prarambh-startup-india-international-summit-summary

Context: The Prime Minister of India will interact with startups and address ‘Prarambh: Startup India International Summit’, to mark the fifth anniversary of the Startup India initiative, launched on 16 January, 2016. 

More on the news:

  • The Summit is being organized by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry. 
  • The two-day Summit is being organised as a follow up of the announcement made at the fourth BIMSTEC Summit (2018 in Kathmandu) wherein India committed to host the BIMSTEC Startup Conclave.

Start Up India Scheme

Launched

  • On 16th January, 2016 and is implemented by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry

Objectives

  • To reduce the regulatory burden on Startups, thereby allowing them to focus on their core business and keep compliance costs low.

Benefits

  • Startups shall be allowed to self-certify compliance for 6 Labour Laws and 3 Environmental Laws through a simple online procedure.
  • In the case of labour laws, no inspections will be conducted for a period of 5 years. Startups may be inspected only on receipt of credible and verifiable complaints of violation.
  • In the case of environment laws, startups which fall under the ‘white category’ (as defined by the Central Pollution Control Board (CPCB)) would be able to self-certify compliance and only random checks would be carried out in such cases

Eligibility

  • DPIIT recognised startups that are within 5 years of incorporation. 

Salient features

  • Defining Start-up: The action plan defines Startup as an entity, incorporated or registered in India not prior to five years, with annual turnover not exceeding INR 25 crore in any preceding financial year.
  • Compliance regime based on self-certification: The objective of compliance regime based on self certification is to reduce the regulatory burden on start-ups.
  • Start-up India hub: A start-up India hub will be created as a single point of contact for the entire start-up ecosystem to enable knowledge exchange and access to funding. 4. Simplifying the start-up process: A start-up will be able to set up by just filling up a short form through a mobile app and online portal.
  • Funds of funds with a corpus of Rs 10,000 crore: In order to provide funding support to start-ups, the government will set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over four years.
  • Credit Guarantee Fund: A National Credit Guarantee Trust Company is being envisaged with a budgetary allocation of Rs 500 crore per year for the next four years. 
  • Exemption from Capital Gains Tax: Currently, investments by venture capital funds in start-ups are exempt from this tax. Now, the same is being extended to investments made by incubators in start-ups.
  • Tax exemption for start-ups: Income tax exemption to start-ups announced for three years.

Concerns

  • Role of government as investor: Start-up India initiative proposes a fund of funds. The government’s ambitions of turning limited partners to venture capital funds has drawn sharp criticism from several quarters. 
  • Exemption from taxes for 3 years only: Considering most startups don’t make money so early, such an exemption would have little impact. 
  • Government’s involvement: The Action Plan requires an enterprise or partnership to be innovative by developing and commercialising a new product or service. But it institutes an inter-ministerial body led by DIPP to examine whether an enterprise is ‘innovative’. 
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