Startup

What is the Startup India Action Plan?

Startup India Action Plan is the detailed list of sequential activities to be performed under the Startup India initiative by the Government of India. The honorable Prime Minister of India^[1] first announced the concept of the Start-up India campaign during his speech on 15^th August 2015 from the Red Fort, New Delhi. Let’s learn about the Startup India Action Plan and what potential it holds for the development of the startup sector.

What do you understand by “Startup India Action Plan”?

The Action Plan of the Startup India campaign contains a sequential list of specific actions that the government plans to perform under the government initiative. The action plan includes the outline of all the action plans of the government and focuses on all the crucial priorities required to achieve the aims of this initiative. It is prepared to provide strong support to the startups in India and creates various opportunities for the establishment of new business for more job creation. Furthermore, it ensures full support for new companies by innovative entrepreneurs.

The action plan is divided into two sections, which are “Introduction” and “Action plan: Proposed Schemes and Incentives.” The second section is further divided into three sub-sections, which are “Simplification and Handholding,” “Funding support’ and “Industry-Academia Partnership and Incubation.” Then comes the Annexure I- Definition of a Startup (for official purposes only) and Annexure-II- Acronyms.

A Brief Note on Startup India Campaign

Startup India scheme is an initiative by the Government of India focused on promoting entrepreneurship and startups. Through this campaign, the Government envisions to generate employment and increasing wealth creation. The aim of Startup India scheme is to innovate and develop products and services and increase the employment rate in India. Benefits of this scheme include providing financial support, simplification of work, increasing networking opportunities, providing government tenders to startups.

The Startup India scheme was launched on 16^th January 2019 with an objective of nurturing innovation and startups in India that will drive sustainable economic growth and create job opportunities.   

Startup India Action Plan Inclusions

The Startup India Action Plan includes various points that focus on helping or supporting the startups and new businesses in India. A few of them are given below.

Self-Certification based Compliance Regime

Generally, new business owners don’t know about the subtle details of various labor and environmental laws and they end up wasting time. The objective is to allow startups to self certify their compliance with numerous labor and environment laws themselves at the time of inspection.

This is suggested so that startups can shift their attention from just trying to comply with all the rules and regulations to focusing on actual work. Also, under this, startups which fall under the “white category” {as defined by the Central Pollution Control Board (CPCB)}, will be able to self certify compliance in case of environmental laws and only random inspection will be conducted in such cases.

Moreover, in case of labor laws, no inspections will be held for a period of three years. Such startups will be inspected based on the receipt of a credible and verifiable complaint of violations that are filed in written form and is signed by an official who is at least one level senior than the inspecting officer. 

Also, Read: Startup India Registration Process – The Complete Guide.

Rolling out of Portal and Mobile App

The government is planning to build a single platform which the startup companies can use to get required registrations from the relevant authorities.  The government is planning to include a list of required licenses, registrations, etc. on the mobile app platform. This is to ensure that the startups can get these licenses and registrations on the go and at a single place. Also, it provides these startups with a platform to connect with other ecosystem partners. The app was launched on 1^st April 2016 on all mobile/ smart devices. The portal also contains similar features.

• The government envisions adding backend support from the Ministry of Corporate Affairs and Registrar of Firms for ensuring seamless information exchange and processing of the registration application.
• Also, the mobile app can be used to track application status and downloading the registration certificate.   
• Furthermore, the user can file compliances and obtain information about various clearances, approvals, registrations, etc.
• Moreover, the app provides a platform for collaborating with various startup ecosystem partners.
• The app can also be used to apply for various schemes under the Startup India Action Plan

Relaxation of Norms of Public Procurement for Startups

Furthermore, the government also plans to relax norms and provide an equal platform to experienced entrepreneurs and companies in the manufacturing sector in public procurement. Generally, when the government floats a tender, the eligibility criterion includes either “prior experience” or “prior turnover,” which typically the startups are not eligible to participate. To promote startups the government has exempted the startup sector from the “prior experience/turnover” eligibility criteria. However, the government suggests these startups to maintain the same quality standards and technical parameters as that of the experienced companies.

This regulation is effective from 1^st April 2015 and mandates the Central Government, State Government, and PSUs to procure at least 20% from the Micro Small and Medium Enterprises {MSMEs}.      

Providing Funding Support to Startups

The Government of India has provided a total sum of Rs.10,000 crores for providing an adequate amount of funds to startups for setting up their businesses. However, the fund is in the form of “Fund of Funds” i.e. it will not invest directly into startups but it will participate in the capital of SEBI registered venture funds. The government plans to set up a fund of Rs. 2,500 crore per year over a period of four years.

Income Tax Exemption for Startups for Three Years

The governing authorities plan to give Income tax exemption on profits to startups for a period of three years with a view to stimulating the development of startups. The objective of commencing this step is to facilitate the growth of business entity and ensure that they meet the working capital requirements during the initial years of operation.

Launching of the Atal Innovation Mission (AIM) Along with the Self-Employment and Talent Utilization (SETU) Program

The objective of this is to serve as a platform for promotion of world-class innovation hubs, startup businesses, grand challenges, and other self-employment activities, particularly in techno-driven areas. Primarily, the two major functions of the Atal Innovation Mission {AIM} are;

• To promote entrepreneurship through the Self-Employment and Talent Utilization {SETU} Program, support innovators and mentor them to become successful entrepreneurs
• To provide a platform for innovative idea generation

Building various innovation centers at the national institute

With an objective to augment the R&D and incubation efforts in India, the government has set-up thirty-one centers to provide facilities for over 1200 new startups of innovation and entrepreneurship at national institutes including;

• Setting-up of thirteen startup centers
• Scaling-up of eighteen Technology Business Incubators {TBIs}

Launching of various Innovation Focused Programs for Students

The government has launched Innovation Focused Programs for Students and young innovators. The government focuses to promote research and development among young students and has taken the following measures for the same namely:

• Innovation care programs
• National Initiative for Development and Harnessing innovations {NIDHI}
• Uchhattar Avishkar Yojana

To Conclude

In the end, we can say that the government has taken various measures towards promoting the startup sector in the national and international grounds. The government created the Startup India Action Plan for the effective implementation of the Startup India scheme. Also, to keep vigilance over various regulatory bodies and institutions who are responsible for performing various actions under the Startup India scheme directed by the government. Under the Startup India campaign, the government also plans to provide easy access to funding for new businesses. This will encourage un-experienced entrepreneurs to start their own business with ease.

Also, Read: Angel tax – Its Effects on Indian Startups.