02 March 2016


PM launches Start-up India movement, unveils action plan for encouraging Start-ups

The Union Budget 2016 remained faithful to the Startup India Action Plan announced by Prime Minister Narendra Modi last month. From the three-year tax holiday to easing up on capital gain tax, the Budget document merely lent a touch of official sanction to the key proposals to the Startup India Action Plan. 

While it is not exactly part of action plan, this probably is the biggest positive change that has been bought by the Government – Defining the phrase ‘Startup’. Now, Startups will be ‘Startups’ and not a ‘Business’. Till date a Startup was not separated in various policies of the Government. All were businesses. Now, we have definition for a startup and a clear direction for them from Government.

The most encouraging aspect is that Government is now looking at startups as a serious growth engine for India and want to help them achieve success.

Government wants to reduce the regulatory burden on Startups thereby allowing them to focus on their core business and keep compliance cost low. Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and environment laws (refer below). In case of the labour laws, no inspections will be conducted for a period of 3 years.

With Startup India Hub, Govt wants to create a single point of contact for the entire Startup ecosystem and enable knowledge exchange and access to funding. They will work in a hub and spoke model and collaborate with Central & State governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions.

Govt will also help startups through their lifecycle with specific focus on important aspects like obtaining financing, feasibility testing, business structuring advisory, enhancement of marketing skills, technology commercialization and management evaluation

New Incentives for Startups
  • Self certification compliance
  • No Inspection for first 3 years
  • No Tax on profits for first 3 years
  • Mobile App for start-up registration in one day
  • Startup India Hub as single point contact
  • Exemption from capital gains tax on personal property sold to invest in startup
  • 80 % rebate on patent filing fee
  • Bankruptcy bill 2015 - 90 days to exit business
  • 500 tinkering tabs
  • 35 public-private incubators
  • 31 innovation centres at national institute
  • Dedicated fund of Rs. 10,000/ - Cr to promote startups
  • Credit guarantee scheme for loans
  • 5 new bio-clusters & 7 new research parks
  • Patent regime and IPR to be simplified.

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