START-UP INDIA STATES CONFERENCE
Highlights of Speech by
Commerce and Industry Minister Nirmala Sitharaman
23rd
July 2016
India
is buzzing with entrepreneurial activity like never before and is at the
forefront of an entrepreneurial revolution. India has been pegged at 3rd place
behind USA and UK in terms of the number of Startups. Close to 4,400 technology
startups exist in India and the number is expected to reach 12,000+ by 2020,
driven by a young and diverse entrepreneurial ecosystem.
We
have recognised the need to handhold and guide
startups particularly in their early growth stage. To meet this, we have operationalised the Startup India Hub on 1st April 2016 to
resolve queries and to provide handholding support to Startups. The hub has
been able to resolve more than 13,500 queries received from Startups through
telephone, email and Twitter.
We
have also recognized the need of incentivizing innovative startups because we
are aware that they are the engines of growth. The Finance Act, 2016 has made
provision for Startups to get income tax exemption for 3 years in a block of 5
years, if they are incorporated between 1st April 2016 and 31st March 2019. Tax
exemption on investments above Fair Market Value have also been introduced for
investments made in Startups. To avail these benefits one must get a
Certificate of Eligibility from the Inter-Ministerial Board of DIPP. The Inter
Ministerial Board examines the eligibility of recognized Startups, which are
incorporated after April 1, 2016, for tax benefits.
Funding
is perhaps the most important input because from day one any entrepreneur will
need funds to develop his ideas and give it a concrete shape. A ‘fund of funds’
of Rs.10,000 crores for Startups has been established
which is managed by SIDBI. The fund will invest in SEBI registered Alternative
Investment Funds (AIFs) which, in turn, will invest in Startups. Thus, this
fund acts as an enabler to attract private capital in the form of equity,
quasi-equity, soft loans and other risk capital for Startups.
Startups
need to concentrate on the idea they are working on and not worry about
compliances under various Acts. Startups working in areas covered under the
list of 36 “white” category industries have been exempted from all the
applicable compliances under 3 Environment Laws viz. the Water (Prevention
& Control of Pollution) Act, 1974; the Water (Prevention & Control of
Pollution) Cess (Amendment) Act, 2003 and the Air
(Prevention & Control of Pollution) Act, 1981.
Startups
also need to be assisted during that stage when they are scaling up and trying
to venture into new markets. To that end, we have made provision for relaxed
norms on prior experience and turnover for public procurement for micro and
small enterprises in the Procurement Policy of Ministry of MSME.
More
than 250 incubators have been recognized by Government of India to provide
recommendation to startups. In order to augment the existing list of
incubators, a module to recognize incubators has been launched. This shall
enable incubators to obtain recognition from Government of India, allowing them
to issue recommendation letters to Startups. 7 proposals for Research Parks, 16
proposals for TBIs and 13 proposals for Startup centers have been recommended
by the National Expert Advisory Committee (NEAC) formed by MHRD. These
proposals shall be implemented in the current financial year.
The
guidelines for harnessing private sector expertise to set up incubators, annual
grand challenge for innovative solutions to problems posed by industry and
Government departments, annual grand challenge for incubators and establishment
of tinkering labs have been formulated and published on Startup India website.
DIPP has written to top 50 companies requesting them to support the initiative
under their CSR activities by setting up new incubators or scale up existing
incubators in collaboration with educational institutes.
Letter
of recommendation by incubators to ascertain the innovativeness of a product,
service or process is an important requirement for startups to obtain
recognition. In response to the feedback on the difficulties faced by startups
in obtaining such recommendation a cap has been put on the maximum fee that can
be charged by the incubators for providing Letter of Recommendation to
Startups.
Innovation
is the core of a Startup and protection of Intellectual property is imperative.
A panel of facilitators has been constituted for providing assistance and
support in filing applications for Intellectual Property Rights (IPR), wherein,
DIPP would bear the facilitation cost. In order to avail IPR-related benefits,
rebate in fee upto 80% and free of cost facilitation
in filing IPR applications, a Startup would now be required to obtain only a Certificate
of Recognition from DIPP and would not be required to be examined by the
Inter-Ministerial Board, as was being done earlier.