Rajesh K. Sharma
World has witnessed Startups from the very primitive age. When anything is done not in consonance with best practice but with a different practice but with a different practice to bring about improvement in existing social, technological, economic and civil life, it is a Startup. In fact, all great personalities of world were in themselves a Startup. However, in this article, we shall dwell upon Startup India Scheme launched by Government of India for the economic development of country and to tackle the problem of unemployment in otherwise youth rich India.
Startup India Yojana was first announced by Prime Minister Narendra Modi during his address to the nation on 15th August, 2015 from the ramparts of Red Fort. The Scheme was formally launched by him at Vigyan Bhawan in New Delhi on 16th January, 2016. Since then, the scheme has been a hot topic for discussion and debates.
What is Startup:
Central Government defines the Startup as an entity incorporated or registered in India for not more than 5 years with annual turnover not exceeding INR 25 crores in any preceding financial year, working towards innovation, development, deployment or commercialisation of new product, processes or services driven by technology or intellectual property provided such entity is not formed by splitting up or reconstruction of a business already in existence. Entity to be eligible as Startup can be a Private Limited Company or Partnership firm and thus Public Limited Companies are not eligible for this Scheme. Restriction in definition of Startups has to be understood in the sense that Government of India wants only serious players to engage in Startups and not the operators who want to fly by night.
Concessions & Incentives to Startups:
Startups have been allowed to self-certify the compliance of labour and environmental laws with a provision of no inspection under labour laws for 3 years unless some authentic complaint is received regarding violation. On the tax front, Startups are eligible for income tax exemption for 3 years in a block of 5 years if they are incorporated between 1st April, 2016 and 31st March, 2019. A fund of INR 10,000 crores has been established which shall be managed by SIDBI. The objective of this fund is to offer soft loans to MSMEs. Startup Hub has been made operational from 1st April, 2016 to attend to queries and provide handholding support to Startups. The Hub is in the process of launching online learning and development module to educate Startups and potential entrepreneurs. Department of Industrial Policy and Promotion(DIPP) under the Ministry of Commerce and Industry is overseeing implementation of Startup Scheme.
Incubators have been appointed for providing Letter of Recommendation to Startups. A panel of Facilitators has also been constituted for assistance and support to applicants in case of Intellectual Property Rights and even facilitation cost is being borne by DIPP. DIPP is further roping in top Companies requesting them to support Startups by setting up incubators or increasing the scale of current incubators in collaboration with educational institutes. State Governments and administration of Union Territories have been requested to set up Startup Hub as well as incubators at local level to help Startups at various levels of development.
Status of Startups in India:
India is a home for almost 3100 Startups starting per year standing just behind United States, United Kingdom and Israel according to the NASSCOM Report, 2015. If the growth continues on the same pace, Indian Startups will generate 2.5 lakhs jobs in the next 5 years. India will be a home to 112 million working population falling in the age bracket of 20-24 years by the year 2020 as compared to that of 94 million workers of China. This demographic dividend or Young India is sure to give a big fillip to Startup Culture in the country. Tech Startups are leading the growth of startup era and it is going to boost revenue generated by IT and ITES Sector by about 12-14 per cent for the current fiscal itself. E-Commerce market of India is also expected to grow by 50 percent within next 5 years. According to World Startup Genome Project, 2015, Bengaluru is the fifth best city in the world to Startup.
Foreign investors have started looking towards India as a favourable investment destination. Indian Startups are proving to be major tool diverting a huge chunk of foreign wealth into the Indian economy. Starup coupled with Make in India is sure to bring huge boost in entrepreneurial activities in the country.
Conclusion:
Central Government has introduced various measures and made provision for incentives to promote Startups in India. It is for Startups to take benefit of this opportunity and build sustainable Startups to help in the growth of nation and shoulder responsibility with the Government. The scheme is aimed at fulfilling job creation and elimination of unemployment from India if it is properly implemented. Let Startup India Scheme fulfils its punch line of converting youth of India from Job Seekers to Job Providers. It is our duty to spread the Startup Scheme to our neighbours, friends, relatives and other familiar persons.
(The author is Chairman, Jammu-Srinagar Chapter of Cost Accountants)
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