Startup India Action Plan Brief - A Reason To Celebrate For Entrepreneurs

“We understand that to build a large and successful corporation, you cannot escape failure. I want to promote those who have the courage to fail” - Narendra Modi

On 15th August, 2015 Prime Minister Narendra Modi broke the news about launching a programme 'Start-up India'. It finally concluded on 16th January, 2016 at Vigyan Bhawan, New Delhi. Each of his announcement were applauded by the best known entrepreneurs of the country, and from overseas. The programme is believed to be the largest start up conference for entrepreneurs in India. 

“Start-up is not just about mobiles and laptops. Start-up does not only mean a company with billions of dollars of money and 2,000 employees. If it is able to provide employment to even five people, it would help in taking the country forward. Young people have to change their mindsets from being job seekers to try and become job creators. Once you become a job creator, you will realise that you are transforming lives,” he said. 

He spent considerable time talking about the new policies and initiatives that would provide relief to investors and start up founders. Let's talk about the highlights of the PM's flagship project. 

1. Income Tax exemption for first 3 years 

Start ups will be exempted from income-tax for a period of three years with an aim to facilitate growth and help retain capital. To boost financing, a 20% tax on capital gains made on investments by entrepreneurs after selling own assets as well as government-recognized venture capitalists will also be exempt. 

2. Tax exemption on investments above Fair Market Value 

Tax exemption will be given on investments above the fair market value. Under the Income Tax Act, if a start-up receives equity funding which exceeds the firm's fair market value, then such excess consideration is taxable in the hands of recipients. 

3. Fund of Rs. 10,000 crore for start ups 

The government will lend funding support to start ups with an initial corpus of Rs. 2,500 crore and a total corpus of Rs. 10,000 crore over a period of four years. The fund would be managed by a board with private professionals drawn from industry bodies, academia, and successful startups. LIC will be a co-investor in the fund. It would help flow of venture debt from the banking system to start-ups by standing guarantee against risks. 

4. 80% Rebate in registering Patent 

A liberalized patent regime is being brought to help start-up businesses register patents, for which the fee will be slashed by 80%. 

5. Easy Exits in 90 days 

Start ups may be wound up within a period of 90 days from making of an application for winding up on a fast track basis, as per the recently tabled Insolvency and Bankruptcy Bill 2015, which has provisions for voluntary closure of businesses. 

6. Self-certification compliance's 

The objective of compliance regime based on self certification is to reduce the regulatory burden on startups. This self-certification will apply to laws like payment of gratuity, contract labor, employees provident fund, water and air pollution acts. 

7. No kind of Inspection for first 3 years 

There will be no inspection during the first three years of launch of the venture. 

8. Incubation programme

Incubation core programs for students to be started in 5 lakh schools. PPP model being considered for 35 new incubators, 31 innovation centers at national institutes. There will also be an annual incubator grand challenge to create world class incubators. 

9. No Govt intervention in start ups 

PM promised that there would be minimum intervention in start ups from the government. This would provide flexibility to startups to work the way they want within the legal restrictions of course. 

10. A scheme for Women Entrepreneur to be announced soon 

PM did not forget this major section of the Entrepreneurship world and has promised, there will be something very nice for Women too soon. 

11.Patent protection and application 

The government is also working on a legal support for fast-tracking patent examination at lower costs. It will promote awareness and adoption of Intellectual Property Rights (IPRs) by start ups and help them protect and commercialize IPRs. Also, a group of lawyers to be setup who will help resolving patent related problems for free. 

12. Setting up of 7 new research parks 

Government shall set up seven new research parks - six in IITs, one in IISc with an initial investment of Rs 100 crore each. 

13. Organizing Start up Fest all over India and abroad regularly. 

Within this action plan, PM has promised that there will be regular startup fest all over India to encourage and spot upcoming major startups 

14. A single point of registration for start ups 

The government will launch a mobile app and a portal on April 1, 2016 which will enable start ups to register their company in a day. The portal will also serve as a single point of contact for clearances, approvals and registrations, and for companies to apply for schemes under the Start up India Action Plan. Modi said a mobile app and portal will be rolled out for interacting with the government and regulatory institutions. 

15. Atal Innovation Mission (AIM) for encouraging Innovation among start ups 

The Atal Innovation Mission will establish sector specific incubators and 500 'Tinkering Labs' to promote entrepreneurship, provide pre-incubation training and a seed fund for high-growth start ups. Three innovation awards will be given per state and union territory, along with three national awards, as well as a Grand Innovation Challenge Award for finding ultra-low cost solutions for India. 

'Start up India' programme will boost the start up ecosystem of India, it will promote innovation with a view to driving sustainable economic growth and generating large-scale employment opportunity, it is about employing even 5 people and developing India.

“People who have achieved success are not just entrepreneurs but also adventurous. Success of entrepreneurs depends on their ability to take risk”   - Narendra Modi

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