PM Narendra Modi concluded what was perhaps the largest startup conference for entrepreneurs in India with his action plan, which included new policies and initiatives that would make it easier for for investors and startup founders to incubate their ventures in the country. Many startup founders had expressed their wishes in the run up to the event, and would find many potential game changers in the new policies announced in the action plan. Here's what changed for India's startup ecosystem on Saturday.
1) A Rs. 10,000 crore fund for startups
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 a period of four years, which will be be managed by a board with private professionals drawn from industry bodies, academia, and successful startups. The fund will participate in the capital of SEBI registered venture funds, and invest in sectors such as manufacturing, agriculture, health, and education.
2) A single point of registration for startups
The government will launch a mobile app and a portal on April 1, which will enable startups to register their company in a day. The portal will also serve as a single point of contact for clearances, approvals and registrations, and for companies to apply for schemes under the Startup India Action Plan.
3) A simplified regulatory regime based on self-certification
To reduce the regulatory burden for startups, the government will allow startups to self-certify compliance on nine labour and environment laws through the startup mobile app. No inspections will be conducted in case of the labour laws for a period of three years.
4) A fast-track mechanism filing patent applications
Launched on a pilot basis for a year, the Central Government shall bear the cost of patents, trademarks and designs for a startup, with an 80 percent rebate to encourage the creation and protection of its intellectual property.
5) A credit guarantee fund for startups
A credit guarantee mechanism willl help startups raise debt funding through the formal banking system through National Credit Guarantee Trust Company (NCGTC)/SIDBI, which has an annual corpus of Rs. 500 crore for the next four years.
6) Tax exemption for three years, and capital gains
Aimed at facilitating growth and help retain capital, startups will be exempted from income-tax for a period of three years. However, the exemption shall be available subject to non-distribution of dividend by the startup. To augment the funds available to various VCs and alternative investment funds, capital gains invested in SEBI registered venture funds will be exempt from tax as well.
7) A Startup India Hub for collaboration
The Startup India Hub will serve as a single point of contact for startup ecosystem players, and will function in a hub and spoke model with central and state governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions. The hub will assist startups in obtaining financing, and organise mentorship programs to encourage knowledge exchange.
8) Relaxed norms of public-procurement
The Central Government, State Government and PSUs will exempt startups in the manufacturing sector from the criteria of "prior experience/ turnover" as long as they have their own manufacturing facility in India, and have the requisite capabilities and are able to fulfil the project requirements.
9) Faster exits for startups
Startups may be wound up within a period of 90 days from making of an application for winding up on a fast track basis, as per the recently tabled Insolvency and Bankruptcy Bill 2015, which has provisions for voluntary closure of businesses. This process will respect the concept of limited liability.
10) Atal Innovation Mission to encourage entrepreneurship and innovation
The Atal Innovation Mission will establish sector specific incubators and 500 'Tinkering Labs' to promote entrepreneurship, provide pre-incubation training and a seed fund for high-growth startups. Three innovation awards will be given per state and union territory, along with three national awards, as well as a Grand Innovation Challenge Award for finding ultra-low cost solutions for India.
11) Innovation focused programs for students
An innovation core program targeted at school kids aims to source 10 lakh innovations from five lakh schools, out of which the the best 100 would be shortlisted and showcased at an Annual Festival of Innovations, to be held in Rashtrapati Bhavan. A Grand Challenge program called NIDHI (National Initiative for Developing and Harnessing Innovations) shall be instituted through Innovation and Entrepreneurship Development Centres (IEDCs) to support and award INR 10 lakhs to 20 student innovations. Uchhattar Avishkar Yojana, a joint MHRD-DST scheme has earmarked Rs. 250 crore annually to foster "very high quality" research amongst IIT students.
12) An annual incubator grand challenge
The government will identify and select ten incubators, evaluated on pre-defined Key Performance Indicators (KPIs) as having the the potential to become world class, and give them Rs.10 crore each as financial assistance to ramp up their infrastructure.