India has the third largest startup ecosystem after U.S. and Britain. India is the youngest startup nation with more than 72% of the population below 35 years of age. Prime Minister Narendra Modi has encouraged the youth of India to believe in their ideas through Startup India and Standup India initiative. He sees technology and innovation as a way to transform India.
The Startup India initiative aims to help people with creative ideas realize their potential and help them start their own business. A startup India Action plan is formed to help budding entrepreneurs concentrate on their core business. This flagship of Government of India aims at nurturing the Startups of India and driving sustainable economic growth.
The Startup India Plan got rationalized on 1st April 2016 and since then it has addressed more than 12,500 queries through social media, e-mails and telephones.
Blooming buds can easily avail benefits under the Startup India programme like relaxation in environmental and labour laws. Often Startups are too much stressed with regulatory formalities requiring compliance with environmental and labour laws. Many a times people are not aware of many rules and regulations, as a result they often end up being a victim of intrusive action by the regulatory bodies. The program will allow startups to self-certify their business through a mobile app, and avail 9 labour and environmental benefits. Also there will be no inspection on these startups for three years.
The question which arises here is how will startups gain recognition under this flagship.
There are certain criteria which a startup needs to do before gaining recognition.
The legal entity of a startup is either a Private Limited Company, Limited Liability Partnership or a Partnership.
The age of a startup is not more than five years.
The annual turnover of a startup must not exceed 25 crores.
The next step would be to gain a recommendation letter from any one of the following:
a. be supported by a recommendation (with regard to innovative nature of business), in a format specified by Department of Industry Policy and Promotion, from an incubator established in a post-graduate college in India; or
b. be supported by an incubator funded (to the project) from government of India as part of any specified scheme to promote innovation; or
c. be supported by a recommendation (with regard to innovative nature of business), in a format specified by Department of Industry Policy and Promotion, from an incubator recognized by government of India; or
d. be funded by an Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network duly registered with Security Exchange Board of India that endorses creative nature of the business; or
e. be funded by the Government of India as part of any specified scheme to promote innovation; or
f. a patent granted by the Indian Patent and Trademark Office in areas affiliated with the nature of business being promoted.
A startup will gain a recommendation letter only if it is working towards the innovation, deployment development of a product or service or it is adding value to the existing product or service.
Once the startup gets a recommendation letter, it gains recognition and becomes eligible for environmental and labour law benefits. To get benefits of tax exemption for three years and Indian Patent Rights, a startup needs to gain approval from Department of Industry Policy and Promotion and inter-ministerial board.