 crore funds of the fund
2. 80% reduction in the patent registration fee
3. Single window clearance
4. Innovation Hub under Atal Innovation Mission
5. Liberty from capital gain tax for three years
6. Freedom from tax in profits for three years
7. Self-certification compliance
8. More friendly Bankruptcy code
9. Freedom from inspections for three years
10. Target 5 lakh schools and 10 lakh children for the innovation program

Aatmnirbhar Sena: A Growth Driver towards the Start-up India Initiative

Aatmnirbhar Sena is serving all day and night to ensure that they can stabilize all the fresh start-ups not just in India but also abroad. It could reach all the global markets, and people from abroad also get a clear picture of new India and indulge in our business and products.  

Aatmnirbhar Sena is working on touching every corner of the country by organizing workshops and motivating program for all fresh and imaginative minds. By doing this, they are not just spreading awareness about one’s own potential to thrive in their startup but also instructing them to be the independent entrepreneur of new India, which will eventually contribute to the vibrant eco-system. 

Take Away

The start-up India initiative is a flagship program of India’s government under the leadership of Prime Minister Narendra Modi, which intends to bring a revolution in the start-up ecosystem of India. The idea behind the start-up India initiative is to increase wealth and create employment opportunities by giving wings to the entrepreneurship spirits. Aatmnirbhar Sena is lending the platform to all the young minds, ideas, and standing tall with them by endorsing each of them. When all the local businesses come together and get the government’s backing, it will lead us to so many likelihoods for new hope and growth of India.