START-UP India Launch by Prime Minister Modi on 16th January, 2016, aimed at celebrating the entrepreneurship spirit of country’s youth and has been attended by CEOs and founders of top startups (over 1500) from across the country. Let’s see this in brief!

<In Part I, we have taken a glance on Simplification and Handholding of Start up Plan, rest part will be covered in Part II of this series>

What is Start up India programme and its mandates?

  • Startup India is a flagship initiative, intended to build a strong ecosystem for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities.
  • In order to meet the objectives of the initiative, Government of India is announcing this Action Plan that addresses all aspects of the Startup ecosystem.

How can this Action Plan help accelerate the Startup movement?

  • It is spread across movement from digital/ technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education, etc.
  • From existing tier 1 cities to tier 2 and tier 3 cities including semi-urban and rural areas.

The Action Plan is divided across the following areas:

  • Simplification and Handholding
  • Funding Support and Incentives
  • Industry-Academia Partnership and Incubation

What is the exact definition of a Startup ?

  • Startup means an entity, incorporated or registered in India not prior to 5 years, with annual turnover not exceeding INR 25 crore in any preceding financial year.
  • Provided that such entity is not formed by splitting up, or reconstruction, of a business already in existence.

What will be the Action plan for Simplification and Handholding task?

#Compliance Regime based on Self-Certification

  • To reduce the regulatory burden on Startups thereby allowing them to focus on their core business and keep compliance cost low.
  • Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and environment laws (refer below).
  • In case of the labour laws, no inspections will be conducted for a period of 3 years.
  • In case of environment laws, Startups which fall under the ‘white category’ (as defined by the Central Pollution Control Board (CPCB)) would be able to self-certify compliance and only random checks would be carried out in such cases. [Can you think of question on white category in Prelims?]

#Startup India Hub

To create a single point of contact for the entire Startup ecosystem and enable knowledge exchange and access to funding.

How will “Startup India Hub” be a key stakeholder in this vibrant ecosystem?

  • Work in a hub and spoke model and collaborate with Central & State governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions.
  • To all young Indians who have the courage to enter an environment of risk, the Startup India Hub will be their friend, mentor and guide to hold their hand and walk with them through this journey.

#Legal Support and Fast-tracking Patent Examination at Lower Costs

  • To promote awareness and adoption of IPRs by Startups and facilitate them in protecting and commercializing the IPRs.
  • By providing access to high quality Intellectual Property services and resources, including fast-track examination of patent applications and rebate in fees.
  • The scheme for Startup Intellectual Property Protection (SIPP) shall facilitate filing of Patents, Trademarks and Designs by innovative Startups.

Various measures being taken in this regard include:

#1. Fast-tracking of Startup patent applications:

Patent application of Startups shall be fast-tracked for examination and disposal, so that they can realize the value of their IPRs at the earliest possible.

#2. Panel of facilitators to assist in filing of IP applications:

Facilitators will be responsible for providing general advisory on different IPRs as also information on protecting and promoting IPRs in other countries.

#3. Rebate on filing of application:

Startups shall be provided an 80% rebate in filing of patents vis-a-vis other companies. This will help them pare costs in the crucial formative years.

#Relaxed Norms of Public Procurement for Startups

  • At present, effective April 1, 2015 Central Government, State Government and PSUs have to mandatorily procure at least 20% from the Micro Small and Medium Enterprise (MSME).
  • In order to promote Startups, Government shall exempt Startups (in the manufacturing sector) from the criteria of “prior experience/ turnover” without any relaxation in quality standards or technical parameters.

#Faster Exit for Startups

  • To make it easier for Startups to wind up operations.
  • The Insolvency and Bankruptcy Bill 2015 (“IBB”), tabled in the Lok Sabha in December 2015 has provisions for the fast track and / or voluntary closure of businesses.
  • In terms of the IBB, Startups with simple debt structures or those meeting such criteria as may be specified may be wound up within a period of 90 days from making of an application for winding up on a fast track basis.

Let us know what do you think on this question?

#Q. How will start ups create an ecosystem that can flourish with ‘Digital India’ initiative? Discuss with examples.


 

Published with inputs from Arun

Any doubts?


  1. vishnu hs

    CD Plz explain twin balance sheet problem

  2. Roma Sanoria

    what is sandbox startup ?

    1. Raj Reddy
    2. Prasanta Pandey

      1. Its a program formerly known as the Enterpreuners in Residence (EIP) Program.
      2. Its based n Hubli, Karnataka.
      3. First started by Deshpande Foundation in 2008, rebranded its name in 2014.
      4. It seeks to create an ecosystem in the region to support entrepreneurship while providing the necessary resources needed to turn businessideas into successful ventures.

    3. Kunal Aggarwal

      It is the largest incubator being started in Hubli in Karnataka.

  3. Rahul Ampati

    Plz elaborate this sir

    1. Root

      Sure rahul. We are working on putting CD Explains under each of these news stories. Will let you know once we have an article here.

      1. Rahul Ampati

        Thanq sir

  4. Peaceful Warrior

    Thank you Sir. Wonderful suggestions!

  5. Hemen Parekh

    TEN MILLION ENTREPRENEURS ?

    Each year , India adds 12 million youth to its work-force

    Only 2 million get jobs , leaving 10 million to fend for themselves

    Eking out a ” subsistence living ” , these 10 million are euphemistically called,

    > Self Employed
    > Start-Ups
    > Entrepreneurs

    There is an urgent need to go beyond rhetoric / lip service / tinkering , to empower them , to become REAL entrepreneurs

    I have explained how this can be done in my earlier blog :

    THE NEW ECONOMIC ORDER / START UP ACT , 2015

    ( read at…..hemenparekh….in > blogs )

    Some naysayers are bound to say :

    ” But entrepreneurship cannot be taught

    Either it is in your blood or it is not ”

    Then they will try to support their argument by citing Bania communities

    Accepting this argument , would be a defeatist attitude !

    Here is how we can produce a generation of ENTREPRENEURS , 5 years from now ( if we start NOW ) :

    * Introduce ” Entrepreneurship ” as an mandatory subject in High Schools
    and Colleges

    * Each such School / College to be ” Adopted ” by a Corporate ( CSR ? )

    * Each adopting Corporate will bear the full expense of running this
    course ( Teachers’ Salaries etc )

    * Such expense to be tax-exempt ( or offset as Corporate CSR obligation )

    * Exams to be in the form of presentation by teams of final year students
    on,

    ” HERE IS A BUSINESS I PLAN TO START ”

    * Presentations to be judged by Panels of Venture Capitalists / Angel
    Investors / Incubators etc

    * Winning teams ( 1st / 2nd / 3rd prize ) , to be offered funds by the
    Panel Members ( as seen in some TV programs )

    Fund amounts should be small ( Max Rs 100 lakhs ) and preference to
    be given to projects involving healthcare / education / manufacturing /
    agriculture / food processing etc

    * Winning Teams , setting up Start Ups with these VC funds , to be
    encouraged to hire graduating students from the non-winning teams

    This ” encouragement ” to be in the form of reimbursement of salaries of
    such hires ( only such hires ), under ” Employment Generation Subsidy ”
    from concerned State Government , where this Start Up gets registered ,
    since , employment is a State Subject

    Such Salary-reimbursements will be for first 3 years of Start Up

    To create an entire GENERATION of ENTREPRENEURS , we need to start at the roots

    Some years later , when this FIRST generation becomes parents of their own 10 year olds , those SECOND generation youngsters will have entrepreneurship in their genes !

    This is one way of preparing a GM ( genetically modified ) Generation , to which , there ought to be all round support
    ———————————————————————————–
    hemen parekh
    20 Oct 2015
    B2BmessageBlaster

    1. Simran Bains

      Amazing sir. 🙂

    2. Peaceful Warrior

      Thank you Sir. Wonderful suggestions!

    3. Surabhi Mishra

      Thank you for your write up sir..

      1. Hemen Parekh

        Thanks . I am glad you liked this

        You may want to look up,

        AGENDA FOR REFORMS , at

        http://www.hemenparekh.in

        regards,

        hemen parekh
        / hcp@RecruitGuru.com

      2. Hemen Parekh

        Dear Surabhi, glad you liked it . You may want to look up ,

        AGENDA FOR REFORMS ( blog ) at,

        http://www.hemenparekh.in>blogs

        regards,

        1. Surabhi Mishra

          Thank you for providing me the link sir.

Start-up funding crawls: 20 months, Rs 70 crore

Note4students

Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

The following things are important from UPSC perspective:

Prelims Level: Particulars of the FFS

Mains level: The article shows the inability of implementing the FFS scheme, by the government. Government needs to counter the issue.


News

Fund-of-Funds for start-ups (FFS) is showing slow progress

  1. FFS was launched in line with the Start-up India Action Plan of the Government
  2. It is a Rs 10,000-crore Fund
  3. The fund under the plan has made slow progress with only about Rs 70 crore having been disbursed to start-ups until the beginning of this month

Aim of launching the fund

  1. The Fund was launched with aim to invest in local venture capital funds
  2. It has made commitments to 62 start-ups
  3. All these 62 start-ups were backed by Alternative Investment Funds (AIFs) where state-owned SIDBI (Small Industries Development Bank of India) acted as a limited partner
  4. What is an AIF: An AIF is any fund established or incorporated in India that is a privately pooled investment vehicle, which collects funds from investors(Indian or foreign) for investing it in accordance with a defined investment policy for the benefit of its investors

Odisha Start-up Policy 2016

  1. Aim: To develop an ecosystem to facilitate at least 1,000 young ventures in the next five years
  2. To emerge amongst the top three start-up hubs in India by 2020 through strategic partnerships and policy interventions
  3. Policy: Will provide incentives and support to young companies at all stages of development
  4. Fund: A start-up capital infrastructure fund up to Rs. 25 crore would also be used to support the development of start-up ecosystem in the state
  5. Credit: The Govt would also encourage banks and other financial institutions to extend and enhance lending facilities and set up dedicated desks for young ventures for easy funding

India is world’s third biggest tech start-up hub: Study

  1. Study: By Assocham in association with Thought Arbitrage Research Institute
  2. Top 3: US, UK, India
  3. Top Indian cities: Bengaluru, Delhi NCR, Mumbai, Hyderabad and Chennai
  4. Overall start-ups: (Both tech and non-tech) India figures among the five largest hosts in the world, along with China
  5. Synergising ‘Startup India’ with ‘Make in India’ and ‘Digital India’ initiatives has the potential to expand the domestic ecosystem for new entrepreneurs
  6. R&D: Tax exemption to encourage fresh ideas without fear of failure

ONGC unveils start-up fund

  1. News: Oil and Natural Gas Corporation (ONGC) unveiled a Rs.100 crore start-up fund to foster, nurture and incubate new ideas related to the oil and gas sector
  2. The initiative, christened as ONGC Start-up’, is in line with the Government of India’s initiative ‘Start-up India’
  3. ONGC will provide the entire support chain for start-ups including seed capital, hand-holding, mentoring, market linkage and follow-ups
  4. Aim: To increase the contribution of implementable ideas in the oil and gas sector
  5. ONGC is setting up a dedicated website to take this initiative forward
  6. Impact: Would promote entrepreneurship among the younger Indians by creating an ecosystem that is conducive for growth of start-ups in the oil and gas sector, which has a huge potential for technology-enabled ideas

    Analysis: Start Up India mission by GOI is to encourage entrepreneurial spirit among youngsters. It has been provided on the motto – “Earlier youngsters used to look for employment but now youngsters will be giving employment. “

Incubator hubs soon to spur Start-up India

  1. News: With its Start-up Policy having drawn only lukewarm response so far, the government is planning a twin-pronged approach to spur the initiative
  2. In places with no leading centres such as the IITs, the IIMs, or other renowned institutes, colleges would be clubbed to form an incubator hub
  3. It will also be ensured that incubators do not reject applications from entrepreneurs, and instead provided them all the hand-holding they needed
  4. Incubators affected by shortage of staff would be asked to rope in experts from outside so that no applicant will be denied the expertise required

Nod for Rs.10,000 cr start-up fund

  1. The Cabinet approved the setting up of a Rs.10,000 crore ‘Fund of Funds for Startups’ at the Small Industries Development Bank of India (SIDBI)
  2. It will contribute to various Alternative Investment Funds registered with the Securities and Exchange Board of India (SEBI)
  3. The Rs.10,000 crore-corpus will be built up over the 14th and 15th Finance Commission cycles subject to progress of the scheme and availability of funds
  4. Already, Rs.500 crore has been provided
  5. The fund is expected to generate employment for 18 lakh persons & will support start-ups in becoming full-fledged business entities
  6. This is in line with the Start-up India Action Plan of the government unveiled this year

Startups to get tax exemptions

  1. News: Central Board of Direct Taxes (CBDT) has notified the much awaited tax exemption on investments above fair market rate for startups
  2. Impact: Startups can now issue shares to investors at higher than fair value without worrying about tax consequences
  3. Fair value: Since startups have unique business models and might not necessarily have a publicly traded comparable, fair value is a value determined by an independent third party, for example, auditors
  4. Background: Under the Indian tax law, if an Indian company receives investment from an Indian resident that exceeds the fair value of shares, then the excess amount is taxed as income of the Indian company

A single platform for smart tech-aided urban solutions

  1. Context: Bengaluru based startup Mapunity gives a single platform for technology aided urban solution called Technagara
  2. It integrates urban solutions on a geospatial platform
  3. Use: Can create an app for city, Community, municipal ward etc
  4. The city-neutral platform is designed to host data over nine major domains
  5. Domains: Transport, health, education, heritage, environment, tourism, safety, business, public utilities

Deen Dayal Upadhyay Swaniyojan Yojana

  1. What? Rural avatar of Startup India campaign aimed at boosting entrepreneurship
  2. It is being designed by the rural development ministry
  3. It will be backed by MUDRA Bank loans, innovative credit linkages and self-help groups
  4. Skill sets to be provided would be related to driving, plumbing, agriculture, dairy farming, grafting and horticulture among others
  5. Govt will also hold discussions with private entities and individuals working in the startup space to map entrepreneurship opportunities

State-run oil companies to set up start-up fund

  1. Context: Statement issued at Natural Gas Vision 2025 conference organized by the Indian Oil Corp. Ltd
  2. What? State-owned oil companies will set up a fund that will finance start-ups based on innovative ideas in the energy sector
  3. The move is in line with the government’s idea of promoting entrepreneurship, innovation and self-employment
  4. Any start-up needing hand-holding can seek support from the fund
  5. Public sector companies will independently evaluate the commercial viability of the project and take a decision on their equity participation

Learn more about Pashmina

  1. About: Pashmina is a fine type of cashmere wool.
  2. The textiles made from it were first woven in Kashmir
  3. Origin: Wool comes from changthangi or Pashmina goat, which is a special breed of goat indigenous to high altitudes of the Himalayas in India, Nepal and Pakistan
  4. Significance: Pashmina shawls are hand spun, woven and embroidered in Nepal and Kashmir, and made from fine cashmere fibre

Kashmiri start-up aims to fight pashmina fakes

  1. News: Srinagar-based start-up aims to sell pashmina shawls, woven from rare wool extracted from chiru in upper reaches of the state
  2. Protection with GI tag: Help to protect new buyers from being cheated into purchasing fakes
  3. What’s the Problem? J&K is battling a high level of unemployment with about 7 lakh educated youth left looking for jobs
  4. State ranks at number 29 on Ease of Doing Business indicator according to a World Bank survey, reflecting the lack of government support for new start-ups
  5. What’s Requirement? Start-ups require an incubation centre where youngsters can toy with their ideas with minimum risk factor
  6. Need of a mechanism to allow free-flow of investment in Kashmir without any fear and hurdles

Incubation policy by Delhi govt

  1. Aim: To promote a start-up culture in the capital
  2. Govt also distributed Rs 1.5 crore each to 6 higher educational institutions for promoting entrepreneurship
  3. A committee has been appointed to oversee the implementation

Start-ups’ focus shifts to conserving cash

  1. What? Start-ups across the board are focusing on cash conservation and making their core businesses fitter
  2. Why ? Funding has slowed
  3. Earlier: Investors poured more than $5 billion into Indian Internet companies, which expanded into new cities and businesses
  4. This was without caring much about the financial viability of many of their experiments
  5. Now: Market sentiment has flipped because of a mix of macroeconomic and international factors and local ones such as deep losses incurred by start-ups
  6. Even relatively well-funded start-ups are shutting the initiatives which aren’t yielding immediate returns or entailing high costs

‘Start-Up India’ and ‘Make In India’ Should Impel CSIR-Tech pvt ltd

  1. Dr Harsh Vardhan recently met with leaders and team members of CSIR-Tech Pvt Ltd at CSIR-NCL’s campus in the city of Pune.
  2. Dr Harsh Vardhan keenly asked questions about the successful work of technology commercialization that CSIR-Tech was involved with for the last 3 years.
  3. CSIR-Tech was doing which directly aligns with the government of India’s programs like ‘Start-up India’ and ‘Make in India’
  4. How technology and intellectual property being developed at CSIR, BARC, IITs, DST labs, DRDO, etc. is finding its way to touch common lives
  5. CSIR-Tech invests in science based start ups and spin off businesses through its ‘India Science Venture Fund’, a SEBI registered fund which includes SIDBI as a lead partner
PIB

Government and Qualcomm announce contest for start-ups

  1. The DIPP and Qualcomm Ventures announced India’s largest start-up contest  “QPrize Make in India”
  2. It will award $3.5 lakh in equity investment as prize money for the winning company
  3. The contest is to catalyse Indian entrepreneurs and start-up community to drive the entire value chain from innovation to manufacturing in India

Relaxations to start-ups to create more Indian unicorns

  1. RBI will ease regulations to allow startups to raise foreign venture capital through innovative instruments.
  2. The step comes as it seeks to lighten norms to support growth of entrepreneurship in India.
  3. RBI will also simplify the process for outward remittances and allow innovative instruments like convertible notes.
  4. RBI’s measures are in line with the government’s Start-up India initiative which envisages making the ecosystem conducive for growth of startups.

RBI relaxes FDI norms to boost start-ups

  1. RBI relaxed several rules including FDI norms to boost start-up activity in the country.
  2. Start-ups are allowed to receive foreign venture capital investment irrespective of the sector in which they operate.
  3. The new norms will enable transfer of shares from foreign venture capital investors to other residents or non-residents.
  4. Proposals like permitting start up to access ECB, issuance of innovative FDI instruments etc. are under consideration.
  5. If these proposal goes through, it will improve investor participation and also help start-ups to raise capital at low cost.

Start and go

‘Start-up India’ is overdue. But creation of enabling policy environment must not be restricted to start-ups.

  1. It promises swift approvals for starting enterprises, easier exits, tax and fiscal incentives, faster registration of patents and protection of intellectual property rights.
  2. Signals a possible end to the inspector raj.
  3. Tax breaks do help but what is more critical is an enabling regulatory and business environment that will foster innovation and have a cascading impact on entrepreneurship.
  4. Funding now on offer could perhaps be directed more towards segments tough to raise capital in such as food processing, rather than mobile-based applications or e-commerce firms.
  5. Easing of rules and creation of a conducive policy environment should not be restricted just to start-ups. It should be extended to all businesses.

Case for special enabling environment for start ups

Small entrepreneurs find it difficult to navigate the complex bureaucratic and regulatory maze.

  1. Start-ups hold the potential of creating more jobs at a time when the manufacturing sector is facing a slump.
  2. That may last longer given global economic prospects and the slowdown in China, which has been one of the engines of global growth.
  3. With growing automation, the manufacturing sector may no longer be in a position to create jobs.
  4. The fact is that there is a fundamental problem of demand and the real challenge for the Indian economy now is to fund several large projects — be it roads, highways or railways.
  5. Start-ups are job creators like the large number of self-employed who form a significant part of the country’s labour force.

SBI starts advisory services for startups

  1. SBI has unveiled a dedicated advisory services branch for startups.
  2. The branch, named branch InCube, was recently inaugurated in Bengaluru.
  3. InCube’s relationship managers will provide personalised advice to startup founders on investments, taxation and forex transactions, and solutions to optimise the cash conversion cycle.
  4. It will be a one-stop advisory services facility for entrepreneurs. However, it will not offer loans to startups for now.

SpaceX success launches space startups to new heights

Investor confidence has been buoyed by the historic landing of SpaceX’s Falcon 9, upright and intact, on December 21.

It was the first ever successful recovery of a reusable rocket.
It was the first ever successful recovery of a reusable rocket.

  1. SpaceX’s successful landing of a reusable rocket booster in December, 2015.
  2. Opens a new frontier for commercial space startups by offering tremendous cost savings and attracting venture capitalists who once shied away from spatial ventures.
  3. Space startups include nano-satellite makers, earth-imaging and weather-tracking technology developers.
  4. SpaceX, founded by high-tech entrepreneur Elon Musk, had one successful rocket landing after multiple failures, and more work to do.

‘Start up India’ to be unveiled today

To make it easier for setting up new ventures and closing unviable ones, besides clearing regulatory issues that hamper access to finance.

Around 40 Silicon Valley heavyweights are expected to take part in the inaugural ceremony of Start Up India launch. Photo: @DIPPGOI/Twitter
Around 40 Silicon Valley heavyweights are expected to take part in the inaugural ceremony of Start Up India launch. Photo: @DIPPGOI/Twitter

  1. The Start Up India mission envisages technology business incubators and research parks.
  2. HRD Ministry and Department of S&T have agreed to partner in an initiative to set up over 75 such startup support hubs in the NITs, IIITs, the IISERs and NIPERs.
  3. Programme include a Startups and Entrepreneurship Law.
  4. Google will be offering $15,000 of equity funding for early stage startups at a session called ‘Launchpad Accelerator’ where startups can make live presentations about their business ideas.

Startups for tax breaks, single window system

With 4,200 enterprises, India already ranks third in the world for the number of start ups after the U.S. and the U.K.

startup-business


  1. Simplified tax structure, easy compliance process and single window system are some of the issues that startups expect to be addressed through the much-awaited ‘Startup India’ policy.
  2. Ease of doing business is important for any enterprise but critical for startups.
  3. All entrepreneurs look for single window clearances, ease of doing business, incentives to develop regions and clarity on taxation structures.
  4. The problem in most cases is not the regulation but the red tape that makes compliance difficult despite best intentions.
  5. Many startups begin their journey here in India but quickly move abroad as they are intimidated by the complexity of regulation in India.

Let’s know about startups of India?

  1. With 4,200 startups, India ranks 3rd globally.
  2. Of $18 billion pumped into Indian startups between 2010-15, $9 billion came in 2015 alone.
  3. 9 Indian startups have been valued at more than a billion dollars.
  4. Increase in number of incubators: 80 in 2014, 110 in 2015; 50% outside Delhi, Bengaluru, Mumbai.

Startup mission looks beyond IITs, IIMs

HRD Ministry, DST to join hands to set up over 75 startup support hubs.

  1. The Start-Up India mission to be unveiled by Prime Minister includes an ambitious plan.
  2. To create a network of startup centres, technology business incubators and research parks, to take the startup culture beyond the top-tier education institutions such as IITs and IIMs.
  3. From about 70 incubators set up by the government between 2001 and 2014, we have now crossed 100 incubators.
  4. As per the plan, the HRD Ministry and the Science and Technology Ministry would share the costs for setting up startup centres in these institutions.
  5. The Science and Technology Ministry would bear 100 per cent cost to set up business incubators in institutes like NITs.

Let’s know more about AIM ?

  1. AIM will be an Innovation Promotion Platform involving academics, entrepreneurs and researchers draw upon national and international experiences.
  2. To foster a culture of innovation, R&D and scientific research in India.
  3. The platform will also promote a network of world-class innovation hubs and grand challenges for India.

Let’s know about SETU scheme?

  1. SETU will be a Techno-Financial, Incubation and Facilitation Programme.
  2. To support all aspects of start-up businesses, and other self-employment activities, particularly in technology-driven areas.
  3. The prime motive is to engage the young population, the largest demographic segment in India, in meaningful work.
  4. This will be able to put their ideas into motion and gradually convert them into scalable businesses.
  5. It aims to create around 100,000 jobs through start-ups.

Start Up India schemes to finally take off

The SETU scheme’s resources would be devoted to strengthening incubators and setting up ‘tinkering labs’ where ideas can be shaped into prototypes before they are ripe for funding.

  1. The government can finally start deploying funds from the Self-Employment and Talent Utilisation (SETU) scheme and the Atal Innovation Mission (AIM).
  2. To promote startups and scientific research, after over 10 months of spadework.
  3. AIM would focus on inviting aspiring entrepreneurs to solve India’s contemporary socio-economic problems via ‘grand challenges’.
  4. That offer substantial awards to incubate and scale up winning ideas.
  5. An overarching supervisory body with about 10 members is being formed to oversee the allocation of funds under the schemes to line ministries.

Corruption, delays hamper startups in India: survey

According to a new survey, corruption and delays are preventing the growth of entrepreneurship in India.

  1. Nearly 60% of the citizens felt these bottlenecks were some of the biggest hurdles to growth of entrepreneurship in the country.
  2. While only 14% felt funding to be the main impediment.
  3. The Start Up India mission should go beyond digital/technology startups and enable entrepreneurship at the grassroot level.

India to roll out red carpet for Silicon Valley chiefs

  1. Govt. has invited CEOs of big MNCs for unveiling the Start Up India initiative on Jan 16.
  2. The Start Up India launch would be similar to the start of the Make In India campaign last year.
  3. Indian startups have received $9 billion in funding in 2015, which is half the total amount they could raise in the 5 years preceding 2015.
  4. PM could announce include a new law that makes it easier to start and exit a venture and additional support for innovative startups.

Let’s know about India Aspiration Fund (IAF)?

  1. The objective of the IAF is to catalyse tens of thousands of crores of equity investment into start-ups and MSMEs creating employment of lakhs of persons, mostly educated youth.
  2. Rs 2,000-crore fund to be managed by SIDBI.
  3. India’s largest insurance company LIC will be a co-investor in the IAF.

Govt sets up mechanism to support start-ups

A mechanism known as SETU to support all aspects of start-up businesses and other self- employment activities has been set up by the government.

  1. National Policy for Skill Development and Entrepreneurs envisaged fostering entrepreneurship and grassroots innovation.
  2. By providing support in terms of fiscal incentives, creation of grass root technology innovation hubs, legal support and market linkages.
  3. India Aspiration Fund (IAF) under the Small Industries Development Bank of India(SIDBI) to give a boost to start-up ecosystem.
  4. Department of Electronics and Information Technology is implementing a scheme entitled ‘Technology Incubation and Development of Entrepreneurs’ (TIDE).
  5. Under which 147 start-ups have been supported at 25 TIDE centres established in premier institutes like IITs, NITs, IIMs etc.

Startup policy in New Year

The Start-up India policy would be a set of significant measures to encourage entrepreneurship in the economy.

  1. It would be a game-changer in making the ecosystem conducive for new ventures.
  2. Nearly 90% of the venture capital in Indian startups is coming from overseas, and govt. is trying to create a domestic VC industry.
  3. Country need innovations that solve Indian consumers’ problems, with a grassroots-level movement.
  4. Foreign venture capital firms tend to have a bias towards replicating business models proven in developed countries

Change laws for startups to mushroom: Nasscom

  1. The Centre is currently engaged in framing its startups policy.
  2. Nasscom is seeking the enactment of bankruptcy laws, the absence of which has become a major bottleneck for establishment of companies.
  3. India needs laws for shutting down unviable startups quickly, ease taxation policies to nurture young entrepreneurs.
  4. There is also a need for introduction of e-filing facility so as to bring down paper work.

Let’s know about Minimum Alternate Tax (MAT)?

  1. MAT is a tax effectively introduced in India by the Finance Act of 1987, Income Tax Act, 1961 (IT Act).
  2. To facilitate the taxation of ‘zero tax companies’ i.e., those companies which show zero or negligible income to avoid tax.
  3. MAT is an attempt to reduce tax avoidance.
  4. Introduced to contain the practices followed by certain companies to avoid the payment of income tax, even though they had the “ability to pay”.
  5. MAT is applied when the taxable income calculated as per the normal provisions in the IT Act is found to be less than 18.5% of the book profits.

Let’s know about Income-Tax Act, 1961?

  1. The Income-tax Act, 1961 is the charging Statute of Income Tax in India.
  2. It provides for levy, administration, collection and recovery of Income Tax.
  3. Recently the GoI has brought out a draft statute called the “Direct Taxes Code” intended to replace the Income Tax Act,1961 and the Wealth Tax Act, 1956.

Start-ups may get MAT exemptions, IPR earning waivers

PM Modi in his Independence Day speech had given a call for “Start-up India, Stand up India” to encourage innovation and increase employment for the youth.

  1. Exempting start-ups from the levy of minimum alternate tax (MAT), exemptions on earnings from intellectual property rights.
  2. A relief from the anti-abuse provisions with regards to capital gains tax.
  3. In cases where the start-ups have started earning from the commercialisation of IPRs, in those cases royalty income should not be taxed.
  4. Currently, the Income-Tax Act, 1961 provides weighted deduction of up to 200 per cent in certain cases for research and development.
  5. An aim to encourage IPR generation and increase innovation.

Can india create the next google-open

Current status of Startups in India:

  • India is the largest incubator in Asia , 3rd biggest in the world.
  • Indian start-ups have received more than $ 3.5 billion in the venture funding during Jan-Jun 2015.

US has cited regulatory hurdles. What are the solutions ?

  • Clear and simple rules
  • Tax treaty with US, because most investments are routed through Mauritius or Singapore.
  • The favourable capital tax gains exemption is available through these countries, in case investor want to exit.
  • A zero capital gains regime will increase the flows substantially.
  • Introduce bankruptcy code/law.
  • Simplify company creation.
  • Streamline issues exits & liquidity.

What is so special about start-ups?

  • In US, they are responsible for 2/3rd of jobs.
  • Indian start-ups will employ majority of the 10 lakh youth that join the work force every month.

India bags third slot in global startup space

India has emerged as the youngest startup nation in the world with over 72% of founders are less than 35 years old.

  1. The country has presence of more than 4,200 startups, making it the 3rd largest startup base worldwide.
  2. The sector grew at the rate of 40% over the last year, overtaking Israel.
  3. Around 1,200 tech startups were born in the year 2015, out of which more than 50% focus on e-commerce, consumer services and aggregators business.
  4. Bengaluru remains the hot destination for entrepreneurs to launch their business and was ranked 15 globally.

Reasons for growth of Startups in India :

  • Investment by business tycoons like Ratan Tata and Azim Premji in startups.
  • Rapid increase in the availability of risk capital.
  • Large Indian enterprises have also formed dedicated corpus to invest in startups.

Impacts of Startups on India :

  • It is contributing to the Indian economy in many ways.
  • It is positively impacting the lifestyles of citizens.
  • They are creating innovative technology solutions that are addressing the key social problems that India is facing.

Nasscom bats for policy changes for the Startups

  1. Nasscom wants India to bring more policy reforms for the growth of the start-up sector.
  2. Nasscom has sought easing of rules and regulation for funding.
  3. It wants simplification in compliance procedures by minimising licences, permits, approvals, tax for startups.

SEBI notifies start-up listing norms

  1. SEBI notified a new set of listing norms for start-ups, including e-commerce ventures, on a separate platform of domestic stock exchanges – the institutional trading platform.
  2. The new norms provide significant relaxations in the disclosure requirements.
  3. SEBI has also relaxed its delisting, takeover and Alternative Investment Fund regulations for entities engaged in IT, data analytics, intellectual property etc.
  4. However, the new platform would be open to only institutional investors and HNIs in order to protect small retail investors from the risks involved with the star-ups.


:( We are working on most probable questions. Do check back this section.







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