Startup India – Adding momentum to startup spirit

Startup India is a Government of India initiative, founded on January 16, 2016, to reduce regulatory burden and provide additional benefits while creating new business in India. It is managed by the Startup India Team which is under the purview of the Department for Promotion of Industry and Internal Trade (DPIIT).

The Startup India Initiative is built around 3 pillars

Simplify and Assist entry and exit into the ecosystem.
Provide tax incentives to startups and investors.
Creations of incubators through a partnership between Industry and colleges.

To avail the benefits, startups must register themselves with the DPIIT. The process of evaluations to accredit a business as a startup has a few prerequisites and these are explained on the gov website.

A summary of the prerequisites is

Company Age – Less than 10 years old since incorporation
Company Type – Private, Partnership, or Limited Liability company
Annual Turnover – Less for 100 Cr for every year
Original Entity – No spin-offs
Innovative and Scalable – High growth potential opportunities.

Once a startup is registered and verified by the DPIIT, they can claim certain regulatory benefits like

Self-Certification on certain labor and environmental laws.
Reduced investigation burden for labor and environmental laws.
Fast-tracking of a patent application.
Both advisory and financial help in filing patent applications.
Exemption from Income tax for the first 3 years since incorporation under 80IAC.
Investments into startups to be given some exemption under Section 56.
Insolvency and Bankruptcy advisory and help – closure within 90 days.
Opportunity to sell products to the government through the Government e-marketplace.
Exemption from prior experience clauses, turnover clauses, and Ernest Money Deposit in government tenders.

The benefits seem to far outweigh the costs of creating your startup as a mom and pop store.

Now, most people will question – What is in it for the Government?

Well, for starters, a Government works for the welfare of the people. So, public welfare is an acceptable response.
Startups, or small businesses in general, improve the overall economic condition of the country by offering services, generating revenue, and creating employment opportunities. While there are considerable differences between a startup and a small business, the fundamental concept is the same – be an employment provider.
Cutting edge technology startups help the government too, by providing indigenous research and development winds with limited expenses.
This reduces the brain drain problem that the country has been struggling with for decades.
It improves the overall brand value of the Government and the Country.

What has the Startup India achieved as of October 2019

The Government has set aside a corpus fund of INR 10,000 crores managed by SIDBI. The flow of funds is Government > SIDBI > Venture Capitals > Startups.
INR 3120 Cr+ has been Committed to 47 VC Firms, INR 2286+ Cr invested in 264 Startups, which implies on average INR 8.65+ has been allocated to a single startup.