Govt‘s ‘Start-up India’ Scheme for Startup Companies : Details & Benefits

Govts Start_up India Scheme for Startup Companies

The central Government has recently launched the much anticipated and needed initiative called as ‘Start-up India’. The government has issued an action plan to help startup companies and encourage entrepreneurship in India.

We all know that how difficult and challenging it is to establish a Start up company in India. A start up company may have to handle corruption issues, lack of financial resources, complex approval processes etc., to see the light of the day. Also, most of the start-ups are either opposed or killed by the big corporates at the initial stage itself.

Most of the funding of Indian start-ups (around 90%) comes from foreign venture capitalists and PE funds (Private Equity). For example, Grofers, a grocery startup has raised 166.5 million from Sequia Capital & Soft Bank. This is the case in most of the start-ups. Various start-ups like Grey Orange Robotics, Ola Cabs etc have had funding from foreign Venture Capitalists only.

To change this scenario in India, to remove risk aversion and to encourage free and fair competition, ‘the Start-up India action plan’ lists out a comprehensive set of structural and regulatory reforms.

Startup India is a flagship initiative of the Government of India, intended to build a strong Eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities.

What is a Startup Company?

A startup is a newly formed business which is in the first stage of its business operations.  Startups are usually small and initially financed by few founders or angel investors. It can be in the form of a company, a partnership firs or even a sole-proprietorship firm.

Top Startup Companies in India

Below are some of the popular Startups in India; (Click on the image to open it in a new browser window)

Best Top 100 Startup Companies in India 2015 2016 pic

Govt’s ‘Startup India, Standup India’ Scheme : Eligibility conditions

  • To avail the benefits under this initiative, the startup entity could be a Private Limited Company (or) a registered Partnership firm (or) a Limited Liability Partnership Firm (LLP).
  • The Startup entity should not be more than 5 year old one.
  • The annual turnover of the start-up company should not have exceeded Rs 25 crore in any preceding Financial Year.
  • Any entity which has been created by just splitting the existing business or company will not be treated as a Startup company.
  • A startup company should aim to develop a new product or service which is commercially viable (which have the potential for commercialization) and should create or add value for customers.

Key highlights of Startup India Action plan

Below are some of the key benefits that are mentioned in Govt’s Start-up Action plan;

  • Income Tax Exemption for the first 3 years on the profits made by the startup companies.
  • Exemption on Capital Gains taxes. (The 20% tax will be exempted on the capital gains made by the govt approved Venture Capitalists)
  • The government will initially set up a corpus of Rs 2,000 crore to provide funding support to startup companies. (A total of Rs 10,000 cr corpus will be provided over the next 4 years)
  • Fast track examination of Patent & Intellectual Property Rights applications filed by the start-up companies. IPR protection to start-ups and new firms will be provided. The government offers free legal support for filing patents and 80% reduction in filing patent fee. This way, an entrepreneur would not lose his ideas to another.
  • The startup companies will have the option to self-certify themselves with respect to most of the rules related to ‘Labour & Environment Laws’. The self-certification can be done through ‘Startup India Mobile App’ which will be launched by the govt in April 2016. (Laws related to Gratuity, Employees Provident Fund, pollution control etc.,)
  • Industry wise ‘Startup incubators’ will be set up across the country.
  • New and special schemes targeting Women entrepreneurs will also be launched.
  • In case of failure (bankrupt) of a startup enterprise, the government aims at providing speedy winding up procedures.
  • Single-point contact centre will be established for all the works & issues related to startup companies. Innovation hub under Atal Innovation Mission will be created.
  • Registration of a startup company can be done in a single day through Startup India Mobile app / portal from April 2016.

My opinion

Around 40% of India’s total population is below 20 years old.  There is no dearth of supply of educated/qualified young talents in India. The govt has to provide an ecosystem to encourage small entrepreneurs to set up new companies and generate employment in India.

  • As per the action plan, the start-up company requires a ‘recommendation’ from a govt owned incubator centre or from an incubator of a govt recognized post-graduate institution. This again may lead to unwanted layer of bureaucracy which can go against the very essence of setting up this initiative. The government involvement should be minimal.
  • Startup companies from all streams / industries (be it manufacturing , service sector or agriculture) should be encourage, not just technology-based companies.
  • Start-up India is in-line with the PM’s call for innovation i.e., Digital India. The Start-up India Action plan is a good start to this. Let’s hope this initiative is implemented in true spirit and brings revolution among the youth of India, making them job-seekers to job-creators.

What could be the implementation challenges for ‘Startup India’ scheme? Will this scheme be beneficial? Kindly share your views on ‘Startup India’ initiative.

Latest News (31-March-2016) : The Govt has launched the Startup India portal startupindia and also mobile APP. Click here to download the detailed FAQs on Startup India Program.

(Image courtesy of Sira Anamwong at (Top Startups Picture source : 

About The Author

  • Rajib saha says:

    sir , my self Rajib saha I have a software company. company name is BYTEINFO SOFTWARE SOLUTION PVT. LTD .-2016 . I want to start company digitally, but due financial problem we cant’ reach our destination. Another problem is we belongs at small state in Tripura, here technology very poor quality, we want to be start our company digitally and globally. Recently we deals Institute Management System(IMS). This for your kind of disposal. kindly help me…

  • sujeet singh says:

    To whom so ever,
    i want to start spice product manufacturing company and water filter plant . spices products making machinery price is about 20, startup India scheme given me loan for start my company.

  • ravi prakash says:

    Dear Shreekant

    Is manufacturing of jute & cotton bags manufacturing unit r considered in start up

  • Joyal says:

    Sorry my number is mistake. +919742841020

  • Joyal says:

    Hi Srikanth I want to start new company so I want buy waterjet machine. That machine price 40 lakh. Can u plz suggest. Machinery loan or under startup India scheme. Plz number +919742842020

  • Kiran says:

    Hi Sreekanth,
    I am looking start a New Company for Solar Products trading for which I have done the Training Programme from KVIC ,Small and Medium enterprises Govt of India. Along with this I am also looking at supplies of Electrical products for Govt sector. Can this new Startup initiative be helpful for me,in terms of the Income tax benefits and Loan if required.

    • Dear Kiran,
      Suggest you to kindly contact ‘Startup India Hub’ Toll Free Number : 1800115565.

      • Kiran says:

        This is the same reply which the Govt email I’d gave me,nothing specific.
        The question is ,If a New normal business as mentioned above .,which may not be innovative it eligible for all such benefits of a startup .

        • Dear Kiran,
          As this is a new initiative, we have little information available right now, which I have shared it here.
          Whether your business initiative will be eligible or not, that you may have to get the confirmation from the ‘startup india hub’ only.

  • Mitesh Sanghvi says:

    Hey Sreekanth, the information you’ve shared is not just correct but the way you presented it was superb. It was damn easy to understand everything and anyone can quickly related stuff. I’m impressed with all the new rules, but there is still one pending to be updated. The Single Person Pvt Ltd company is still restricted, which stops those single person entrepreneurs from starting up.

  • vaishali gawli says:

    dear srikanth,
    i dont know why my brothers company of mechanical seal is not working , need ur suggestion plz help.
    thanks in advance

  • RANGARAJU.T.K says:

    To whom so ever,
    I am RANGARAJU.T.K 28 year old, from semi urban area which namely called tumkur 80k.m away from banglore. I working i an private jewellery company and i am looking forward to become a entrepreneur with small investment can be a owner of my business…?

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