Role of Govt. in encouraging Start-ups in India by Harshit Srivastava

“India does not have IP (Intellectual Property) but it has YP (Youth Property). I want to convert YP into IP” – Narendra Modi

Making a fresh start for boosting the morale and building a strong ecosystem for nurturing the genuine business talent of all the entrepreneurs – to be & in the making, the Indian Prime Minister announced the ‘Startup India, Stand Up India’ campaign. Addressing the nation from the historical Red Fort in the morning hours of India’s 64th Independence day celebration, the PM has given a new ray of hope amongst all who believe that they can bring a significant amount of change in the lives of the citizens of the country. Since then there has been a significant amount of progress in terms of strategy & schemes formulation and implementation by the Central as well as the State Governments. The Standup India initiative looks forward to promoting entrepreneurship among SC/ST’ women groups. The rural version of Startup India, named Swaniyojan Yojna pays tribute to Philosopher Pandit Deendayal Upadhyay.

Commerce and Industry Ministry’s Department of Industrial Policy & Promotion has been given the prime responsibility to run the Startup India campaign and manage every nook and cranny of the Government’s initiative. The Government of India aims to empower startups, to grow through innovation and purpose which would derive viable economic progress and cut down the unemployment rate in the country.

The Government is keen to help the budding entrepreneurs, and has come up with proper specifications, right from definition to tax rules and proper exit routes, to indicate its sincere efforts in the domain. The strict definition of a Start-up (for govt. schemes purpose) highlights four major bullet points. The first bullet emphasizes on the startup being an entity (Pvt. Ltd., RPF, LLP) which has been incorporated or registered in India. The second bullet refers to the less than 5-year time frame for a company, to be under the definition of a startup. The third bullet points towards the upper limit of Rs. 25 crores, for annual turnover in any preceding financial year, to be in the hunt. The final bullet talks about innovation and development by technology or IP but clears the air by specifying that mere act of developing products or services which do not add value or significantly improve any existing process, will not be considered under this scheme.

The Government of India has also come up with a detailed 19 pointer Action Plan for the Startup India initiative. Figure 1 highlights the major key points of the action plan.

In brief, the startups will adopt to self-certification style for reducing regulatory liabilities, an all India startup India hub will act as a single point of contact for knowledge sharing and financial aid, the mobile app of startup India will ease the registration process, patent examination will be done at a lower cost and IPR adoption will be promoted, Rs. 2,500 crore fund for 4 continuous years to support upcoming projects, credit guarantee through NCGTC, no income tax for first 3 years, no capital gain tax for venture capitalists, innovation related study plans in schools along with NIDHI challenge program and Uchhattar Avishkar Yojna , launch of  Atal Innovation Mission and Self-Employment & Talent Utilization programs for entrepreneurship and innovation promotion, setting up of incubators across the country in public private partnership, setup of incubators and R&D centers at NIT’s, IIT’s and other premier institutes, setting up of  7 research parks with initial investment of  Rs. 100 crore each, Bio – incubators, seed funding and equity funding for Biotech sector, financial aid of Rs. 10 crores each to winners of annual incubator challenge, one national level as well as one international fest annually to connect with investors and faster exit for startups in a case of failures.


FIGURE 1: Action Plan

The next important setup which explains the encouragement strategies of the Government towards the Startups is the integration of various ministries with the startup mission along with the launch of new schemes only for this purpose. Talking about the various ministries, The MHRD will help in the Innovation program for Students along with Innovation Centers and Research parks at various premier Govt. Institutes. The MSDE through its Skill India program will try to prepare the people with basic skills required in various work domains, along with developing two national institutes of entrepreneurship. MMSME will administer the 10,000 crores of startup fund  under action plan. MoF is concentrating on removing the bottlenecks related to tax for the startups. The setup of Mudra bank Yojna will ease the loan process for Startups .


FIGURE 2: Integration of various ministries for Startup India

After focusing on the various policies and facilities provided by the central government, now let us take an overview of the state governments and their initiatives towards Startup India. Figure 3 highlights major initiatives taken by some state governments. Every State Government is focusing on developing Incubation centres, take the support of premier institutes, allocating separate funds for startups, encouraging women participation, national and international collaborations for better support, starting up with specialist courses for study and relaxations in space & electricity requirements of Startups.


FIGURE 3: Major Initiatives by some State Governments

Throughout the article, we have come across a number of ways in which the Central, as well as the State Governments, have come up with new processes which streamline and ease the whole process of setting up and blossoming in the current scenario for the Start-Ups in the Country. The other Government schemes like Digital India, Skill India, Smart Cities mission, Mission Indradhanush for Immunization and Nai Manzil Scheme are also expected to benefit largely because of the Start Up India program as new innovations and designs will help in faster deployment and removing various roadblocks related to other schemes benefiting the citizens.


– This article is submitted by Harshit Srivastava from SCIT, Pune

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