The Startup India initiative was announced by the Honorable Prime Minister of India on August 15, 2015, with the aim of creating a robust ecosystem to foster innovation and support startups in the country. The main objectives of this flagship initiative are to promote sustainable economic growth, generate significant employment opportunities, and cultivate a culture of entrepreneurship. To achieve these goals, an Action Plan for Startup India was introduced on January 16, 2016. Read More Business News on our website.
What are the Major Startup India Initiatives By PM?
The Action Plan consists of 19 action items that cover various areas such as simplifying procedures and providing guidance to startups, offering funding support and incentives, and promoting collaboration between industries, academia, and incubators. It is widely recognized globally that startups play a crucial role in driving economic progress, creating jobs, and fostering innovation. Therefore, it is essential for the government to nurture emerging talent and entrepreneurship as part of the larger vision of nation-building. The ultimate objective is to transform India into a nation of job creators rather than merely job seekers.
The Department for Promotion of Industry and Internal Trade (DPIIT) is responsible for coordinating the implementation of the Startup India initiative in collaboration with other government departments. Along with the DPIIT, five key government departments, namely the Department of Science and Technology (DST), Department of Biotechnology (DBT), Ministry of Human Resource Development (MHRD), Ministry of Labour and Employment, Ministry of Corporate Affairs (MCA), and NITI Aayog, actively drive the initiatives under Startup India.
The government of India has made significant strides in realizing the vision of the Startup India initiative. This initiative has sparked an entrepreneurial spirit across the country and has led to substantial progress. The government aims to further accelerate the growth of the startup ecosystem by extending its reach beyond the digital/technology sector to include a wide range of sectors such as agriculture, manufacturing, social services, healthcare, education, and more. Additionally, the focus is on expanding the startup movement from tier 1 cities to tier 2 and tier 3 cities, including semi-urban and rural areas.
STARTUP RECOGNITION
The website, startupindia.gov.in known as the Startup India Portal, serves as an online platform dedicated to startups and entrepreneurs. It plays a vital role in the Indian Startup Ecosystem by facilitating connections among tens of thousands of key stakeholders, including startups, investors, and incubators. By bringing them together on a single platform, the Portal encourages collaboration and enables these stakeholders to discover new opportunities.
One of the primary objectives of the Portal is to bridge the gap in knowledge and provide valuable support to entrepreneurs, enhancing their chances of success. It achieves this by offering essential information, online courses, access to a database of government schemes, market research reports, free software applications, and other valuable resources.
The Portal is a significant component of the Startup India Initiative, which aims to foster the growth and development of startups in India.
SECTOR WISE CATEGORISATION OF RECOGNISED STARTUPS
Out of the startups acknowledged until the fiscal year 2018-19, 15.20% belong to the field of IT services, while 9.1% are related to Healthcare and Life Sciences. Augmented and Virtual Reality (AR/VR) startups account for 7.6% of the recognized startups, followed by Food and Beverages at 4.40%, Agriculture at 4.20%, Finance Technology at 3.5%, Retail & Other Speciality at 3.40%, and Green Technology at 3.30%. These percentages represent the distribution of startups among various sectors during that time.
INCOME TAX EXEMPTION:
The complex and extensive tax regulations pose significant challenges for startup businesses. However, there are certain provisions in the current tax regime that provide relief to recognized startups. For instance, under Section 80IAC of the Income Tax Act, startups are exempt from income tax for a period of three years out of ten years since their incorporation.
To further ease the burden, the Eligibility Criteria for tax benefits have been relaxed through meetings conducted by the Inter-Ministerial Board (IMB). During these meetings, it was decided that startups in the ideation stage would also be exempted from tax benefits, as approved by the Board. However, subsidiaries of existing Indian or foreign companies are not eligible for recognition as startups and consequently do not qualify for any tax benefits.
Furthermore, the IMB has introduced modifications in the evaluation criteria. These changes aim to accommodate a larger number of applications, particularly in specific service sectors. As a result, the rejection criteria have been eased. The evaluation process now considers entities that are engaged in innovative activities, such as the development or improvement of products, processes, or services. Moreover, startups that have a high potential for employment generation or wealth creation are also eligible for exemptions.