The Startup India Scheme is a programme of the Government of India in 2016. The main purpose of Startup India includes the promotion of startups, formation employment and wealth. The Startup India has started a number of programs to make a stronger startup system and converting India into a country of job creators rather than job seekers. These programs are administered by the Department for Industrial Policy and Promotion (DPIIT).
Any company that comes into below mentioned category will be known as "Startup" and also approved by DPIIT to take the advantages from the Government of India :
Type of Company - Should have been registered as a private limited company or a registered partnership firm or a limited liability partnership.
Age of the Company – The date of Incorporation must not exceed 10 years.
Original Unit - The unit should have been established originally by the promoters and should not have been established by reconstructing or splitting up an existing company.
Annual Turnover - Should not go beyond Rs. 100 crore for any of the financial years from its incorporation.
Innovative and Scalability – It should have plan for development or improvement of a commodity, service or procedure and also includes scalable business model with enhanced potential to make employment and wealth.
The benefits for startup India are as follows :
Startups will be legitimate to self-certify compliance with nine labour laws and environmental laws. In the case of labour laws, no check up will be done for a period of 3 years.
Startup India helps companies to incorporate through their mobile application and upload applicable documents. Single window clearances will be there regarding approvals, filing compliances and registrations with other things.
Patent filing method will be easy. The Startup will have a rebate of 80% of the fee regarding patent application. The startup will offer the statutory fees only and the government will provide all facilitator fees.
The Startup India scheme will promote research and innovation among students who are promising entrepreneurs and 7 new research parks will be established to offer amenities for startups in the Research and Development sector.
Equal prospects will be offered for both startups and experienced entrepreneurs. Before this was not possible as all applicants need either 'prior experience' or a 'prior turnover'. But currently, public appropriation rules have been comfortable for startups.
The company to be created should be a private limited company or a limited liability partnership.
It must be a new firm or not older than 5 years and the total turnover of the company should be not exceed 25 crores.
The firms must get the approval from the Department of Industrial Policy and Promotion (DIPP).
To acquire authorization from DIPP, the firm must be funded by a private equity fund incubation fund or angel fund.
The firm must have acquired a patron guarantee from the Indian patent and Trademark Office.
It should possess a recommendation letter by incubation.
Capital gain gets exempted from income tax under the startup India campaign.
The firm should offer inventive schemes or products.
Angel fund, accelerators, incubation fund, angel network, private equity fund, must be incorporated with SEBI (Securities and Exchange Board of India).
Step 1 – Incorporate a Business – It is recommended to first incorporate a business as a private limited company or a partnership firm or a limited liability partnership. You need to follow all the normal registration procedures of a business like acquiring the certificate of partnership registration / incorporation, PAN and other important compliances.
Step 2 – Register with Startup India – The business should be registered as a startup and the complete procedure is easy and online.
Step 3 – Documents which needs to be uploaded (Only in PDF format)
a) A letter of recommendation / support - A letter of recommendation is required to be produced with the registration form. Any of the following :
(i) An Incubator established in a post-graduate college in India requires offering a recommendation (concerning innovative nature of business) from in a format stated by the Department of Industrial Policy and Promotion (DIPP)
(ii) A letter of support by an incubator, which is funded (corresponding to the project) by Government of India as part of any particular scheme to facilitate innovation
(iii) An Incubator accepted by the Government of India must offer a letter of recommendation (about innovative nature of business) in a format specified by DIPP
(iv) Any Angel Fund/Incubation Fund/ Accelerator/Private Equity Fund/ Angel Network with not less than 20% in equity, accordingly incorporated with SEBI that supports innovative nature of the business has a letter of funding
(v) A letter of funding by Government of India or any State Government as part of any particular scheme to facilitate innovation
(vi) A patent filed and published in the Journal by the Indian Patent Office in areas associated with the nature of the business being promoted.
b) Registration / Incorporation Certificate
You require uploading the certificate of incorporation of your company/LLP (Registration Certificate in the case of partnership)
c) Brief description of the business
A brief description of the innovative nature of the products/services should be given.
Step 4: Reply whether you would like to get tax advantages
Startups get exempted from income tax for 3 years. But to obtain these advantages, they should be certified by the Inter-Ministerial Board (IMB). Start-ups acknowledged by DIPP, Govt. of India can now directly get IPR related advantages without any additional certification from IMB.
Step 5: Finally, self-certification is to be offered that following conditions are satisfied
a) You require registering your new company as a Private Limited Company, Limited Liability Partnership of a Partnership firm
b) Your business requires being registered/incorporated in India, not earlier than 5 years.
c) Turnover should be less than 25 crores per year.
d) Innovation is essential – The business needs performing towards innovation of something new or notably involved in development of the existing technology.
e) Your business must not have encountered reconstruction of an existing business or splitting up.
Step 6: Obtain recognition number instantly
On applying you will get an acknowledgment number for your startup instantly. The certificate of acknowledgment will be issued after checking all the documents. Though, it is recommended to be careful while uploading the documents. If it is found after verification that the necessary document is not uploaded/ improper document has been uploaded or a fake document has been uploaded then you shall be legally responsible to a fine of 50% of the paid-up capital of the startup with a minimum fine of Rs. 25,000.
Step 7: Other Areas
a) Patents, trademarks and/or design registration
If you require a patent for an innovation or a trademark for your business, it is suggested to approach any from the list of facilitators prescribed by the government. Only the statutory fees will require to be offered by you therefore you will get 80% reduction in fees.
One of the major challenges experienced by a lot of startups includes accessing to finance. Due to lack of experience, safety or active cash flows, entrepreneurs cannot get investors. Furthermore, some of the start-ups are in high-risk as a big percentage of them cannot start/ delay getting a lot of investors.To offer necessary fund support, Government has made a fund with an initial corpus of INR 2,500 crore and a total corpus of INR 10,000 crore over a time span of 4 years (i.e. INR 2,500 crore per year).
Startup India is a flagship scheme of the Government of India, planned to make a strong ecosystem that is helpful to grow startup businesses, to promote continuous economic development and make large scale employment opportunities.
Startup patent application and IPR protection
SIDBI Fund of Funds
Simpler Public Procurement Rules