The Startup India scheme aims at generating employment. It was launched on 16th January 2016. The Government of India initiative supports entrepreneurs in building their businesses. Most people in India are job seekers, and there is a massive shortage of employment. The Startup India program helps a business owner become a job creator and offers large-scale employment to educated and skilled people. The scheme does the work of handholding for new startups and gives funding to them. It provides many types of support to entrepreneurs to run their businesses smoothly and help our country’s progress. Let’s discuss how the Startup India scheme promotes innovation and entrepreneurship in India.
Background Of The Startup India Scheme
The Government of India program has been successful in promoting entrepreneurship in India. It is essential to know the background and origin of Startup India before we talk about other things in detail.
Origin And Launch Of The Scheme
Prime Minister of India Narendra Modi first announced the decision to begin the Startup India scheme on 15th August 2015. He declared that his government would start the scheme in a speech he gave at the Red Fort located in India’s capital, New Delhi. The scheme began with an initial aim to build seventy-five startups in India. The government wanted to give people employment and boost the nation’s economy. That is why it started the scheme.
However, despite the scheme being announced in 2015, the government of India launched the scheme a year later. Arun Jaitley, former Finance Minister of India, launched Startup India on 16th January 2016. The scheme is a program of the Ministry of Commerce and Industry. It is handled by the Department for Promotion of Industry and Internal Trade of this ministry.
Objectives And Goals Of The Scheme
The Startup India scheme was launched to generate employment for the people of India. The startups get the advantage of bank finances under the scheme. Some objectives and goals of the scheme are listed below.
- Firstly, the scheme motivates new business people who launch startups to simplify their work. Also, startups get assistance incorporating and registering their business in Startup India hubs. They will also get help in writing their complaints in the hubs. Notably, businesses can be registered online anywhere, anytime. In addition, there is a provision for quick patent registration. Any startup can do it easily if it becomes bankrupt and wants to close down.
- Secondly, the Startup India scheme gives financial support to startups. A corpus of ten thousand crore rupees has been set up. For your information, it is a fund from which the startups will get money. Moreover, the duration of the corpus is four years.in case investments are made in other funds established by the government, the individuals get a discount on income tax. In addition, people who launch a startup don’t have to pay income tax for the initial three years, starting from the day of their incorporation.
- Next, startups can get government tenders for expensive and large-scale projects under the Startup India program. Under normal circumstances, it can be challenging to obtain a government tender. However, Startup India helps a business get a tender quickly. Another critical point is that businesses lacking experience are also eligible for tenders.
- The government of India established the scheme to help startups do networking. Remember that a lack of networking opportunities is a significant problem for a business owner. However, the Startup India scheme allows businesses to network and collaborate with other businesses and stakeholders.
- Lastly, one of the objectives of the Startup India scheme is to help business owners get intellectual property right on their ideas and creations. Not to mention that the government organizes intellectual property rights workshops so business owners become aware of it.
Definition And Eligibility Criteria For The Startup India Scheme
If you have a startup or business and want to get benefits under the Startup India scheme, your startup must be recognized by DPIIT. The definition of a startup for the program is as under:
- To begin with, your business is a startup if it has existed and operated for ten years or less than that from the date you incorporated your business.
- In addition, your company should be a Private Limited Company to be able to register under the Startup India program. The critical point is that you are also eligible if you have a Registered Partnership Firm. Furthermore, a business that is a Limited Liability Partnership can register itself.
- Furthermore, your company’s annual turnover should be at most a hundred crore rupees in any financial year starting from the date you incorporated your startup.
- What is more in the eligibility criteria is that your startup should be original. If the business is formed by dividing or rearranging an old and existing company, you can’t register your business.
- Lastly, businesses that are innovative and scalable can register as a startup. If your company builds a product and works on improving it, you are a startup. In addition, your startup should be scalable with a scope to employ people and generate wealth in the future.
Registration Process Of The Scheme
New businesses need to register themselves for the Startup India scheme. The steps for the registration are as follows.
- First, you must incorporate your business as a Private Limited Company or Limited Liability partnership. In addition, you can incorporate the business as a Partnership firm. The registration process is simple and easy. With this in mind, you must complete the application form and the required documents. After that, you will get a certificate of incorporation, and your company will be registered as a startup.
- Secondly, you must register the startup with the Government of India’s Startup India scheme. You can do this online on the web portal of Startup India.
- Next, you must apply for DPIIT Recognition. Once you do this, your startup will be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) Recognition.
- After that, business owners must fill in and submit the registration application form.
- In addition, you have to submit documents like the incorporation certificate, PAN number, authorization letter from your company representative, patent and trademark, and proof of funding. Also, you must submit the pitch and deck proof, website details, awards, and certificate of recognition.
- Subsequently, you will get a recognition number. Business owners will get a certificate of recognition after the scrutiny of their documents is over. You may get the approval and recognition within two days.
Benefits For Registered Startups
Business owners can sell their products in India under the Startup India scheme, giving them a huge market base. Not to mention you get labour at a cheaper rate in India in comparison to other countries. Also, startups get real estate and office space at a relatively low cost. Moreover, startups get the benefit of government funding. You get an easy and relaxed regulatory policy under the scheme. Moreover, there is no rule for minimum capital investment under the scheme. Even more, startups get fast approvals from the government.
1. Tax And Regulatory Benefits
The government gives many types of tax incentives under the Startup India scheme. Also, there is a provision for businesses to be exempt from capital gains tax if they decide to sell off the profit they get after selling their shares.
2. Funding And Financial Support
Startup funding can be raised from sources like equity funding, debt financing, and grants:
- Equity funding is earning money by selling equity.
- Debt financing is when you take money on a loan and pay it back with interest.
- A grant is when you get money as a prize or an incentive for achieving your business goal or performance.
Startups can raise funding through some simple steps:
- They need to analyze what funds they need and check investment readiness. After that, you need to prepare a pitch deck.
- You need to target investors. Once you do this, you will have to see the diligence for investing money in your business by investors.
- You have to make the term sheet for the final deal.
3. Incubation And Mentorship Programs
As far as other types of support are concerned, the scheme offers incubation and mentorship support. Even more, many types of organizations support startups and offer help to build a business at an initial or starting stage. Such institutions are called business incubators. The critical point is that incubators have good business experience and provide technical support to startups. Moreover, they help startups with advice and funding resources. Lastly, a business owner gets help for networking and sharing office space from incubators.
New businesses get mentoring support under the Mentorship, Advisory, Assistance, Resilience, and Growth (MAARG) program of the Government of India. Moreover, it is a solution for getting mentors and connecting with them. Startups can visit the program’s web portal and gain access to mentors.
Challenges And Limitations Of The Startup India Scheme
Like any other scheme, the Startup India scheme has challenges and limitations. Subsequently, business owners must become aware of the problems they may face while starting and setting up a new business. They must take steps to overcome these problems.
1. Regulatory Hurdles And Bureaucratic Challenges
New businesses may face regulatory problems like high taxes and delay in approving licenses. Consequently, you may have to wait long to get permits. Also, you may have a problem with strict labour laws. Moreover, there can be competition from other businesses and bureaucratic challenges also.
2. Problems In Getting Funding And Access To Capital
Similarly, most new startups face the problem of funding. The fact is that Venture Capitalists like to invest their money in established businesses and hesitate to fund a newly formed startup. Subsequently, the solution is getting funding from angel investors, crowdfunding, accelerators, incubators, and bank loans. Try to apply for government schemes that offer funding.
3. Problems In Hiring Employees
The critical point is that a business owner may need more skilled labour or professionals to run their company. Concerning the solution, they should get skilled labour from educational institutions and online and social media platforms. Similarly, you can get educated professionals through work fairs. Startups must invest time and effort in training their employees and enhancing their skills. Consequently, offering growth opportunities to staff is equally important. Remember to reward your employees if they perform well.
4. Regional Disparities
India has a large number of states with a different set of policies and regulations for startups. As a result, business owners may have to struggle with disparities among the states of India. Similarly, some regions may offer more encouragement and favourable business environments and policies than others. Thus, startups may have a problem of regional disparity in India.
Conclusion
Finally, we can conclude that the Startup India scheme is the best for startups. It offers many incentives and benefits for starting and developing a business. So far, we have looked at the goals and objectives of this scheme in this blog. We also discussed the eligibility criteria and process of registering your business with the scheme. In addition, the post explained the tax benefits that a startup gets. Lastly, we talked about the challenges and problems associated with the scheme. We can assert that the Government of India is vital in handholding and supporting startups. We encourage entrepreneurs to register their businesses under the scheme and take advantage of it.
