The Ecosystem is Talking About Startup India Action Plan!

India’s unique startup program on 16th January, 2017 completed its first anniversary. Prime Minister Narendra Modi’s initiative to set several positive action plans in place actually took off from here.

The action plan contains several positive initiatives for Indian startups that look at easing up various regulatory, legal, financial and other challenges faced by them.

Here are, 20 Fundamentals of the Startup India Action Plan
1.) Defining what is a ‘Startup?’
While it is not exactly part of action plan, this has probably brought a lot of positive awareness in the country. Now, a Startup will be tagged under the category of yet another ‘Business’.

Till date a startup was not separated in various policies of the government. They were all businesses. But now, the most encouraging aspect is that government is now looking at startups as a serious growth engine for India and wants to help them achieve success.

2.) Establishing a Compliance Regime based on Self-Certification
Government wants to reduce the regulatory burden on startups thereby allowing them to focus on their core business and keep compliance cost low. Startups shall be allowed to self-certify compliance via Startup mobile app with 9 labor and environment laws.

3.) Setting up a Conducive Startup India Hub
With Startup India Hub, government wants to create a single point of contact for the entire Startup ecosystem. In order to enable knowledge exchange and access to funding.

On the brighter side, the hub will be collaborating with the central and state governments, Indian and foreign VCs, angel networks, financial institutions, legal experts, business consultants, R&D institutions, universities and incubators.

All this and more to help out the startups through their lifecycle and increasing the ease of doing business in India. The support will also include feasibility testing, enhancing marketing, and technological management and give a push on the risk-taking front.

4.) Connecting Via Mobile App and Portal
This is going to happen very soon, the government is about to launch an app, for startups. It will feature relevant agencies of the government and the form required. This app will also provide tracking facility to keep a tab on registration filing, obtaining clearances and approvals. The website will also be a guide for the same.

5.) Fast-tracking Patent Examination & Legal Aspect
A lot has be taken care of from promotion, awareness and adoption of IPRs and now fast-track examination of patent applications and rebate in fees is also included in the list. The legal experts will also help startups by assistance in filing of IP applications and the cost will be borne by the government.

6.) Norms of Public Procurement Relaxed for Startups
Going forward, norms for startups will be relaxed once when they are applying for tenders floated by PSUs. Earlier, this was not possible as all tenders require either “prior experience” or “prior turnover”. Now, this will not be roadblock any more for new ventures in India.

7.) Easing Exit Points for Startups
When it’s to make it easier for startups to close and exit their businesses in case they are winding up operations.

8.) Funding Support through a Fund of Funds
While government will not directly invest or fund startups, they will be doing it through Fund of Funds with a corpus of Rs. 10,000 Crore. The Fund of Funds shall be managed by a board with private professionals drawn from industry bodies, academia and successful Startups.

9.) Credit Guarantee for Startups
In order to overcome traditional Indian stigma associated with failure of Startup enterprises in general, to encourage experimentation among Startup entrepreneurs, Government plans to provide credit guarantee comfort with flow of ‘venture Debt’ from the formal Banking System.

10.) Tax Exemption on Capital Gains
The government plans to provide tax exemptions to persons who have capital gains during the year, if they have invested in such capital gains in the Fund of Funds recognized by the government.

11.) Tax Exemption to Startups for 3 years
In what could be termed as one of the most positive moves, exemption for income tax shall be given on profits generated by startups for a period of first 3 years.

12.) Tax Exemption on Investments above Fair Market Value
Currently, only the investments by venture capital funds in startups are exempted from operations of provision under section 56(2). Now, the same shall be extended to investment as made by incubators and angel investors in the startups.

13.) Organizing Startup Festivals
In addition to the aforementioned plans, the government plans to organize one national and one international startup festival annually for showcasing innovation and providing a collaboration and networking platform.

14.) Launch of Atal Innovation Mission
The government provides a platform for promotion of world-class innovation hubs, grand challenges, startup businesses and other self-employment activities, particularly in technology driven areas. This will be done through Atal Innovation Mission (AIM)

15.) Harnessing Private Sector Expertise for Setting-Up Incubator
The government intends to create a policy and framework for setting-up of incubators across the country in public private partnership. 35 new incubators in existing institutions will be setup along with funding support of 40% shall be provided by central government.
Government will also provide grant of 50 percent for 35 new incubators established by private sector.

16.) Building Innovation Centers at National Institutes

17.) Setting up Research Parks
The government would set up 7 new research parks at IIT Guwahati, IIT Hyderabad, IIT Kanpur, IIT Kharagpur, IISc Bangalore, IIT Gandhinagar, and IIT Delhi with an initial investment of INR 100 crore each. The research parks would be modeled based on the research park setup at IIT Madras

18.) Promoting Startups in the Biotechnology Sector
To foster and facilitate bio-entrepreneurship, 5 new Bio-clusters, 50 new Bio-Incubators, 150 technology transfer offices and 20 Bio-Connect offices will be set up in research institutes and universities across India.

19.) Innovation Programs for Students
In order to promote research and innovation among young students, the Government shall implement various innovation programs including Innovation Core, NIDHI and Uchhattar Avishkar Yojana

20.) Annual Incubator Grand Challenge
To build world class incubators in India, government plans to launch an annual Incubator Grand Challenge to identify leading Incubators in India. Kudos to the government for coming up with a startup action plan that really touches on every facet of India’s startup ecosystem. With such big help from the Government, there is no doubt, our startup ecosystem has the potential to be the best in the world!