It was on the occasion of India’s 69th Independence Day that Prime Minister Narendra Modi announced the Startup India initiative from the ramparts of India’s iconic Red Fort. Just five months later, on 16th January, the PM unveiled the historic Startup Action Plan. PM Modi’s talk was laced with humour:
“If anyone asks what’s the difference, the government working on a Saturday that too after 6pm is the difference.” He also said: “When I heard Ritesh (Aggarwal of Oyo) speak, I thought how a tea seller like me didn’t think of setting up a hotel chain.”
In the Vigyan Bhawan auditorium that was bristling with energy and anticipation, PM Narendra Modi announced the Startup Action Plan. Here are the top points:
1. Compliance regime based on self certification.
To reduce regulatory burden, startups shall be allowed to self-certify compliance with labour and environment laws. In case of labour laws, no inspection will be conducted for three years. In case of environment laws, startups under ‘white’ category would be able to self certify compliance.
2. Startup India Hub will be single-point of contact and hand holding.
The start up India hub will act as a contact and a firm hand hold between the other start ups in India.
3. Set Up Your Startup With A Single Form.
A startup will be to able to set up by just filling up a short form through a mobile app and online portal that will be launched in April.
4. Patent protection
PM Modi said patent protection and IP rights are a major concern for Indian startups. The government will make IPR procedure transparent for startups. Fast track mechanisms of startup patent applications – in order to allow startups to realize the value of their IPRs at the earliest possible. Patent applications of the startups shall be fast tracked for examination and disposal.
5. Panel of facilitators to provide legal support and assistance in filing of patent application.
Facilitators shall provide assistance for startups in filing and disposal of patent applications related to patents, trademarks and design under relevant Acts. Government shall bear the entire fees of the facilitators for any number of patents, trademarks or designs that a startup may file.
6. 80% rebate on filing patent applications by startups
To enable startups to reduce costs in their crucial formative years, startups shall be provided an 80% rebate in filing patents vis-a-vis other companies.
7. Relaxed norms of public procurement for startups.
to provide an equal platform to startups vis-a-vis the experienced startups/companies in public procurement, startups (in the manufacturing sector) shall be exempted from the criteria of prior.
8. Faster exits for startups.
To make it easier for startups to exit, provision for fast-tracking closure of businesses have been included in ‘The insolvency and Bankrupcy Bill 2015’. Startups with simple debt structures may be wound up within a period of 90 days from making of an application for winding up on a fast-track basis.
9. Funds of funds with a corpus of Rs 10,000 crore.
To provide funding support for development and growth of innovation driven enterprises, Government will set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over a period of 4 years.
10. Credit Guarantee Fund.
To catalyse entrepreneurship through credit to innovators across all sections of society, credit guarantee mechanism through National Credit Guarantee Trust Company/SIDBI shall be rolled out with a budgetary corpus of Rs 500 cr per year for the next four years.
11. Exemption from Capital Gains Tax
Exemptions shall be given in case capital gains are invested in the fund of funds recognised by the government. In addition, existing capital gain tax exemption for investment in newly formed MSMEs by individuals shall be extended to all startups.
12. Tax exemption for startups.
To promote growth of startups, profit of startups, set up after April 1,2016, shall be exempted from income-tax for a period of three years.
13. Tax exemption on investments above Fair Market Value.
In line with the exemption available to venture capital funds to invest in startups above fair market value (FMV), investments made by incubators above FMV shall also be exempted.
14. Startup fests.
For showcasing innovation and providing a collaboration platform.
15. Launch of Atal Innovation Mission.
Entrepreneurship promotion via
Establishment of sector specific incubators
Establishment of 500 tinkering labs with 3D printers in universities
Pre-incubation training to potential entrepreneurs
Strengthening of existing incubation facilities
Seed funding to high growth startups
Innovation promotion via
Institution of innovation awards (three per state/UT) and three national level
Providing support to State Innovation councils for awareness creation and organising state level workshops/conferences
Launch of Grand Innovation Challenge Awards for finding low cost solution to India’s pressing and intractable problems.