Standing up for Start-ups
Every strong initiative needs an evangelist, and for entrepreneurship in India our Prime Minister donned that mantle very well on the evening of 16th January at Vigyan Bhawan in New Delhi. On this very day, Narendra Modi gave India’s budding entrepreneurs an impressive roadmap with the launch of a start-up action plan, a first such initiative by the government.
Our statistics says India had about 5000 start-ups in the last year but we need 1 million first-generation entrepreneurs in the next three years and 10 million in the next 7. This need was realized by our PM Modi which made him announce the “Start-up India” initiative from the rampart’s of India’s iconic Red Fort on the occasion of India’s 69th Independence Day. Five months later he unveiled the historic Start-up action plan.
Organised by Department of Industrial policy and Promotion (DIPP) along with other key Indian start up ecosystem players, the “Start-up India Stand up India” initiative aims to celebrate the country’s entrepreneurial spirit and create a strong ecosystem for fostering innovation and start ups in India.
What is a Start-up?
Before going any further, it is important to have a clear definition of a start up. A Start-up is an entity, incorporated or registered in India less than five years ago with an annual turnover of upto Rs 25 crore in any preceding financial year. It has to work towards innovation, development, deployment or commercialisation of new products, processes or services driven by technical or intellectual property.
“Start-up does not mean billion-dollar revenues and thousands of workers. Even if a start-up gives employment to five people, that will take India forward,” said Narendra Modi while launching the start up action plan. He also pointed out that a start up’s success is not just about entrepreneurship, but also risk, adventure and a sense of empathy towards a problem.
On Saturday, Modi, who shared the dais with prominent names from Indian start-ups as well as global giants such as Uber founder Travis Kalanick and Softbank chairman and CEO Masayoshi Son, put in place the first building blocks, by defining start-ups and detailing the action plan to help them grow.
Funds and tax incentives for start-ups
The government will set up a fund with an initial corpus of Rs. 2,500 crore and a total corpus of Rs. 10,000 crore over a period of four years, which will be managed by a board with private professionals drawn from industry bodies, academia, and successful start-ups. Moreover, a credit guarantee mechanism will help start-ups raise debt funding through the formal banking system through National Credit Guarantee Trust Company (NCGTC)/SIDBI, which has an annual corpus of Rs. 500 crore for the next four years.
“On its part, government will do all it can to make life easy for start-ups”, Modi said, as he promises tax exemption to start-ups, set up after April 1st, for three years. Also tax on long-term capital gains in unlisted entities would be cut from present rate up to 20 per cent.
Business made easy
As a part of the start-up action plan, government will launch a mobile app and a portal on April 1, which will enable start-ups to register their company in a day. Launched on a pilot basis for a year, the government has created a fast-track mechanism while filing for patent applications with 80 percent rebate. Also, the Central Government, State Government and PSUs will exempt start-ups in the manufacturing sector from the criteria of "prior experience/ turnover" as long as they have their own manufacturing facility in India, and have the requisite capabilities and are able to fulfil the project requirements. If the company doesn’t work well, now there’s an easy way to back out, start-ups may be wound up within a period of 90 days from making of an application on a fast track basis.
Further, government also announced 35 new incubators in institutions along with a funding support through a Fund of funds which would have a corpus of Rs 10,000 crore. It also plans on setting of 7 new research parks modelled on the research park at IIT Madras. Start-up India hub, Atal Innovation mission, institution of innovation awards are some of the ways through which government plans to promote entrepreneurship.
All in all, the day heralded what may just be the beginning of a new era for the Indian start up ecosystem. The plan was greeted by much enthusiasm from the gathered audience which included some of the top names from the start-up community. Well, Acche-din must have come significantly closer with PM Modi’s Start-up action plan!
For all of you waiting to start up, bring your running shoes, set your sights on the peak and settle for nothing else because it’s not just about starting up, it’s about staying in the course. So are you ready?