Consensus on definition of start­ups among G20 nations may emerge by July

Consensus on definition of start­ups among G20 nations may emerge by July

Subject: Economy

Section: National Income

Context: G20 nations are working towards agreeing on a common definition for start-ups by July this year to help create an ecosystem that will enable global policymaking, say officials.

A G20 Startup20 Engagement Group was formed recently to come up with policy recommendations on entrepreneurship and innovation priorities of G20 countries. The taskforce on foundation and alliances, one of the three taskforces, has been tasked to come up with consensus-based definitions and promote knowledge sharing.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), the nodal department for start-ups in India, an entity would be considered a start-up up to 10 years from its date of incorporation and if its turnover for any of the financial years since incorporation does not exceed ₹100 crore.

Why definition of Start up is important?

Definition of start-ups is important as governments extend various incentives, including tax sops to such entities by meeting the stated requirements and parameters. The G20 Starup20 Engagement Group also seeks to bridge the knowledge gap between the start-up ecosystems of G20 member countries and emerging economies through partnerships with enablers such as incubators and government agencies, per a government statement.

The finance taskforce aims to increase access to capital for start-ups by providing financing and investment platforms and also create pitching and networking opportunities. The inclusion and sustainability taskforce is working on the roadmap to increasing support for women-led start-ups and organisations. It also plans to promote start-ups working on making communities more inclusive and those working on sustainable development goals in areas of global interest.

Eligibility Criteria for Startup Recognition:

• The Start-up should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership.
• Turnover should be less than INR 100 Crores in any of the previous fiscal years.
• An entity shall be considered a Start-up up to 10 years from the date of its incorporation.
• The Start-up should be working towards innovation/ improvement of existing products, services, and processes and should have the potential to generate employment/ create wealth.
• An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”.