The Indian startup ecosystem is maturing, and the government is doing its part to make life easier for entrepreneurs. Let’s face it, things are already difficult for entrepreneurs. They must create a product, find talent, please customers, and ensure that they do not run out of money. It’s like repairing a plane in midair, a terrifying experience. A startup does not need to be suffocated by red tape.
As a result, in January 2016, the government launched the Startup India Registration plan, as directed by Prime Minister Narendra Modi. This flagship program aims to promote the growth and expansion of Indian startups.
The core idea behind this initiative was to focus on areas such as the startup ecosystem simplification, funding support and incentives, and facilitating industry-academia partnership and incubation.
With the rise of startup culture in recent years, the program has also harnessed entrepreneurship for the growth of the Indian economy. Startup India has helped increase employment opportunities, particularly for young professionals since its start.
What exactly is a startup?
A startup is a company that is in its early stages of operation. When the founders believe that the product or service they offer has a unique value proposition and that there is a demand and market for said product or service, the company or organization is usually founded.
The founders usually fund the company until it starts making money. They may also try to entice financial investment from outside sources. This is in exchange for a stake in the startup.
Startups that qualify for Startup India
A company is considered a startup under the Startup India scheme if it meets the following criteria:
- In India, the startup must be formed as a private limited company or registered as a partnership firm or limited liability partnership.
- It should not be more than ten years since its incorporation or registration.
- In any fiscal year since incorporation, the turnover must not have exceeded 100 crores.
- The startup should have a scalable business model capable of creating wealth or job opportunities
- The startup must work to improve the products or services it provides
The advantages of registering a company under the Startup India scheme
The startup must be recognized by the Department of Industrial Policy and Promotion (DIPP) to receive any benefits under the Startup India Scheme. The following are some of the scheme’s advantages:
Startup India participants can self-certify compliance with six labor laws and three environmental laws, which reduces the regulatory burden on startups. Instead, the companies can focus on their core business while reducing compliance costs.
Startups have five years from the date of incorporation to self-certify their compliance. In environmental laws, units operating in the 36 white category industries are exempt from environmental clearance for three years.
- Exemptions from taxes
Taxes are a concern for most startups, and the government of India is working to reduce capital requirements in the early years. Recognized startups that receive an Inter-Ministerial Board Certificate (IMB Certification) are exempt from paying income taxes for three years. Certified startups are also exempt from paying taxes on capital and investments that exceed Fair Market Value.
- In the event of bankruptcy
Startups are not always successful. Startups that have been recognized under the Startup India scheme are referred to as “fast track firms”. This enables them to complete their operations in 90 days, as opposed to 180 days for other companies. The startup’s insolvency professionals will help with asset liquidation and pay creditors within six months of application filing.
- Improved patent application and intellectual property protection
Along with a streamlined patent filing process, startups participating in the Startup India program will receive an 80 percent reduction in application fees. Also, a 50 percent discount is provided for trademark registration when compared to other companies. The government also has a panel of facilitators who will provide general advice on IPR protection and promotion to startups, with the government covering the entire fee.
- Easier Public Procurement Regulations
Startups that have been recognized by DIPP can be listed on the Government e-marketplace, the country’s largest e-procurement portal. Also, the startups will be exempt from the requirements for prior turnover and experience, as well as the Earnest Money Deposit.
- SIDBI Fund of Funds
The Indian government has set aside a fund of 10,000 crores, which will be managed by SIDBI to help Indian startups. The government participates in the capital of SEBI-registered Venture Funds, which then invest in startups through this “Fund of Funds”
According to the most recent figures, 400 crores has already been invested in 97 startups through this scheme.
Registration under Startup India requires minimal documentation
One of the primary reasons for launching a program like Startup India was to assist startups in the country thriving. Previously, startups had to go through the same process as all other businesses to register and be recognized. The program was designed to eliminate the License Raj, which consists of many permissions requirements and a lot of red tapes.
The following documents are needed to register your startup under the Startup India scheme:
- Your startup’s certificate of incorporation or registration company information
- Company details
- PAN number
- Partner or Director Information
- If your startup is in the validation stage, create a proof of concept
- Specifics of a patent or trademark (optional)
How to Register Your Startup Under Startup India
Step 1: Register your company
First, you must incorporate your company as a Private Limited Company, a Partnership firm, or a Limited Liability Partnership. The procedure is the same as registering any other business, and you will need to get a Certificate of Incorporation or a Partnership Registration, as well as a PAN number for your startup.
Step 2: Create an account with Startup India
To take advantage of the Startup India scheme’s benefits, you must first register your entity as a startup under the Startup India scheme. Go to the Startup India website and fill out the form with the necessary information. Your profile is now complete!
Step 3: Request DPIIT recognition
Obtaining DPIIT recognition will provide your startup with benefits such as tax exemptions, self-certification facilities, easier access to patent applications, and IPR protection. The ability to wind down a company easier Public Procurement Norms, access to Fund of Funds, and more. To begin the DPT recognition certificate procedure click the “Get Recognized” button on your profile.
Step 4: Get the Recognition Number
After submitting your application, you will receive an immediate recognition number. Remember that the issuance of the certificate of recognition is contingent on the verification of all the documents you’ve submitted. The process can take up to two days filling out forms and uploading documents should be done with extreme caution. Uploading incorrect documents, failing to submit relevant ones, or sending forged documents can result in a significant fine. You could face a fine of up to 50% of your startup’s paid-up capital, with a minimum of $25,000.
Step 5: Obtaining a copy of your Startup India registration certificate
You can access your system-generated registration certificate from your account on the Startup India website once you receive it in your email. The certificate can also be downloaded from the Startup India portal for future use and convenience.