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PM Modi launches Start-up India Action Plan to encourage entrepreneurship

pm mod launches startup india action plan to encourage entrepreneurship

PM Modi launches Start-up India Action Plan to encourage entrepreneurship

The Prime Minister, Shri Narendra Modi, launched the much anticipated Start-up India initiative in New Delhi on 16th January, 2016. He provided an outline of the Start-up Action Plan which includes a dedicated Start-up fund of Rs. 10,000 crore (approxamtely £1 billion GBP or $1.4 billion USD) for the funding of start-ups. These new ventures will be exempted from income tax on profits for the first three years. He also mentioned that the government is working on a simple exit policy for start-ups.

The PM announced an exemption of eighty percent on patent fees for start-up businesses. He also introduced a plan for a self-certification based compliance system for start-ups.  

Various Announcements and benefits:-

  1. Compliance regime based on self-certification. For Labour laws – no inspection for 3 years
  2. Startup India hub – a single-point contact and guide
  3. Mobile App to be launched on April 1: registration of Startup Company in one day. Also portal for clearances, approvals and registrations.
  4. Fast-track mechanism for startup patent applications.
  5. Panel of legal facilitators for startups to file IP (patents, designs, trademarks) – costs to be borne by government
  6. 80% rebate on filing of patent applications by startups, as compared to other companies,
  7. Relaxed norms of public procurement for startups. No requirement of turnover or experience, but no relaxation of quality.
  8. Faster exits for startups (Insolvency and Bankruptcy Bill), e.g.: wind up within 90 days.
  9. Fund of funds i.e. (government will invest indirectly in the startup by participating in the capital of SEBI registered Venture Funds) initial corpus – INR 2500 crore, total corpus of 10,000 crore (over a period of 4 years).
  10. Credit guarantee fund for startups
  11. Tax exemption on capital gains
  12. Tax exemption to startups for 3 years to promote growth
  13. Atal Innovation mission : sector –specific incubators, 500 tinkering labs, pre-incubation training, seed fund for high growth; PPP model being considered for 35 new incubators; 31 innovation centres at national institutes, 7 new research parks like IIT-M, 5 new bio-cluters
  14. Annual incubator Grand challenge to create world class incubators in India
  15. Innovation core programs for school students in 5 Lakh schools
  16. National and International startup Festivals to provide visibility

Conditions to utilise benefits:-

1. Entity must be registered/incorporated as a:

  • Private Limited company under the Companies Act,2013  or
  • Registered Partnership Firm under the Indian Partnership Act,1932 or
  • Limited Liability Partnership under the Limited Liability Partnership Act,2008

2. Five years must not have elapsed from the date of incorporation/ registration.

3. Annual Turnover (as defined in Companies Act, 2013) in any preceding financial year must not      exceed Rs 25 crores (260,000 GBP or 367,000 USD).

4. Startup must be working towards innovation, development, deployment or commercialisation      of new products, processes or services driven by technology or intellectual property.

5. The startup must aim to develop and commercialise:

  • a new product, service or process
  • a significantly improved existing product or process or service which will create or add value for customers or workflow

 6. The startup must not merely be engaged in:

  • Developing products or services or processes which do not have any potential for commercialisation
  • Undifferentiated products or services or processes
  • Products/ Services/ Processes with either none or limited incremental value for customers or workflow.

7. The startup must not be formed by splitting up, or reconstruction of a business already in

8. The startup has obtained a certificate from the inter-ministerial board, setup by DIPP to
     validate the innovative nature of the business and:

  • be supported by a recommendation (with regard to the innovative nature of business), in a format specified by DIPP, from an incubator established in a post-graduate college in India;
  • be supported by an incubator which is funded (in relation to the project) from GOI as part of any specified scheme to promote innovation
  • be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an incubator recognized by GOI
  • be funded by an Incubation  Fund/ Angel Fund/ Private Equity Fund/ Accelerator/ Angel Network duly registered with SEBI that endorsed the innovative nature of the business
  • be funded by GOI as a part of any specified scheme to promote innovation;
  • have a patent granted by the Indian Patent and Trademark office in the areas affiliated with the nature of business being promoted.

DIPP may also publish a ‘negative’ list of funds which are not eligible for the initiative.

*Announcements and benefits compiled from Start-up India Action Plan

If you are interested in the Start-up India initiative, or are considering business setup in India feel free to call us on 0845 838 2672 or email us on to discuss in further.

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