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Startup India is a campaign to promote the business possibility in India from various inspiring people in an easy and convenient way. An entity shall be considered as a Startup if:-
Provided that any such entity formed by splitting up or reconstruction of a business already in existence shall not be considered a “Startup”
All the Startup entities need to register in the Startup India portal designed and maintained by the Ministry of Commerce and Industry. Unless it is recognized by the department the same can’t be termed as Startup. An entity required to make an application to the department for recognition of Startup for an entity subject to fall under the above definition of an entity.
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It is commercial loans raised by eligible resident entities (Borrower) i.e. Startup (recognized from Department) from recognized non-resident entities (Lender) and should conform to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. The parameters apply in totality and not on a standalone basis. The framework for raising a loan through ECB is broadly comprised of three modes i.e.
Being more specifically on ECB facility for Startup, all the requirement and guidelines are set up below: –
ECB Facility for Startup:
Any entity recognized as Startup by the Central Government as on date of raising ECB will be eligible under the facility under the automatic route from AD Category-I Bank. The Minimum Average Maturity period will be 3 years. The Lender/Investor shall be a resident of a country who is either a member of Financial Action Task Force (FATF) or a member of a FATF-Style Regional Bodies; and shall not be from a country identified in the public statement of the FATF as: –
However overseas branches/subsidiaries of Indian Bank and Overseas wholly-owned subsidiary/joint venture of an Indian Company will not be considered as recognized lenders under this framework.
Read our article:Startup India Registration Process – The Complete Guide
The various forms/guidelines to be duly completed in process of ECB or to regulate the ECB are listed below:-
Based on Master Direction dated 1st January 2016, the extracts above have helped the Startup campaign of Government of India as far as the financial needs of such entity is a concern. The liberalized way of reporting and compliance list has made it friendlier for both borrowers and investors to work together in India.
Read our article:What are the Income Tax Laws for Startups in India
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