India's startup eco-system
The Government's new policies and initiatives announced last week will make it easier for investors and startup founders to incubate their ventures in the country. Many startup founders had expressed their wishes in the run up to the event, and would find many potential game changers in the new policies announced in the action plan.
According to the Startup India Action Plan, for a startup to be recognized as one, it must be an entity 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.
Five years must not have elapsed from the date of incorporation/registration.
Annual turnover (as defined in the Companies Act, 2013) in any preceding financial year must not exceed Rs. 25 crore.
Startup must develop an innovative product which should add to the value of customers and should be commercial. It must get approval from DIPP that the company is innovative.
It must have a recommendation letter by incubator in post-graduate Indian college or be supported by an incubator which is funded (in relation to the project) from the Government of Indian as part of any specified scheme to promote innovation; or be supported by a recommendation (with regard to innovative nature of business), in a format specified by DIPP, from an incubator recognized by the government; or be funded by an Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network duly registered with SEBI that endorses innovative nature of the business; or has a patent granted by the Indian Patent and Trademark Office related to the nature of business being promoted.
The Startup India Action Plan seeks to build a new eco-system for startups also. To make things easier for startups, the plan includes special features such as a compliance regime based on self-certification, a single point of contact for the entire startup ecosystem and rolling out of a Mobile App & Portal – Starting a Startup in 1 day on a Mobile App.
Among the highlights of the Startup India Action Plan are a fast track mechanism of Startup patent applications, relaxed norms of public procurement for startups, faster exit for startups,Rs 10,000 crore Fund of Funds for funding support, Credit Guarantee Fund for startups, tax exemption on Capital Gains, tax exemption to startups for 3 years (for startups registering after April 1, 2016) and tax exemption on investment above fair market value. (SH)
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