Thursday, February 4, 2016

Ten Benefits to Startup India Ventures

Government of India has already launched the Start-up India program which principally for  building a strong and effective eco-system for start-ups in India. This idea is to use the power if startup to drive sustainable growth and generate large scale job opportunities in India. The Government has announced action plans for startups  to addresses all aspects of the Start-up ecosystem. 
Here are ten most important benefits attached to startups :
  1. Very low regulatory intervention- For this , most of the regulation is thorough Self-Certification of compliance with certain labour laws and environment laws s. It is also proposed that , no inspections related to labour laws compliance shall be done for an initial period of 3 years.
  2. Innovation and the speed is the keyword for startup . So, it is proposed that govt, of India will created mobile app for startup from April 1 , 2016  that will facilitate  registration of startups,compliance and information about clearances and action plans .

  3.Fast and Cost Effective Patent registration : A Panel of facilitators will be empanelled to assist in filing of IP applications. The Government shall bear the entire fees of the facilitators and the Start-up shall bear the cost of only statutory fees. Further, Start-ups shall be provided 80% rebate in filing of patents vis-à-vis other companies.
  4. Faster windup Start-ups: 90 days from making of an application for winding up  is the target . In terms of the Insolvency and Bankruptcy Bill 2015, 
  5. Tax Exemption if capital gain is invested in start-ups: Exemption shall be given in respect of a capital gain which is invested in the Start-up ecosystem.
  6. Profit of Startup Not Taxable for 3 years : Profits of Start-up initiatives shall be exempted from income-tax for a period of 3 years provided the start-up  it has obtained certification from the Inter-Ministerial Board, setup for such purpose.
  7. Section 56(2)(viib) of Income Tax Act Not Applicable.: At present , if an unlisted company issues shares at a premium, the difference between Fair Market Value and the issue price is added income of the unlisted company. This is a big bottleneck for growth of the start-up companies . So, government has made section 56(2)(viib) inapplicable in case of startups.
  8. Start-up India Hub: The Government has announced launch of Start-up India Hub to create single point of contact for the entire Start-up ecosystem and enable knowledge exchange and access to funding. The "Start-up India Hub" will be a key stakeholder in this vibrant ecosystem and will:
  a) Work in a hub and spoke model and collaborate with Central & State Governments of Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions.
  b) Assist Start-ups through their lifecycle with specific focus on important aspects like obtaining financing, feasibility testing, business structuring advisory, and enhancement of marketing skills, technology commercialization and management evaluation.
  c) Organize mentorship programs in collaboration with Government organizations, incubation centers, educational institutions and private organizations who aspire to foster innovation.
 9.  Easy participation in tenders of Public Sectors : Most of the PSU while required principally to support small scale industries , but the tender norms require prior experience/turnover". Such a stipulation prohibits/impedes Start-ups from participating in such tenders. In order to promote Start-ups, Government shall exempt Start-ups (in the manufacturing sector) from the criteria of "prior experience/turnover" for filing of public tenders.
10.  Easy funding and loans :  Government of India will set up a startup fund with an initial corpus of Rs. 2,500 crore and a total corpus of Rs. 10,000 crore over a period 4 years (i.e. Rs. 2,500 crore per year). The Fund will be in the nature of fund of funds, which means that it will not invest directly into Start-ups, but shall participate in the capital of SEBI registered Venture Funds.Debt funding to Start-ups is also perceived as high risk area and to encourage Banks and other Lenders to provide Venture Debts to Start-ups, Further credit guarantee mechanism through National Credit Guarantee Trust Company (NCGTC)/ SIDBI is being envisaged with a budgetary Corpus of INR 500 crore per year for the next four years.

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