Start-up Ecosystem In India

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!

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