Startup India Scheme : Benefits, Eligibility & Registration Process | IIFL Finance (2024)

28 May, 202411:45 IST518

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With its expanding young population and growing economic aspirations, India presents fertile ground for budding entrepreneurs. Recognizing this potential, the Government of India launched the "Startup India" initiative in 2016. This ambitious program aims to foster a supportive ecosystem for startups, encouraging innovation and propelling them towards success. This article explains the features, benefits, funding options, and registration process associated with the Startup India scheme.

What is the Startup India Programme?

The Startup India scheme is a flagship initiative designed to catalyze the growth of startups in India. It includes comprehensive benefits, including tax exemptions, regulatory relaxations, and funding opportunities. This program aims to simplify the startup journey by providing handholding support, easing compliance burdens, and facilitating access to capital.

Features and Benefits of the Startup India Scheme:

The Startup India scheme offers many advantages that can significantly benefit aspiring entrepreneurs:

• Tax Exemptions: Eligible startups can avail income tax exemption for three consecutive financial years out of their first ten years. This financial relief allows startups to reinvest their profits into growth and expansion.
• Regulatory Relaxations: Self-certification for compliance with various labor and environmental regulations is allowed for startups. This eases the administrative burden and allows them to focus on core business activities.
• Faster IPR Registration: The program facilitates and subsidizes patent, trademark, and design filing processes, protecting the intellectual property of startups.
• Government Procurement: Simplified access to participate in government tenders opens doors for startups to showcase their solutions and gain valuable contracts.
• Seed Fund Scheme: Financial assistance of up to Rs. 10 lakhs is available under the Startup India Seed Fund Scheme (SISFS) to support proof-of-concept, prototype development, and market entry.

Types of Startup India Funding:

The program recognizes the crucial role of funding in nurturing startups and offers various avenues for financial support:

• Startup India Seed Fund Scheme (SISFS): This scheme provides equity-free funding of up to INR 10 lakhs to eligible startups. This initial financial boost can be instrumental in the early stages of development.
• Debt Financing: The program facilitates access to bank loans with credit guarantees. This allows startups to secure loans with more favorable terms and lower interest rates.
• Angel Investors and Venture Capitalists: Startup India connects startups with potential angel investors and venture capitalists, opening doors to larger investments for scaling up operations.

Startup India Investment and Loan:

It's crucial to differentiate between investments and loans offered under the Startup India scheme:

• Startup India Investments: Angel investors and venture capitalists provide equity-based investments in exchange for a stake in the startup. This allows startups to access significant capital but involves sharing ownership and potential dilution of control.
• Startup India Loans: Banks offer debt financing through loans with credit guarantees provided by the government. This option provides access to capital without relinquishing ownership but requires repayments with interest.

Startup India Registration Process:

It is mandatory to register with the Department for Promotion of Industry and Internal Trade to get the benefits of the Startup India scheme. Here's a simplified overview of the process:

Eligibility Criteria:

Here's a detailed breakdown of the Startup India programme's eligibility criteria:

Company Registration:

• Eligible Entity Types:
  • The company must be registered as a Private Limited Company or a Limited Liability Partnership (LLP). These legal structures offer limited liability protection to the founders, separating their personal assets from the company's debts.

Age of the Company:

• Timeframe:
  • The company must be incorporated not more than ten years ago. This ensures the program focuses on nurturing young, nascent startups with high growth potential.

Nature of Business Activities:

• Focus on Innovation:
  • The company's core activities must be centered around:
    • Innovation: Developing entirely new products, services, or processes with a significant technological component. This could involve pioneering solutions in various fields like biotechnology, artificial intelligence, or renewable energy.
    • Development: Further developing or refining existing products, services, or processes in a novel and impactful way. This might involve significantly improving existing technologies or functionalities.
    • Commercialization: Bringing a new or improved product, service, or process to the market. This involves making the innovation accessible to a wider audience and generating revenue.

It's important to note that the company's activities should demonstrate a clear potential for scalability and job creation, aligning with the program's objective of fostering economic growth through innovative startups.

Registration Process:

1. Visit the Startup India portal (https://www.startupindia.gov.in/).
2. Register on the portal and fill out the online application form.
3. Upload necessary documents, including company registration certificate and board resolution for startup recognition.
4. Pay the nominal registration fee.

As far as the Startup India registration fees is concerned, the registration process itself is free of charge. There are no fees levied by the Department for Promotion of Industry and Internal Trade for obtaining startup recognition. You can register directly through the Startup India portal (https://www.startupindia.gov.in/) without incurring any government fees.

However, it's important to note that there might be other associated costs involved:

• Professional Service Fees: While the registration itself is free, some individuals or companies might choose to utilize the services of professionals like consultants or legal advisors to assist with the process. These professionals may charge fees for their services, which can be different depending on the complexity of the case and the chosen provider.
• Document Processing Fees: There might be minimal fees for obtaining specific documents required for registration, such as certified copies of company documents or digital signatures. These fees are usually nominal and vary depending on the service provider.

Who Can Apply for a Startup Loan?

Startups recognized by the DPIIT (Department of Industry and Internal Trade) can apply for loans under the scheme through designated partner banks. The specific eligibility criteria and loan terms may vary depending on the chosen bank. However, generally, startups with a viable business plan, strong financial projections, and a track record of performance are more likely to secure loans.

Conclusion:

The Startup India program is a game-changer for aspiring entrepreneurs in India. Offering a comprehensive package of benefits, funding options, and a streamlined registration process empowers them to overcome initial hurdles and navigate the growth journey more easily. This initiative has the potential to contribute to India's economic development by fostering a vibrant startup ecosystem and fueling innovation across diverse sectors.

FAQs

Q1. Who can register under Startup India?

• Your company must be a Private Limited Company or a Limited Liability Partnership (LLP).
• It should be less than ten years old.
• Your core business should focus on innovation, development, or commercializing new products, services, or processes.

Q3. What documents are needed to register?

• Company registration certificate.
• Board resolution for startup recognition.
• Other documents may be required depending on your company structure.

Sapna aapka. Business Loan Humara.

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