Decades after being ignored and written-off, India is finally on every global investor’s radar as the fastest-growing large economy that will drive the world’s growth going forward. India will become the fifth-largest economy in terms of nominal GDP at +$2.8 trillion and will overtake France and the UK in 2019.
Startups are growing very widespread in India. The government under the administration and leadership of PM Narendra Modi has started and promoted Startup India. India is now hosting to the third-largest start-up ecosystem on the planet. There have been nearly 49,000 start-ups that originated in our country that has accumulated nearly a combined total of more than $51 billion from 2008 to 2018.
Around $38.5 billion of this capital went into start-ups between 2014 and 2018. From e-commerce and fintech to logistics and consumer services, these start-ups have already created a value of over $130 billion. In recent times India is nearly now home to 26 -Unicorns. This trend shows no signs of slowing down. To boost growth and improve the Indian economy, many advantages are being given to entrepreneurs setting startups. An Entrepreneur must always be updated and well known about the market, referring to any Idea Validation Platform will always be a help.
Startup business registration has forever been a major difficulty for entrepreneurs in India. Earlier Indian Government had a lengthy process for which included long procedures with a lot of legal involvement, which was being a difficulty for entrepreneurs. Then the newly introduced INC-29, by the Ministry of Corporate Affairs in 2015, will go a long way to minimize the long term legal process. Form INC-29 Company Registration has combined the process of getting Director Identification Number (DIN), Name Approval and Incorporation application into one process – thereby reducing the time taken to start a company in India. You can face difficulties the process but market research will always be a great help, or referring to a Market Research tool will act as a guideline.
Technology is improving every second and is helping us daily to achieve our task. This technology has also made the process easier for entrepreneurs, by getting things done online. Now it is possible to register your startups within few steps all online without any difficulties. The government of India has started a mobile app and a website for easy registrations. Anyone excited in setting up a startup can fill up a simple form on the website and upload the mentioned documents. The complete process is entirely online.
Reduction in cost
Previously every legal procedure called a particular amount depending on your work. People back then had no idea about the lawful working process, but today we can see a totally different scenario, the civilization around has evolved so much that people look into each and everything maturely. This is the reason why the government has started to make the working affordable and have transparency for the entrepreneurs.
The government includes patents in its Startup India Action Plan to spread awareness and adoption of Intellectual Property Rights by startups business. And to support them in protecting and commercializing the IPRs by providing access to high-quality Intellectual Property services. As startups businesses that have limited resources and manpower, cannot survive in today’s competitive world if they do not secure their IPRs.
Under this scheme, the Central Government bears the fees of the facilitators for as much of patents, designs, trademarks that a startup business might file. Patents give an exclusive right to the owners to avoid duplicity of their products and reduce the chances of having their designs copied. Startups only have to pay the cost of the statutory fees payable. The government further contribute lists of facilitators of trademarks and patents. They will provide high-quality Intellectual Property Rights Services with a quick examination of patients at economical fees. The government will bear complete facilitator fees and the startup will bear just the legal fees. They will enjoy an 80% rebate on the cost of filing patents.
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Secure access to Funds
According to a current study, over 94% of startups fail during the first year of working. Lack of funding is said to be one of the common reasons. Money is the prime element of any business. The long yet exciting journey of business from the idea to revenue-generating needs a fuel named capital that is money. That’s why, at almost every stage of the business, entrepreneurs find themselves in questions – How do I supply Finance my startup?
The Government of India has launched a 10000 crores Startup Fund in the Union budget to improve startups in India. In order to uplift innovative product companies, the Government has launched the ‘Bank of Ideas and Innovations’ program. Government’s Pradhan Mantri Micro Units Development and Refinance Agency Limited (MUDRA) starts with an initial collection of Rs. 20,000 crore to gain benefits. You are supposed to approach and submit your business plan and once approved, the loan gets approved. You get a MUDRA Card, which is similar to a credit card, which you can use to purchase raw materials, other expenses, etc. Shishu, Kishor, and Tarun are three types of loans available under the mentioned scheme
Tax holiday for 3 Years
The Inter-Ministerial Board framed by the Department of Industrial Policy and Promotion authorizes Startups for approving tax-related benefits. The board shall authorize startup businesses for the Income Tax Exemption profits under section 80-IAC of Income Tax Act: A department of policy and promotion recognized Startup shall be qualified to apply to the Inter-Ministerial Board for a full deduction on the profits and gains from business.
Start-up is engaged in innovation, development or improvement of products, processes or services business model with a huge potential of employment generation or wealth creation.
The tax exemption under Section 80-IAC is given for any 3 consecutive years out of seven years from the year of incorporation of a startup.
Apply for Tenders
Government of India has altered Rule 170 of GFR 2017 allowing all Startups as recognized by DIPP exemption by submission of Earnest Money Deposit or Bid Security in public procurement tenders. DIPP- recognized startups have now been free from submitting Earnest Money Deposit (EMD) or bid security while filling government tenders. Till now, in the case of public sector projects, to place bids for government tenders, the interested vendors are needed to support their bids with earnest money. This is in the form of documents such as – demand draft, fixed deposit receipt from any of the public sector bank or a private sector bank legal to conduct government business. The bids for government tenders is not in the form of cheque or cash.
This helps the government in avoiding duplicate bids that refuse to take the contract at the time of opening the tender. Usually, EMD is returned when all bids are opened & tender is awarded, the tender gets cancelled. Also, EDM is usually less than 5% of the tender value.
Prime Minister Mr Narendra Modi presented the ‘Startup India, Stand up India’ in 2016. The initiative had an expand of measures aimed at simplifying compliance, exempting profits from startups businesses for the first 3 years, and rolling out an action plan for uplifting innovation and entrepreneurship in the country. The Action Plan also fixed the setting up of 7 new Research Parks Modeled on the Research Park set up at IIT Madras. The Government said that the new Research Parks in institutes will be set up with an investment of about 100 crores each. They would drive innovation through joint R&D efforts between academia and the industry. The proposed parks will be up at IIT -Guwahati, Kanpur, Hyderabad, Kharagpur, IISC Bangalore, Gandhinagar, Delhi.
No time-consuming compliance
Various compliances have been simplified for startups business to help them save time and money. The process of conducting inspections shall be made more meaningful and easy. Startups shall be allowed to self-certify through the Startup mobile app with 9 Labour and Environmental Laws. In the case of the labor laws, no inspections will be conducted for a duration of three years. The Startups can self-certify compliance in respect of following Labour Laws: Other Constructions Worker Act 1996, The Inter-State Migrant Workmen Act 1979, the Payment of Gratuity Act 1972, the Contract Labour Act 1970, The Employee Provident Funds and Miscellaneous Provisions Act 1952, The Employee State Insurance Act 1948.
Tax saving for investors
The Indian government noticed a long-standing demand of the startup community in the nation, announcing that the angel investors would get a total exemption on the investments in the startups’ businesses. Angel investors were taxed abundantly, even when the investors from foreign countries and venture capital firms were exempt from it. Angel Investor is one who invests his capital in a startup while it is still finding its feet and is still struggling to establish itself in the marketplace.
Until now, an angel tax of more than 30% was charged on the funds invested by the independent people in an unlisted firm at the share price above the fair market value. More or less, around 300-400 of the startups fund themselves with the angel funding in one year. The Income Tax Department (ITD)has exempted the Angel investors, subject to specific conditions that are mentioned by the Indian DIPP, which has offered considerable relief to early-stage investors. People investing their capital profits in the venture funds by the government will get an exemption from capital gains. This will help startup businesses attract more investors.
Choose your investor
After the plan, a lot of investors enter the market place to experience capital gains. Every investor in the market is in search of startups, due to this the earlier scenario is seen to be changed other way around. Here the investor gets to witness the priority and have options in investors to choose from. Every investor has a particular Venture capital and an entrepreneur chooses their investors on bases on that.
Meet other entrepreneurs
The government has proposed to arrange two startup fests annually both nationally and internationally for the various stakeholders of a startup to meet and come together. This will provide heavily networking opportunities for every startup. Startups are highly encouraged by the government. The benefits enjoyed by them are in huge amount, which leads to attracting more people for setting up startups.
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