The number of start-ups has exploded since Indian Prime Minister Narendra Modi started the Startup India programme. With tax rebates, social benefits, and government assistance, an increasing number of people are launching their own businesses. Most start-ups have young founders and owners, which speaks volumes about India’s incredible creative talent.
It’s raining unicorns (i.e. firms valued at more than $1 billion) in India, thanks to an unprecedented round of funding for Indian startups across industries. In the previous year, a total of 42 startups were included on the list.
This year, India saw the birth of its first unicorns in the fields of health-tech, social commerce, cryptocurrency, and e-pharmacy.
To date, 84 Indian firms have joined the unicorn club in the recent decade.
At this rate, India will have more than 100 unicorns by 2022, far sooner than the previous estimate of 2023 provided by Inc42 Plus reports.
What is a startup?
A start-up is a freshly formed firm, usually a small one, that is founded by one person or a group of people. It is distinct from other businesses in that the start-up is introducing novel products or services that are not available elsewhere. This is what innovation is all about. The company creates new products/services or redesigns existing ones in order to improve them.
A great significance of a start-up is that it can improve employment in our country because it is a direct result of the emergence of more and more entities with such businesses. With the opportunity to expand employment, the Indian government strives to help young companies in developing and grow.
A start-up business is a legal entity incorporated in India that meets the following criteria:
a) The Startup must be incorporated as a private limited company / a partnership firm / a limited liability partnership.
b) Turnover must be less than INR 100 crores in any of the previous financial years.
c) An entity is regarded as a startup for the first ten years after its establishment.
d) The startup should be focused on improving/innovating existing products, services, and processes, and it should have the potential to produce jobs and wealth.
e) An entity formed by splitting up or reconstruction of an existing business shall not be considered a “Startup”
How to establish a Startup?
The following is the procedure for registering a startup in India:
Step 1: Establish your business entity
The first step is to form your company as a Private Limited Company or a Limited Liability Partnership. All you have to do is go through the standard registration process, which includes filling out a form.
Step 2: Create an account with Start-ups India.
The business must then be registered as a start-up. The entire procedure is simple and can be completed online. Simply go to the Start-ups India website and fill out the form with your Entity’s details.
Step 3: Obtain DPIIT Certification
After creating a profile on the Start-up India website, the next step is to apply for recognition from the Department of Promotion of Industry and Internal Trade (DPIIT). This recognition enables start-ups to benefit from services and high-quality intellectual property resources, as well as easing public procurement, regulations, labour and environmental self-disclosure, and easy company liquidation, as well as tax exemption for three years and tax exemption for investments above market value. If you are new to DPIIT, click the ‘Get Recognised’ button to begin the process. Click the ‘Dashboard button’ and then ‘DPIIT Recognition’ if you already have it.
Step 4: Recognition Application
The ‘Recognition Application Detail’ page displays; click ‘View Details’ under the Registration Details section on the same page, then fill out the ‘Startup Recognition Form’ before submitting it.
Step 5: Documents for Registration
- Articles of Association/Incorporation document / LLP Agreement/ Bylaws
- Startup’s incorporation or Registration Certificate.
- Director’s Complete Profile Verification Details.
- PAN Card Number
- Written Proof related to your official website, link, or pitch deck. Needed for validation, speaking, early traction, or a staged startup.
- Details about patent and trademark.
- A Non-Disclosure Agreement (NDA)
- Shareholder’s Agreement
- Intellectual Property Assignment Agreements
- Founder/
- Business Plan/Pitch Deck
Step 6: Obtain Recognition number
You will receive an approval number as soon as you submit your application for this registration. After the authorities have reviewed all of your uploaded documents, you will obtain your certificate of registration or incorporation. However, you must be cautious when submitting the data because any errors could result in a fine of up to 50% of your deposited capital, which must be at least Rs 25,000.
Startup India Offers a Wide Range of Benefits
Startup India’s mission is to produce and innovate products and services while also improving India’s employment rate.
The procedure is straightforward.
The Indian government has launched a smartphone app and a website to make it easier for entrepreneurs to register their businesses. Anyone interested in starting a business can fill out a simple form and upload documents to the website. The entire procedure takes place entirely online.
Cost reductions
The government also publishes a list of patent and trademark facilitators. They will offer high-quality Intellectual Property Rights services, such as patent examinations that are completed quickly and at a lesser cost. All facilitator fees will be covered by the government, leaving just the statutory fees to be covered by the startup. The cost of filing patents will be reduced by 80% for them and for Trade Mark it is 50% discount.
Easy compliances
To save time and money, certain compliances have been streamlined for startups. Startups will be able to self-certify compliance with nine labour and three environmental rules (through the Startup mobile app).
Easy to apply for Government Tenders.
Government tenders are open to startups. They are exempt from the “prior experience/turnover” requirements that apply to regular businesses responding to government tenders. No time-consuming compliances
Three-year tax holiday
Startups will be free from paying income tax for three years if they obtain an Inter-Ministerial Board certification (IMB).
Tax exemptions.
People who invest their capital profits in government-run venture funds will be exempt from capital gains taxes. This will assist startups in attracting further investors.
Interactions with other startups.
The government has proposed holding two startup fests each year, one on a national level and one on an international level, to bring together the numerous stakeholders of a startup. This will open up a lot of doors for networking.
Simplified Exit.
In the event of an exit, a company can close its business within 90 days of filing a winding-up application.
Mentors.
The Startups are also supported by Mentors who guide and handhold them thereby making things easy for them.
Investment benefits
The Government of India has created a Fund of Investment of Rs. 10000 cr. which would invest in eligible startups this will help the startsups in their early years of establishment.