National Start-up Day

National Start-up Day

Subject – Governance

Context – Interacting with over 150 startups on Saturday as part of Azadika Amrit Mahotsav, Prime Minister Narendra Modi has declared that January 16 will be celebrated as ‘National Start-up Day’.

Concept –

• The prime Minister said, “start-ups are going to be the backbone of new India. When India completes 100 years of independence, start-ups will have an important role. Country’s innovators are making the country proud globally.”
• He further noted that, “this decade is being called as ‘techade’ of India…to strengthen the innovation, entrepreneurship and start-up ecosystem have important aspects like liberating entrepreneurship, innovation from govt processes, bureaucratic silos.”
• The event is a part of AzadikaAmritMahotsav, “Celebrating Innovation Ecosystem”.
• According to Prime Minister’s Office (PMO), the event is being hosted by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, from January 10 to 16. The event marks the 6th anniversary of the launch of the Startup India initiative.

Definition of Startup for Government schemes

• To bring uniformity in the enterprises, the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India has come out with a definition for an entity to be considered as a Startup.
• An entity shall be considered as a Startup:
  • Upto a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008) in India.
  • Turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees.
  • Entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation. Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.
• Provided that such entity is not formed by splitting up, or reconstruction, of a business already in existence.
• An entity shall cease to be a Startup on completion of ten years from the date of its incorporation/ registration or if its turnover for any previous year exceeds one hundred crore rupees.
• The process of recognition as a ‘Startup’ shall be through an online application set up by the Department for Promotion of Industry and Internal Trade.
• Post getting recognition a Startup may apply for Tax exemption under section 80 IAC of the Income Tax Act.
• Post getting clearance for Tax exemption, the Startup can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation.

Startup India Scheme

• Startup India scheme is an important government scheme that was launched on 16th January 2016 with an aim to promote and support the start-ups in India by providing bank finances.
• Organized by the Department for promotion of industry and internal trade, the major objective of Startup India is to discard some of the restrictive States Government policies which include:
  • License Raj
  • Land Permissions
  • Foreign Investment Proposals
  • Environmental Clearances
• Various benefits under it:
  • 10,000 crore startup funding pool.
  • Reduction in patent registration fees.
  • Improved Bankruptcy Code, to ensure a 90-day exit window.
  • Freedom from inspections for first 3 years of operation.
  • Freedom from Capital Gain Tax for first 3 years of operation.
  • Freedom from tax for first 3 years of operation.
  • Self-certification compliance.
  • Created an Innovation hub, under the Atal Innovation Mission.
  • To target 5 lakh schools, and involve 10 lakh children in innovation-related programmes.
  • New schemes to provide IPR protection to startup firms.
  • Built Startup Oasis as Rajasthan Incubation Center.