Startup India Scheme, launched by Prime Minister Narendra Modi in 2016, aims to promote startups and drive India’s social and economic growth. By providing Startup India Registration, the scheme provides many benefits with a clear vision of its social impact. Startups with a clear vision of their impact have higher chances of success. To achieve their goals these ventures receive benefits such as funding, tax exemptions, and mentorship, leading to their success while tackling social challenges. The scheme has played a crucial role in fostering social impact startups and contributing to India’s sustainable development goals. As a result of Startup India Registration, startups are effectively achieving their goals by creating social impact. The current blog will discuss the benefits of startups in India.
What is the Startup India Scheme?
The Startup India scheme was launched by the Indian government to help and provide benefits to startups in India. It basically promotes and helps startups to grow. The aim of the Startup India scheme was to promote startups so that they can help in the development of the country. Through the Startup India scheme, the government provides help to startups. There are many benefits of startups in India like easy loan facilities, tax exhibitions, exemptions in legal compliances, etc. This will motivate the entrepreneurs to start more and more startups in the country and help the government to solve many issues like unemployment, poverty, illiteracy, etc. Startups not only help a country in its social growth but also help in economic growth. Hence for the economic and social growth of the country, the government launched a scheme called the Startup India Scheme.
What is Startup India Registration?
As per G.S.R 127(E), clause 2, the process known as “Startup India Registration” involves the recognition of startups by the Department for Promotion of Industry and Internal Trade (DPIIT). This recognition is essential for startups to gain access to various benefits of startups in India. The benefits of startups in India include but are not limited to tax advantages, simplified compliance procedures, expedited Intellectual Property Rights (IPR) processing, and other favorable measures.
Eligibility Criteria to Get Startup India Registration
To be eligible to get the Startup India Registration, startups must fulfill the conditions given below:
- Startups must be incorporated in India, not be older than ten years, and have an annual turnover under INR 100 crore.
- It should focus on innovation, technology, and intellectual property.
- It must be a private limited company, partnership firm, LLP, or sole proprietorship.
- It needs a recommendation letter from a government-funded incubator, funding from SEBI-registered investors, or an IP registration.
What are the Benefits of Startups in India?
Startup India registration is a catalyst for startups because of the number of benefits of startups in India. Some of the most important and crucial benefits of startups in India are given below:
Easy Loan
The most difficult part for entrepreneurs is to get funds for starting a business. This issue is recognized by the government and they started providing financial support to young entrepreneurs-led startups through the Startup India Scheme. Specifically this scheme is there to facilitate bank loans between Rs.10 lakh and Rs.1 Crore to at least one woman borrower per bank branch for setting up a Greenfield enterprise. Greenfield enterprise means the first-time venture of the beneficiary.
Exemption from Certain Compliances
At the initial stage of any business, compliance with various laws is mandatory, and this process can be time-consuming. Entrepreneurs may find it daunting as it involves adhering to legal requirements, and failure to comply may lead to potential legal actions against the business. Startup India Registration makes it easy by allowing startups to self-certify compliances under six Labour laws and three Environment laws.
Under labor laws, no inspection will be conducted for the initial five years of the enterprise until credible and verifiable complaints of violation of labor laws. In the case of environmental law, enterprises having a “White Category” by the Central Pollution Control Board (CPCB) are allowed to self-certify compliances.
Exemption under the Income Tax Act, of 1961
For the ease of doing business and setting up, the government provides an exemption to the startups under the Income Tax Act, of 1961. As per section 80 IAC, startups need not pay income tax for three consecutive financial years out of their ten years from the incorporation. Also under section 56, shares received by startups shall be exempt up to an aggregate limit of INR 25 Crore.
Easy Winding-Up Process
In general, the winding-up process can be time-consuming and complex. However, for startups, it has been streamlined to make it easier and faster. According to the Insolvency and Bankruptcy Code, 2016, startups with straightforward debt structures can complete the winding-up procedure within just 90 days of applying for insolvency. To initiate the process, an insolvency professional will be appointed to take charge of the company.
Once the insolvency professional is appointed, they will be responsible for efficiently closing down the business, selling off assets, and repaying creditors following the distribution waterfall outlined in the IBC. This process aims to expedite the closure of startups and enable a smoother resolution for all parties involved.
List the Product on the Government e-marketplace
Government e-marketplace (GeM) is the largest online procurement platform where Government Departments can purchase products and services. What makes it particularly advantageous is that DPIIT Recognized Startups can register as sellers on GeM, granting them direct access to government buyers. This enables startups to showcase their offerings and receive trial orders from the Government, which can lead to significant business opportunities.
By leveraging GeM, startups can establish credibility, expand their customer base, and foster long-term partnerships with Government entities. This streamlined process fosters growth and provides a valuable pathway for startups to contribute their innovations to the public sector while accessing a vast market for their products and services.
Exemption from Prior Experience/Turnover
Manufacturing startups are granted an exemption from “prior experience/turnover” requirements by the Government, ensuring quality standards are upheld. To qualify, startups must showcase their capability to execute projects and possess a manufacturing facility in India. This move encourages their participation in projects that were previously out of reach, fostering innovation and propelling the growth of the manufacturing sector.
Government Support
Schemes like Startup India provide a number of benefits to startups, which motivates people to start their own business. Every government wants their country socially uplifted; hence it provides every possible support to the startups that are creating social impact. To get support from the government, recognition is essential for startups to gain access to various benefits under the Startup India Scheme.
The benefits include but are not limited to tax advantages, simplified compliance procedures, expedited Intellectual Property Rights (IPR) processing, and other favorable measures. As per G.S.R 127(E), clause 2, “Startup India Registration” involves the recognition of startups by the Department for Promotion of Industry and Internal Trade (DPIIT).
Promote Innovation
Startups develop innovative products and services that directly deal with social problems. They reach the underserved population and provide solutions to one or more problems. For illustration, Metafin, a fintech company founded in 2018 provides affordable solar installation in schools, hospitals, and rural areas to achieve the goal of sustainable development.
Fulfill Basic Needs
There are a number of basic problems India is currently facing. Some of them are poverty, sanitization, education, etc. Social impact startups recognize such problems and give affordable solutions to them. For example, the Green Pencil Foundation creates awareness about menstrual health and provides sanitary napkins at affordable rates.
Given below is the table with particulars and associated benefits of startups in India. Read the table below for a better understanding of the benefits of startups in India:
| Particulars | Benefits of the Startups in India |
| Legal Compliances | Startup India Scheme lessens the burden of legal compliances on startups |
| Startup India Registration | To benefit from the Startup India Scheme must take Startup India Registration |
| Tax Exemptions | Exemption under Section 80 IAC and Section 56 of the Income Tax Act |
| Financial Support | By providing easy loans at lower interest rates governments provide financial support to startups |
| Less Burdon | Due to various exemptions provided by the Startup India Scheme to the startups they have less burden and hence can fully focus on growth. |
| More Chances of Success | Due to various exemptions provided by the Startup India Scheme to the startups they have less burden, hence more chances of success in the market between the competitors |
| Helps Government | Startups directly or indirectly help the government which is why the government supports startups. For example, startups provide employment to many people and this ultimately helps the government to solve the issue of unemployment |
Sectors Which are Getting Benefits of Startups in India
In recent years social entrepreneurship is entering the business world and creating social impact. As per a report by the British Council India has approximately 11 million social impact startups. Out of these 11 million 23% of startups are working in the field of agriculture, green technology, education, and healthcare.
Agriculture
Agritech startups are developing products and services to fill gaps in the sector, bringing new technologies to farmers and consumers affordably. Their offerings include farm automation, post-harvest management, weather forecasting, direct farmer linkages, equipment renting, and online selling. NASSCOM Report which was published in 2019 says that every 9th Agritech startup in the world is from India.
Clean Technology
India’s renewable energy sector is experiencing significant growth, spurring demand for sustainable and eco-friendly technologies. Clean technology startups in the country are driving innovation in areas like Solar Energy, Hydropower, Wind Energy, Electric Vehicles, Residual Waste, Energy Storage, and Efficiency. Stakeholders, including sustainability-focused investors, corporates, incubators, and accelerators, are actively promoting environment-conscious business models.
Education
Amidst the COVID-19 pandemic, the Education Technology industry experienced a significant surge. Startups are now concentrating on webinars, skill testing, online test preparation, courses, and career guidance.
Healthcare
Emerging health technologies like wearable tech, telemedicine, genomics, VR, robotics, and AI are reshaping India’s healthcare system. Startups are swiftly embracing digital technologies in patient engagement, physician engagement, field force effectiveness, R&D efficiency, and supply chain management.
Conclusion
The benefits of Startups in India have been discussed in the current blog. The Startup India Scheme has been helpful in fostering the growth of startups in India. Through Startup India Registration, these startups gain access to funding, tax benefits, and mentorship, increasing their chances of success in addressing social challenges. With innovations in sectors like agriculture, clean technology, education, and healthcare, social impact startups are driving positive change and contributing to India’s sustainable development goals. Their dedication to creating a social impact, supported by government initiatives and corporate collaborations, has made them a vital force in India’s journey toward a more inclusive and sustainable future.
