Introduction – About ‘Startup India’
As India’s economic landscape continues to evolve, the rise of startups has become a crucial factor contributing to this growth. The initiative, “Startup India,” a brainchild of the Indian Government, aims to foster an environment that encourages entrepreneurial spirit, innovation, and sustainable economic development. The Startup India program was launched on the date 16th of January 2016. This program has since redefined the contours of India’s business ecosystem, presenting a myriad of opportunities to both fledgling and mature entrepreneurs. Understanding the eligibility criteria, benefits, registration process, and fees associated with this initiative becomes an indispensable aspect for aspirants striving to transform their nascent ideas into substantial, tangible businesses. This article provides information about the Startup India initiative, exploring how it opens doors for individuals to participate actively in India’s thriving entrepreneurial ecosystem. We’ll demystify the processes, guidelines, and advantages for startups to better equip those poised to embark on this exciting journey of entrepreneurship.
Eligibility Criteria for DPIIT Startup Recognition
The Department for Promotion of Industry and Internal Trade (DPIIT) is the nodal agency that grants recognition to startups in India. Under the Startup India initiative, eligible companies can get recognized as Startups by DPIIT to access tax benefits, easier compliance, IPR fast-tracking & more. To be eligible for DPIIT startup recognition, a company must meet the following eligibility criteria:
- Company Age: The company’s period of existence and operations should not exceed ten years from its incorporation date.
- Company Type: The startup should be incorporated in the form of a private limited company, a limited liability partnership (LLP), or a registered partnership firm.
- Turnover: The annual turnover of the startup should not exceed Rs 100 crores for any of the financial years since its date of incorporation.
- Original Entity: The startup should not have been created by reconstructing or splitting up an already existing business.
- Innovative and Scalable: The startup should work towards developing or improving a product, service, or process and/or have a scalable business model with a high potential for creating wealth & employment.
Documents Required for Startup India Registration
- Incorporation/Registration Certificate
- Director details
- Patent and trademark details (optional)
- PAN Number
- A proof of concept (website link/video/pitch deck) for startups that are in the Validation stage. For the Early Traction and Scaling stage, it is essential to provide a video or pitch deck and a company website. Ideation stage startups are not required to submit a proof of concept.
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[Note: There is no requirement for any Letter of Recommendation, Sanction Letter, Udyog Aadhar, MSME Certificate, or GST Certificate.]
Benefits of Registering with Startup India
Registering with Startup India offers numerous benefits to startups, providing them with a supportive environment to grow and succeed. Some key advantages include:
- Ease of Starting Business: The initiative offers a simplified process to register a startup online. It provides a single platform for interacting with various stakeholders, including government departments, thereby reducing bureaucratic hurdles.
- Intellectual Property Rights (IPR) Benefits: Registered startups have access to fast-track processes for patent applications. There are substantial rebates on patent costs and legal support. There is also a panel of facilitators to assist in IP applications.
- Government Tenders: DPIIT-recognised startups are eligible to apply for government tenders and are exempt from prior experience/turnover and earnest money deposit criteria. They can get listed as sellers on the Startup Runway section of Government of India’s largest e-procurement portal, Government e-Marketplace, and can also become preferred bidders on the Central Public Procurement (CPP) Portal through eprocure.gov.in and etenders.gov.in.
- Tax Benefits under Income Tax Act:
- The scheme provides income tax exemptions (under Section 80-IAC) to startups for any three consecutive years out of their first ten years since incorporation, subject to meeting certain conditions.
- Eligible startups are exempted from paying angel tax (under section 56(2)(viib)).
- Budget 2023 extended the benefit of carry-forward losses for startups from the current seven years to 10 years from the date of incorporation of the firm.
- Funding Access:
- Fund of Funds for Startups (FFS): The Indian government has set up an FFS with a corpus of Rs 10,000 crore. The FFS is managed by the Small Industries Development Bank of India (SIDBI) and facilitates funding needs for Startups through participation in capital of SEBI-registered Alternative Investment Funds (AIFs). The flow of funds is Government > SIDBI > SEBI registered AIF> Startups. AIFs under FFS are listed here.
- Startup India Seed Fund Scheme (SISFS): SISFS has an outlay of Rs 945 crore and aims to provide financial aid to startups for proof of concept, development of the prototype, product trials, market-entry, and commercialization.
- Credit Guarantee Scheme for Startups (CGSS): CGSS aims to provide credit guarantees to loans extended by NBFCs, Scheduled Commercial Banks, and SEBI-registered AIFs to eligible startups. The exposure to individual cases would be limited to Rs. 10 crores per case or the actual outstanding credit amount, whichever is less.
- Access to Incubators and Innovation Centers: Registered startups can be part of various government-supported incubators and innovation centers nationwide. These offer facilities like working space, mentorship, and resources to develop and grow the startup.
- Exit Policy: The initiative provides a simplified and fast startup exit process. The Ministry of Corporate Affairs has notified Startups as ‘fast track firms’, allowing them to wind up operations within 90 days viz-a-viz 180 days for other companies.
- Self-Certification: Startups can self-certify their compliance under 9 Labour and 3 Environment Laws for 3-5 years from the incorporation date.
- Startup India Hub: Startup India Hub is an all-in-one platform for all stakeholders in the Startup ecosystem to interact with each other, exchange knowledge and form successful partnerships in a highly dynamic environment.
- Free Resources and Templates: Startup India provides free multilingual templates like contracts and NDAs, which can be customised swiftly using their online document builder. Startup India has also collated over 100 government schemes and state government policies that benefit startups.
- Pro Bono Services: Startup India has partnered with various corporates and organizations to provide free services for startups, such as management enterprise, legal services, cloud credits, and more.
- Startup India Learning Program: Upgrad provides a free 4-week online program taught by 40+ leading founders of India to assist entrepreneurs in startup development. Participants receive a certificate acknowledging their learning upon course completion. You can register for the program here. There is also an official Startup India Learning Program mobile app.
- Networking: Registered startups can network with other businesses, potential investors, and industry mentors. Such networking opportunities can provide invaluable connections, guidance, and mentorship.
The Startup India initiative’s comprehensive benefits make it a promising opportunity for entrepreneurs. It not only supports the creation and growth of startups but also provides an environment that encourages innovation, risk-taking, and creating solutions to the problems of the future. It’s an initiative that can boost India’s image as a global startup hub.
Step-by-Step Process for Registering with Startup India
Here is a step-by-step guide to registering online with Startup India for DPIIT Startup Recognition:
- Step 1: Visit the official Startup India website www.startupindia.gov.in
- Step 2: If you are a new user, click the ‘Register’ button. You can provide the required details or register using your social media accounts. If you are an existing user, you can log in using your credentials (and go to Step 4).
- Step 3: Provide the One-Time Password (OTP) and other details, such as selecting the type of user as ‘Startup’, name, and the startup stage. Your startup profile is now created.
- Step 4: If you are a new user, click the ‘Get Recognised’ button. If you are an existing user, go to the Dashboard and click ‘DPIIT Recognition’.
- Step 5: On the ‘Recognition Application Detail’ page, click on ‘View Details’ under the ‘Registration Details’ section
- Step 6: Fill out the ‘Startup Recognition Form’ with the required information and click ‘Submit.’
You can complete the registration process with Startup India by following these steps. As per DPIIT’s Startup India Kit, once you submit your application, it will be processed within 48-72 working hours.
Startup India Registration Fee
No charge or fee is levied for applying to any of the benefits under the Startup India Scheme.
Conclusion
The “Startup India” initiative has emerged as a vital cog in the engine driving India’s entrepreneurial development. It has successfully carved a path for startups to grow and thrive, underlining the government’s commitment to creating a vibrant and inclusive ecosystem for businesses. By meeting the stipulated eligibility criteria, registering, and navigating the processes efficiently, startups can gain numerous advantages, including tax benefits and supportive measures. However, it’s essential to remember that while the initiative provides a solid foundation, the journey of a startup is replete with challenges that demand tenacity, resilience, and an unwavering vision. As India forges ahead on its path to becoming a global startup hub, the “Startup India” initiative’s role becomes ever more significant, painting a good picture for tomorrow’s innovators and trailblazers. We hope this article serves as a practical guide for those eager to contribute to India’s burgeoning startup landscape, empowering them with the knowledge to navigate the complex yet rewarding world of entrepreneurship. For more information about Startup India’s benefits and processes, you can refer to DPIIT’s Startup India Kit.
Frequently Asked Questions
1. Would a One Person Company (OPC) be eligible for benefits under the Startup India initiative?
Yes. One-Person Companies (OPCs) can avail the benefits under the Startup India initiative.
2. My entity does not have a PAN. Can I register it as a ‘Startup’ on the Startup India portal?
Yes, an entity without a PAN can be registered as a ‘Startup’ on the website of Startup India. However, it is preferred that a valid PAN of the entity is provided during registration.
3. If my startup gets recognized, would I obtain a certificate for it? If yes, can I download the certificate?
Yes, if your startup gets recognized, you can download a system-generated verifiable certificate of recognition.
4. What is the time frame for obtaining the certificate of recognition as a ‘Startup’ if an entity is already in existence?
The certificate of recognition is usually issued within two working days upon successful application submission.
5. How would the Inter-Ministerial Board review the tax exemption applications?
The Inter-Ministerial Board shall review the supporting document(s) provided to determine if the entity qualifies as an eligible business for availing tax.
6. Once the tax exemption application is successfully submitted, what is the time frame for getting certification from the Inter-Ministerial Board?
The Inter-Ministerial Board meeting is usually conducted monthly. At the meeting, the cases are processed in a serial order. The communication regarding the Inter-Ministerial Board decision is emailed to the registered email address of the Startup.