Various Initiatives taken by Government to promote startups

Various Initiatives taken by Government to promote startups

Start-ups are often expected to contribute to the revitalization of the national and regional economies. In terms of entrepreneurship and business, India has evolved into one of the top emerging countries in the world. Hundreds of startup companies have been founded in the last few years, many of which are enjoying incredible success.

Startups are becoming the driving force behind innovation-driven economic recovery, reorientation, and growth. They are also constructing a distributed-yet-collective future that is in line with the changing requirements and value systems of each country. The global startup economy is worth nearly $3 trillion out of the total world economy of around $90 trillion, and is growing exponentially.

Startups in India

India is the 3rd largest ecosystem in the world, with 107 unicorns. Sustained government efforts in this direction have resulted in an increase in the number of startups. In India, startups increased from 442 in 2016 to 92,683 in 2023. With over 100 unicorns, the Indian startup ecosystem is expanding. The year 2021 witnessed a record set of 4 entries to the coveted unicorn club, and there has been a staggering jump of 15,400% in the number of startups in India in 6 years. More than 4,000 recognised startups are engaged in sectors relating to emerging technologies such as the Internet of Things (IoT), robotics, artificial intelligence, analytics, etc.

Launched on January 16, 2016, the Startup India Initiative has rolled out several programmes with the objective of supporting entrepreneurs, building a robust startup ecosystem, and transforming India into a country of job creators instead of job seekers. These programmes are managed by a dedicated Startup India team, which reports to the Department for Industrial Policy and Promotion (DPIIT).

In order to meet the objectives of the initiative, the government unveiled an Action Plan for Startup India that laid the foundation for government support. Realising the action items, various programs are implemented by the government under the Startup India initiative to recognise, develop and promote the startups so they can raise private investment.

To support the startups in the country across various sectors, including emerging technologies, the government is implementing various programmes. Details of some programmes are below:

Startup India Action Plan: An Action Plan for Startup India was unveiled on January 16, 2016. The Action Plan comprises 19 action items spanning across areas such as “Simplification and handholding”, “Funding support and incentives” and “Industry-academia partnership and incubation”. The Action Plan laid the foundation of Government support, schemes and incentives envisaged to create a vibrant startup ecosystem in the country.

Fund of Funds for Startups (FFS) Scheme: The Government has established FFS with a corpus of Rs. 10,000 crore, to meet the funding needs of startups. DPIIT is the monitoring agency and Small Industries Development Bank of India (SIDBI) is the operating agency for FFS. The total corpus of Rs. 10,000 crore is envisaged to be provided over the 14th and 15th Finance Commission cycles based on progress of the scheme and availability of funds. It has not only made capital available for startups at early stage, seed stage and growth stage but also played a catalytic role in facilitating raising of domestic capital, reducing dependence on foreign capital and encouraging home grown and new venture capital funds.

Credit Guarantee Scheme for Startups (CGSS): The Government has established the Credit Guarantee Scheme for Startups for providing credit guarantees to loans extended to DPIIT recognized startups by Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs) and Venture Debt Funds (VDFs) under SEBI registered Alternative Investment Funds. CGSS is aimed at providing credit guarantee up to a specified limit against loans extended by Member Institutions (MIs) to finance eligible borrowers viz. DPIIT recognised startups.

Regulatory Reforms: Over 50 regulatory reforms have been undertaken by the Government since 2016 to enhance ease of doing business, ease of raising capital and reduce compliance burden for the startup ecosystem.

Ease of Procurement: To enable ease of procurement, Central Ministries/ Departments are directed to relax conditions of prior turnover and prior experience in public procurement for all DPIIT recognised startups subject to meeting quality and technical specifications. Further, Government e-Marketplace (GeM) Startup Runway has been developed which is a dedicated corner for startups to sell products and services directly to the Government.

Support for Intellectual Property Protection: Startups are eligible for fast-tracked patent application examination and disposal. The Government launched Start-ups Intellectual Property Protection (SIPP) which facilitates the startups to file applications for patents, designs and trademarks through registered facilitators in appropriate IP offices by paying only the statutory fees. Facilitators under this Scheme are responsible for providing general advisory on diff­erent IPRs, and information on protecting and promoting IPRs in other countries. The Government bears the entire fees of the facilitators for any number of patents, trademarks or designs, and startups only bear the cost of the statutory fees payable. Startups are provided with an 80% rebate in filing of patents and 50% rebate in filing of trademark vis-a-vis other companies.

Self-Certification under Labour and Environmental laws: Startups are allowed to self-certify their compliance under 9 Labour and 3 Environment laws for a period of 3 to 5 years from the date of incorporation

Income Tax Exemption for 3 years: Startups incorporated on or after 1st April 2016 can apply for income tax exemption. The recognized startups that are granted an Inter-Ministerial Board Certificate are exempted from income-tax for a period of 3 consecutive years out of 10 years since incorporation.

International Market Access to Indian Startups: One of the key objectives under the Startup India initiative is to help connect Indian startup ecosystems to global startup ecosystems through various engagement models. This has been done through international Government to Government partnerships, participation in international forums and hosting of global events. Startup India has launched bridges with over 15 countries that provides a soft-landing platform for startups from the partner nations and aid in promoting cross collaboration.

Startup India Seed Fund Scheme (SISFS): Easy availability of capital is essential for entrepreneurs at the early stages of growth of an enterprise. The capital required at this stage often presents a make-or-break situation for startups with good business ideas. The Scheme aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization. Rs. 945 crore has been sanctioned under the SISFS Scheme for a period of 4 years starting from 2021-22.

National Startup Awards (NSA): National Startup Awards is an initiative to recognize and reward outstanding startups and ecosystem enablers that are building innovative products or solutions and scalable enterprises, with high potential of employment generation or wealth creation, demonstrating measurable social impact. Handholding support is provided to all the finalists across various tracks viz. Investor Connect, Mentorship, Corporate Connect, Govt. Connect, International Market Access, Regulatory Support, Startup Champions on Doordarshan and Startup India Showcase, etc.

TIDE 2.0 Scheme: Technology Incubation and Development of Entrepreneurs (TIDE 2.0) Scheme was initiated by Ministry of Electronics and Information Technology (MeitY) in the year 2019 to promote tech entrepreneurship through financial and technical support to incubators engaged in supporting ICT startups using emerging technologies such as IoT, AI, Block-chain, Robotics etc. The Scheme is being implemented through 51 incubators through a three-tiered structure with an overarching objective to promote incubation activities at institutes of higher learning and premier R&D organizations.

SAMRIDH Scheme: MeitY has launched the ‘Start-up Accelerator Programme of MeitY for Product Innovation, Development and Growth (SAMRIDH)’ with an aim to support existing and upcoming Accelerators to further select and accelerate potential software product based startups to scale.

Next Generation Incubation Scheme (NGIS): NGIS has been approved to support the software product ecosystem and to address a significant portion of National Policy on Software Product (NPSP) 2019.

Biotechnology Industry Research Assistance Council (BIRAC): An industry-academia interface agency of Department of Biotechnology, Ministry of Science & Technology is supporting biotech startups in all biotech sectors including clean energy and emerging technologies. Project based funding is provided to startups and companies for product/technology development under its key Schemes including Biotech Ignition Grant (BIG), Small Business Innovation Research Initiative (SBIRI) and Biotechnology Industry Partnership Programme (BIPP). Incubation support to the startups and companies is also provided through Bio Incubators Nurturing Entrepreneurship for Scaling Technologies (BioNEST) Scheme.

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