Plans for encouraging startups in India & What is meant by Startups?

Plans for encouraging startups in India, Honorable Prime minister, Mr. Narendra Modi has unveiled ‘ Start up India Initiative ‘on January 16th 2016. He quoted that startups are not just money making entities but they have compassion and urge to solve the problems that people face. This article will try to summarize all that has been undertaken for encouraging the startups in India.

Plans for encouraging startups in India

Plans for encouraging startups in India

What is meant by Startups?

This initiative has separated the term start ups from business, which would mean that startups will be treated differently.This has shown government’s perspective to look at it as growth prospects.

The term start up can be defined as a company which is in infant stage , which need financial support from Venture capitalists, banks etc. due to their high costs and lower revenues in initial period.

Regulatory requirements

Government has introduced with reduction in various regulatory requirements which entails compliance regime based on self certification.This can be carried out through Start up Mobile App , which is integrated for nine labor and environment laws.Dedicated web portal can also be checked for status of registration , compliance formalities , obtaining approvals etc.

Also, no regulatory inspections will be carried out under labor law for a period of three years.

Start up India Hub

The intention of government for creating a single point of contract for start ups which would facilitate knowledge exchange and will have easy access to financing. This single hub is in collaboration with Central and State Governments, domestic and foreign venture capitalists, banks, incubators and universities etc.

This hub will be focusing on helping the start ups throughout lifecycle, which may include various activities like feasibility testing , technology commercialization , evaluation of management etc.


The government has decided to support the start ups by floating a fund of funds of Rs 10000 crores for backing up start ups.This Fund will be managed by the professional from academic, corporate fields.A special credit guarantee fund will also be there , which will in still and boost the confidence in the minds of bankers towards start ups.This will also lead to encouragement of innovation and experimentation by the start ups.

Tax exemptions

The start ups will enjoy following tax exemptions

  • Capital gains earned by start ups would be exempt if they invested the same in recognized fund of funds
  • Profits generated by the start ups would be exempt for period of 3 years
  • The investment made by incubators and angel investors will also be exempt in addition to investments by VC (Venture capitalists).

Research and development support

Atal Innovation Mission (AIM) is introduced for promoting R&D , which will consist of tinkering labs, incubators, Innovation centres, research parks at IIT with initial investment of Rs 100 crores, Bio clusters across universities and institutes all over India.

Government has also announced three programs to encourage innovation like innovation core , NIDHI etc.

Government is also set to provide platforms like grand challenges for incubators , self employment activities , innovation clubs etc which would promote the start up sector to international levels.

Patents issue

Start ups would be offered reduction in patent filing fees which will bring down the cost of filing and obtaining the patent by any start up. Government has also set up speedy examination of patent applications by start ups , which would also have facility of legal panel set up for helping start ups for filing the patent application.Costs of such legal procedure would be borne by the government.

No restriction on public procurement.

Generally the tenders require prior experience or past years turnover , which was not possible to provide in case of Start ups. However with alteration of norms , now start ups can also float the tenders for the PSU.

Exit from business

Start ups would be allowed 90 days period for winding up the operations which would relieve them


Government has recognized the strength of startups to carry the India Shining on its growth path.As honorable prime minister quoted – start ups , technology and innovation exciting and effective instruments for India’s transformation.So lets hope that start up initiative would pave its and India’s way to success.

Recommended Articles

Join the Discussion