India now has the world’s third largest startup ecosystem after the US and China, according to the Economic Survey 2021-22 released by the Indian government in January this year.
In a written reply to the Rajya Sabha in March this year, Commerce and Industry Minister Piyush Goyal said there are more than 65,000 government-recognised startups in the country.
With the stupendous rise of startups in the country, the Government of India in 2016 constituted Startup India, an initiative to support entrepreneurs and strengthen the already growing startup ecosystem.
Under the Startup India initiative, the government aims to help entrepreneurs by simplifying starting a business, access to funds, and streamline other growth factors that are important for early-stage companies.
It requires businesses to be a part of the Startup India initiative to reap its benefits. Let’s understand how your startup can become a part of Startup India.
Eligibility for Startup India initiative
Since startups get exclusive benefits once they are a part of Startup India, there are certain conditions that your company must meet to get recognised under this initiative.
According to the Startup India official website, these are the requirements for a startup to get into the coveted Startup India initiative:
- Your startup must be a private limited company or registered as a partnership firm or a limited liability partnership
- It should have a turnover of less than Rs 100 crores in any of the previous financial years (from the date of application)
- Your startup must be equal to or less than 10 years old from the date of its incorporation
- Your startup should be working towards innovation or improvement of existing products, services, and processes. It should have the potential to generate employment or create wealth
- An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”
If your startup meets all the criterias mentioned above, you can apply to get registered with Startup India.
Step-by-step registration process
- Go to the sign up page by clicking here.
- Enter your details including email address, mobile number, and the desired password. Next, verify your email via an OTP.
- Now you can sign in using the login credentials.
- This will direct you to the Hub where you can select and create the profile of a stakeholder which best defines your role. Once the profile is created, the next step is to apply for the Department for Promotion of Industry and Internal Trade (DPIIT) recognition to get the benefits as a startup.
- Log in to your Startup India account and click on “DPIIT Recognition for Startups”, which is under the “Schemes and Policies” tab.Also Read: How to Start a Startup Company in India in 9 Steps
- On the next page, click on the “Get recognised” button, which will lead you to a new page.
- Next, click on the “DPIIT Recognition for Startups” button under the “Schemes and Policies” tab at the bottom of the page.
- A form will open up where all the fields are mandatory. You need to fill in details of your startup, nature of business, year of establishment, PAN number, office address, partner details, etc. You also need to upload relevant documents like registration certificate, PAN card, trademark details, funding documents, pitch deck, etc.
- After filling up the form and uploading the documents, accept the terms and conditions and click on “Submit”
- You will receive a recognition number unique to your startup. If all your uploaded documents are verified and no error has been found, within two days you will receive the certificate of recognition from DPIIT.
Five benefits of registering with Startup India
Starting a business is challenging as it is, so it’s always better to take all the help that comes on the way. That is what the Startup India initiative is all about – helping entrepreneurs.
Getting your startup registered with Startup India has a host of advantages.
1. Relaxed norms
All the startups that get recognised by DPIIT can get listed as sellers on Government e-Marketplace, which is the Government of India’s largest e-procurement portal. The government of India has authorised its ministries, departments, and public sector undertakings to relax norms in all public procurements for startups that are recognised by DPIIT.
As a DPIIT-authorised startup, your company can apply for government tenders without having to show prior proof of work or have a minimum yearly turnover.
2. Tax exemption
As a registered startup with Startup India and DPIIT, your startup is eligible to get a tax exemption for 80-IAC of the Income Tax Act. Once you get the green signal from the income tax authorities, your startup can avail tax holiday for three consecutive years.
In addition to the above, recognised startups can also apply for exemption from angel tax under Section 56 of the Income Tax Act.
Until May this year, 448 startups have been granted tax exemption under section 80-IAC and close to 6,000 cases for tax exemption for angel tax have been filed.
3. Access to funding
There are two different types of funds that Startup India has for startups that register with DPIIT.
As a part of Startup India, your company can raise money from the Fund of Fund For Startups (FFS) that has a corpus of whooping Rs 10,000 crore. FFS, which is managed by SIDBI, gets in the hands of VC firms that are registered with SEBI, which in turn invest in startups. About 600 startups have collectively raised Rs 9,571 crore through this fund of funds till May 2022.
Another fund of funds under Startup India is for companies looking for seed round of investment. Formally known as Startup India Seed Fund Scheme (SISFS), this fund is set up to help companies at their initial stage such as finding proof of concept, prototype development, product trials, market entry, and commercialisation.
Through SISFS, Startup India aims to disburse money to 3,600 startups through 300 incubators across India.
4. Easy exit
It’s a well known fact that most of the startups fail to take off and unfortunately have to shut down. Ironically, it’s more difficult to shut a company than to start it.
However, if your startup is recognised by DPIIT and you need to take an exit, it’s quite a simple process. A startup can shut down their business within 90 days from the date of application.
5. Cheaper patent costs
The cost of filing for patents and trademarks can be quite steep. In addition to the cost involved, it takes a really long time for the patent and trademark certificates to come by. Good news for startups recognised with DPIIT is that they can process their patents and other intellectual property rights services at a considerably lower fees.
Startup India will provide your company with an 80% rebate to file patents. In case of filing for trademark certification, you will receive a 50% rebate, decreasing the cost from Rs 10,000 to Rs 5,000. Your application process will be fast tracked and processed within 72 hours.
Conclusion
This is the best time to start a company in India as the government is quite gung ho about the employment as well as the foreign investment these companies bring.
Since the government is lending a helping hand with the Startup India initiative, startups should grab the opportunity and get themselves registered.
