Startup India Scheme: Benefits, Eligibility, and Registration

Home » Blog » The Startup India Initiative: Empowering Entrepreneurs in India

Gone are the days when businesses had to stand in long queues just waiting for the government to approve their licenses so that they could actually start their operations. From the License Raj era, our country has come a long way in simplifying business compliance processes to boost economic growth and generate wealth for the people. One such key initiative of the Government of India that has transformed the idea of entrepreneurship from a distant concept to a reality for millions is the Startup India Programme.

The entire idea of the initiative derives from the understanding that making things easier for businesses is essential for unlocking our country’s growth potential. There are countless people out there with novel ideas for solving problems, just brimming to leap into reality. So many people are fed up with the crazy rat race of preparing for the job sector, to be forever working under someone else’s thumb. They aspire to be their own bosses and break free from the death grip of foreign conglomerates draining our country’s wealth to accumulate a fortune for themselves. And finally, so many indigenous products, practices and ideas thrive locally but never see the light of day on a nationwide level due to a mere lack of funding. All these ideas, enterprises and entrepreneurs were waiting to be given the wings to fly, and the Startup India initiative helped them ease into existence.

The Startup India Initiative was launched on 16th January 2016 to empower the startup ecosystem of the country and boost innovative businesses by providing support in terms of easier compliance requirements, taxation benefits, access to funding, networking, as well as other opportunities to increase operations, scalability and profitability. The gamut of schemes and initiatives under the programme are managed by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Corporate Affairs (MoCA).

What Qualifies as a “Startup”?

A business qualifies for a “Startup” under this scheme if it meets the following criteria:

Enterprise Age: The enterprise in question should not have completed more than 10 years from the date of incorporation. It means that your venture should be fairly recent.
Enterprise Type: Private Limited Companies, Limited Liability Partnerships (LLP) or Registered Partnership Firms are eligible for this scheme.
Annual Turnover: The enterprise’s annual turnover should not have exceeded Rs. 100 crores in any of the financial years since incorporation.
Originality: The enterprise should not have been formed by splitting up or reconstructing/restructuring an already existing entity. That means it should be a new or an original entity.
Innovative: The business should have an innovative product or service that has a growth potential. The criteria for this involves:
- Developing, deploying or commercialising products or services driven by the latest technology or intellectual property
- Improving an existing or creating a new product or service for enhancing customer value or workflows
- Developing or commercialising a unique product or service to create customer value
Scalability: The business should also have a plan for expansion and upscaling its operations.

From this, one can derive that the Startup India scheme is meant for fairly new ventures with products or services that can impress upon investors the confidence of going big. However, since the scheme was envisioned for the young talent of this country, navigating the entire business process ideation could be a little challenging for budding entrepreneurs with limited experience. Moreover, having a good idea on paper is only a part of the battle, the next part involves proving that it holds water. Brydgework Consultants can help your enterprise construct a comprehensive plan that will not only work wonders for the venture but also boost investor confidence to attract funding. Check out the entire suite of our Business and Strategy Consultancy Services to learn more.

Benefits under the Startup India Scheme

The following are the broad benefits of being recognised as a Startup under the scheme:

1. Self-Certification: Registered startups can avoid the hassle of lengthy compliance processes for 3 environmental and 6 labour laws by self-certifying compliance. This reduces their compliance burden and allows them to focus on core business operations.

For the labour laws, inspections will not be carried out for a period of 5 years unless a complaint is filed against non-compliance. For the environmental laws, startups falling under the ‘white’ category as defined by the Central Pollution Control Board (CPCB) will be able to self-certify, and only random checks will be carried out.

The following are the laws covered under the scheme:

Labour Laws
- The Building and Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
- The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
- The Payment of Gratuity Act, 1972
- The Contract Labour (Regulation and Abolition) Act, 1970
- The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
- The Employees’ State Insurance Act, 1948
Environmental Laws
- The Water (Prevention & Control of Pollution) Act, 1974
- The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003
- The Air (Prevention & Control of Pollution) Act, 1981

2. Tax Exemption: To improve their profitability, and scalability, and attract funding options, startups will receive a tax holiday for a period of up to 3 consecutive years. Additionally, startups can also be exempt from Angel tax under section 56 of the Income Tax Act.

3. Ease of Winding Up: One of the biggest fears that hold people back from undertaking new ventures is that of losing money if the venture fails. To address that, the scheme provides a mechanism to speed up the process of winding up the venture in 90 days to liquidate the entrepreneur’s funds quickly. This is to ensure that the funds do not remain blocked in the assets of a failed enterprise and can be easily relocated.

4. Ease of IPR Registration: Innovation lies at the heart of a startup. For startups to be successful, the innovative part of their product, service, or idea must remain unique to them. This can be taken care of by protection through Intellectual Property Rights, which help create an intangible asset for the businesses and also boost their credentials.

Under the scheme, the IPR filing process for startups has been expedited to ensure quick registration. Additionally, they receive a rebate of up to 80% in patent filing process fees.

5. Relaxation in Public Procurement Norms: Public sector procurement often involves certain restrictive clauses like “proven experience in similar projects” or specific turnover requirements as a means of ensuring that the vendors are reliable. But this alienates small businesses and startups from being eligible for sending their expressions of interest.

Under the scheme, startups get access to the Government e-Marketplace (GeM) for listing their products and services. Manufacturing startups are exempt from the “prior experience/turnover” clauses, provided that they prove their capability in delivering products of the required quality and specifications, and have their facilities located in India. They are also exempt from providing the “Earnest Money Deposits” or bid security while tendering.

Registering as a Startup

The first step involves being incorporated as a business entity – a private company, LLP or a Partnership. Once that is done, applicants can visit the Startup India Website to register as a startup by creating their profile. To avail the benefits under the scheme, startups have to apply for recognition from DPIIT. This involves the submission of various documents and a series of self-declarations.

Brydgework Consultants can streamline the startup registration process for your enterprise by taking care of all formalities, including the preparation of pitch decks/proof of concept. Visit our Business Setup and Nurture Services page to learn more.