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Startup India Scheme

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The government of India initiative for creating job opportunities and wealth was launched by Prime Minister Narendra Modi on 16th January 2016. It was named as the Start-up India Scheme. The startup India scheme’s primary objective is to develop and innovate products and services and create more job opportunities in India. This would further lead to an increased employment rate and help strengthen the economy.

The scheme not just facilitates job opportunities, it also allows the companies to avail of various benefits set forth by the government in terms of tax, compliance and more. As such, any company with less than 10 years of existence, less than 100 crores of turnover, that was not formed by splitting up or reconstruction of an existing business and has a high potential of creating business and employment is classified as a start-up or is eligible to avail the benefits under Startup India Scheme. These startups can be registered either as partnership firms, Limited Liability Partnership (LLP) or Private Limited Company.


The Startup India-plan of Action

The Government has taken a few measures to simplify the process of entering into the Startup India scheme. Let’s discuss the few measures taken to motivate the startups to enter into the scheme.

Simplification of Work

Like any government schemes, Startup India Scheme also involves a certain administrative process and documentation. Given below are few steps taken by the Government to simplify the process:

  • Startup India hubs are set up by the Government of India in various places where all the works related to incorporation, registration, grievance handling, etc. are done.

  • The government has both the physical and an online portal for the application process to be initiated. With the registration process, acquiring Patents is faster.

Any startup is allowed to wrap its operation or business within 90 days of its inception. This was rolled out further to the Insolvency and Bankruptcy Bill passed in 2015 meant to facilitate fast winding up companies.

Financial Support

One of the most important factors of the scheme is that the government provides various financial aids to applicants to ensure they are motivated. Let’s discuss some of the few steps taken by the Government to do so.

The government of India has set up a fund with a corpus of 2,500 crores for 4 years which sums up to 10,000 crores. These funds facilitate investment for startups. Some special funds are also designed to cater to tax exemption from income tax and capital gains. These tax-exempts are made available only up to 3 years from the period of inception. Some exclusions applied to the scheme are the investment made by venture capitalists and incubators; they are not allowed to apply for the provisions set forth by the scheme.


Benefits of Startup India

Financial Benefits

The Government of India provides an 80% rebate on the patent cost incurred by the startup company. Most often, startups have unique products or services, these require patenting. Under the startup scheme, the registration of these patents is relatively faster.

Income Tax Benefits

The tax exemption is one of the biggest reliefs companies are allowed to avail. However, these exemptions are available only up to 3 years from the period of incorporation. Further by investing in some specialized funds, the companies can claim an exemption for tax on Capital Gains. The Inter-Ministerial Board validates all startups and grants eligibility for tax benefits by the startup scheme by issuing a certificate.

Registration Benefits

Generally, it is believed that the registration process is tedious and involves a lot of administrative processes back and forth to be done. Hence, as discussed earlier, the government of India has set up various Startup Hubs that facilitate a time meeting for the application, registration and grievances.

Government Tenders

Government tenders are widely opted for by entrepreneurs as passing through a Government tender will bring in a large volume of business and involves big money. These tenders are usually hard to acquire. However, under the current scheme, the startups are given priority even though they do not have any prior experience in handling Government tender or large volumes.

Huge Networking Opportunities

Exposure, word of mouth marketing and reputation are dependent on how many people know about your startup and how many startups you are associated with.  This sounds like a process that might happen along the way of the business. This scheme brings all platforms under one roof twice a year and organizes start-up fests which allow the companies to develop their network and opens doorways to new markets and collaborations.

Apart from the above-discussed benefits, one other important benefit is that the scheme also provides Intellectual property rights protection and conducts many activities to spread the awareness of the same. Furthermore, the government of India continues to enhance the benefits at different levels as it evolves.

FAQ (Frequently Asked Questions)

1. What is the Startup India Scheme?

Ans: The Government of India started a scheme for the generation of employment and better wealth creation. This scheme is called the startup India scheme. Its major goal is to provide better services, innovate new products and increase the employment rate in India. This scheme was introduced on 16th January 2016 by our honourable prime minister Shri. Narendra Modi.

2. What is the Government’s role in Startup India?

Ans: The science and technology department and the ministry of Human Resources department have agreed to partner with the scheme in an initiative for the setup of 75 such startup support hubs. These support hubs are said to begin in the Indian Institute of Information Technology, National Institute of Technology and the Indian Institute of Science Education and Research. Softbank headquartered in Japan is said to have invested around 2 billion into Indian startups.