India has emerged as a hotspot for startups in recent years, thanks to the various benefits provided by the Indian government. These benefits aim to foster innovation, support entrepreneurship, and boost the economy. This article help you understand the benefits to startups by Indian government.
If you are planning to start a new venture, make sure to explore and utilize these government benefits to maximize your chances of success. Under the Startup India scheme, startup ecosystem in India is vibrant and full of opportunities.
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What is a Startup?
A startup is a newly established business, typically in its initial stages, founded by one or more entrepreneurs to develop a unique product or service for the market. Startups are characterized by their innovative approach, scalability potential, and aim to address a gap in the market or solve a particular problem. They often focus on high-growth sectors such as technology, biotech, and fintech.
What is meant by Startup India Scheme?
The Startup India Scheme is an initiative launched by the Government of India in January 2016 to promote and support the growth of startups in the country. The scheme aims to create a robust ecosystem for nurturing innovation and startups, leading to sustainable economic growth and generating large-scale employment opportunities. Some of the key features of the scheme include:
- Simplified regulations
- Financial support and incentives
- Industry-academia partnerships
- Incubation and research facilities
- Easier access to funding through a dedicated fund of funds
What are the benefits to startups by Indian Government?
The Indian government offers various benefits. Here’s a detailed guide on the benefits to startups by Indian government.
- Startup India Initiative:
The Startup India Initiative is a flagship program aimed at building a robust ecosystem for nurturing innovation and startups in the country. Key benefits under this initiative include:
- Simplified Regulations:
- Startups can self-certify compliance with labor and environmental laws, reducing the regulatory burden.
- Tax Exemptions:
- Recognized startups can avail themselves of a three-year tax holiday within the first ten years of incorporation.
- Easy Access to Funding:
- The government has set up a Fund of Funds for Startups (FFS) with a corpus of INR 10,000 crore to provide funding support.
- Patent and IPR Support:
- Startups receive an 80% rebate on patent filing fees and fast-track examination of patent applications to protect their intellectual property rights.
- Ease of doing Business:
To improve the ease of doing business, the Indian government has introduced several measures:
- Single Window Clearance:
- Startups can register their business and get approvals through a single online portal, reducing paperwork and processing time.
- Insolvency and Bankruptcy Code:
- This code facilitates faster resolution of insolvency proceedings, helping startups recover from business failures quickly.
- Credit support and financing:
Access to credit is crucial for the growth of startups. The Indian government offers various schemes to provide financial support:
- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE):
- This scheme provides collateral-free credit to startups, ensuring easy access to loans.
- MUDRA Loans:
- Micro Units Development and Refinance Agency (MUDRA) offers loans up to INR 10 lakhs to startups and small businesses.
- Stand-Up India Scheme:
- This scheme provides loans between INR 10 lakhs and INR 1 crore to at least one woman and one SC/ST borrower per bank branch for setting up greenfield enterprises.
- Support for Research and Innovation:
Innovation is at the heart of every startup. The Indian government provides several benefits to encourage research and development:
- Atal Innovation Mission (AIM):
- AIM promotes a culture of innovation and entrepreneurship through various programs such as Atal Incubation Centers and Atal Tinkering Labs.
- Promoting IP Rights:
- Startups can avail fast-track examination of patent applications and an 80% rebate on patent fees.
- National Initiative for Developing and Harnessing Innovations (NIDHI):
- NIDHI provides seed funding, mentoring, and incubation support to startups.
- Incubation and Mentorship programs:
Incubation centers and mentorship programs play a pivotal role in the success of startups. The Indian government supports these through various initiatives:
- Startup Incubation Centers:
- These centers offer co-working spaces, mentorship, and networking opportunities to startups.
- Samridh Scheme:
- The Startup Accelerators of MeitY for Product Innovation, Development, and Growth (SAMRIDH) scheme aims to boost the startup ecosystem by providing financial support and mentorship.
- Market access and Government tenders:
The Indian government helps startups access larger markets and participate in government tenders:
- Government e-Marketplace (GeM):
- Startups can register on GeM to sell their products and services directly to government departments and public sector units.
- Relaxation in Public Procurement Norms: Startups are given relaxation in prior experience and turnover criteria while participating in government tenders.
- Digital India:
- Under the Digital India program, startups can leverage government digital platforms to promote their products and services.
- Tax Benefits and Incentives:
Several tax benefits and incentives are provided to startups:
- Income Tax Exemption:
- Startups can avail a 100% tax exemption on profits for three consecutive years within the first ten years of incorporation.
- Capital Gains Tax Exemption:
- Investments in eligible startups are exempt from capital gains tax.
- Angel Tax Exemption:
- Recognized startups are exempt from angel tax on investments received from domestic investors.
- Sector-Specific Benefits:
The Indian government also provides sector-specific benefits to promote startups in particular industries:
- Biotechnology Industry Research Assistance Council (BIRAC):
- BIRAC provides funding and support to biotech startups.
- Agriculture and Rural Development:
- NABARD offers financial assistance and support to agritech startups and rural enterprises.
Check here, how to register a dream startup in India?
What is the eligibility for registration under Startup India?
To be eligible for registration under the Startup India Scheme, a business must meet the following criteria:
- Incorporation Date:
- The entity should be incorporated or registered in India for less than 10 years.
- Type of Entity:
- The entity must be a private limited company, a registered partnership firm, or a limited liability partnership.
- Annual Turnover:
- The entity should have an annual turnover of less than INR 100 crore in any preceding financial year.
- Innovation:
- The entity should be working towards innovation, development, or improvement of products, processes, or services, or it should have a scalable business model with a high potential for employment generation or wealth creation.
- Original Entity:
- The entity should not be formed by reconstructing or splitting up an existing business.
Learn more on the eligibility criteria of Startup Registration.
Companies registered under the Startup India Scheme
Thousands of companies across various sectors have registered under the Startup India Scheme. Some notable examples include:
- Ola (Ride-hailing service)
- Paytm (Digital payments platform)
- Flipkart (E-commerce)
- Zomato (Food delivery service)
- Swiggy (Food delivery service)
- Lenskart (Eye wear brand)
- Byju’s (Ed-tech platform)
- Cred (Digital payments platform)
- Udaan (E-commerce)
- Zerodha (Online Brokerage firm)
These companies have benefitted from the various incentives and support mechanisms provided by the Startup India Scheme to scale their operations and achieve significant growth.
JOIN 24EFILING TELEGRAM CHANNELConclusion
In conclusion, the benefits to startups by Indian government are extensive and designed to foster a thriving entrepreneurial ecosystem. From financial support and tax exemptions to incubation and market access, these benefits provide a solid foundation for startups to grow and succeed. By these benefits, startups can focus on innovation, expand their operations, and contribute to the nation’s economic development.
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FAQs
1. What are the benefits to startups by Indian government under the Startup India initiative?
Under the Startup India initiative, startups receive several benefits, including:
– Tax Breaks: No taxes for three years out of the first ten years.
– Funding Help: Access to an INR 10,000 crore fund for investment.
– Simplified Compliance: Easier self-certification for labor and environmental laws.
– IP Support: Fast and discounted patent and trademark applications.
– Incubation and Mentorship: Support from government-approved incubators and mentors.
2. How do tax exemptions benefit startups under the Indian government’s initiative?
Tax exemptions allow eligible startups to skip paying taxes for three consecutive years within their first ten years. This helps them save money and reinvest profits back into their business, reducing financial stress in the early stages. To qualify, startups should be DPIIT recognized.
3. What funding support does the Indian government offer to startups?
The government supports startups with an INR 10,000 crore Fund of Funds, managed by SIDBI, which invests in startups through various venture capital funds. Additionally, state governments and public sector bodies offer additional funding schemes to help startups grow.
4. How does the Indian government help startups with intellectual property registration?
The government provides:
– Fast-Track Process: Quicker patent examination.
– Fee Discounts: Up to 80% off on patent fees and 50% off on trademark fees.
– Legal Support: Free legal help from government-appointed experts for IP filings.
5. What is meant by Startup India Seed Fund Scheme?
The Startup India Seed Fund Scheme (SISFS) offers financial help to startups at the early stage. This funding helps startups overcome early challenges and scale their business effectively. It provides:
– Up to INR 20 lakhs: For concept validation and prototype development.
– Up to INR 50 lakhs: For product trials, market entry, and commercialization.
