Startup India is a flagship initiative launched by the Government of India on January 16, 2016. Its primary objective is to build a strong ecosystem for nurturing innovation and startups in the country, thereby driving economic growth and generating large-scale employment opportunities.
The initiative aims to empower startups to grow through innovation and design by providing a conducive environment and a comprehensive set of benefits.
Core Pillars of the Startup India Initiative
The Startup India Action Plan is broadly structured around three pillars:
1. Simplification and Handholding:
Self-Certification
Reduced regulatory burden by allowing self-certification for compliance under 6 Labour Laws and 3 Environmental Laws. Inspections are minimized for a period of up to 5 years.
Startup India Hub
A single point of contact for the entire startup ecosystem, enabling knowledge exchange and access to funding.
Mobile App and Portal
A single platform for startups to interact with the government, regulatory institutions, and other stakeholders.
Legal Support and Fast-tracking Patent Examination
Reduced costs and faster processing for patent, trademark, and design applications (up to 80% rebate on patent fees).
Easier Exit Process
Simplified and faster winding-up process for startups with simple debt structures (within 90 days).
2. Funding Support and Incentives:
Fund of Funds for Startups (FFS)
A corpus of ₹10,000 Crore managed by SIDBI to support innovation-driven startups. This fund invests in SEBI-registered Alternative Investment Funds (AIFs), which in turn invest in startups.
Startup India Seed Fund Scheme (SISFS)
Launched with effect from April 1, 2021, this scheme provides financial assistance (up to ₹10 lakhs) to startups for proof of concept, prototype development, product trials, market entry, and commercialization.
Credit Guarantee Fund for Startups
To encourage banks and financial institutions to provide venture capital by guaranteeing loans.
Income Tax Exemption (Section 80-IAC)
Eligible startups (Private Limited Companies or LLPs) can avail 100% income tax exemption on their profits for three consecutive financial years out of their first ten years of incorporation, provided they obtain a certificate from the Inter-Ministerial Board (IMB).
Angel Tax Exemption (Section 56(2)(viib))
Exemption from “Angel Tax” on investments above Fair Market Value, subject to certain conditions and recognition by DPIIT.
3. Industry-Academia Partnership and Incubation:
Setting up Incubators
Promoting the establishment and scaling up of incubators across the country, often through Public-Private Partnerships (PPP).
Research Parks
Setting up new research parks (e.g., modelled on IIT Madras Research Park) to provide R&D facilities and support.
Innovation-focused Programs
Launching programs for students to foster innovation and entrepreneurship.
Mentorship, Advisory, Assistance, Resilience, and Growth (MAARG) Portal
A one-stop platform for facilitation and guidance across various sectors, functions, and stages for startups.
Eligibility Criteria for DPIIT Startup Recognition
To avail the benefits under Startup India, a company needs to be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry.
An entity is considered eligible for DPIIT Startup Recognition if it meets the following criteria:
Company Age
The period of existence and operations should not exceed 10 years from the date of its incorporation/registration.
Company Type
Incorporated as a Private Limited Company, a Registered Partnership Firm, or a Limited Liability Partnership (LLP) in India.
Annual Turnover
Should have an annual turnover not exceeding ₹100 Crore for any of the financial years since its incorporation/registration.
Original Entity
The entity should not have been formed by splitting up or reconstructing an already existing business.
Innovative & Scalable
The entity should be working towards innovation, development or improvement of a product, process or service, or it should be a scalable business model with a high potential for employment generation or wealth creation.
How to Register for Startup India (DPIIT Recognition)
The registration process is entirely online through the Startup India portal (https://www.startupindia.gov.in/).
General Steps:
Incorporate Your Business
Before applying for Startup India recognition, ensure your business is legally incorporated as one of the eligible entity types (Private Limited Company, LLP, or Partnership Firm). You would have already completed registrations like obtaining PAN, Certificate of Incorporation/Partnership Deed, etc.
Register on the Startup India Portal
- Visit https://www.startupindia.gov.in/.
- Click on “Register” and create a profile by providing your name, email ID, and mobile number. Verify with OTP.
- Once registered, you’ll have access to the dashboard.
Apply for DPIIT Recognition
- Log in to your Startup India account.
- Navigate to the “Recognition” tab and click on “Apply for DPIIT Recognition.”
- This will redirect you to the National Single Window System (NSWS) portal (which is now integrated with Startup India for this process).
Fill the Startup Recognition Form
- On the NSWS dashboard, add the form “Registration as a Startup” and proceed.
- Fill in all the required details in the “Startup Recognition Form,” including:
- Entity details (legal name, CIN/LLPIN/Registration No., date of incorporation).
- Full address of the office.
- Authorized representative details.
- Directors/Partners details.
- Details about your startup activities:
- Industry, sector, sub-sector.
- Detailed explanation of how your startup is innovative, developing or improving a product/process/service, or has a scalable business model with high potential for employment/wealth creation. (This is a crucial part of the application).
- Information on patents/trademarks (if any).
- Proof of concept (e.g., pitch deck, website link, video, awards/recognitions).
Self-Certification and Declaration
- Confirm that your startup meets all the eligibility criteria.
- Accept the terms and conditions.
Submit Application
Submit the completed form online.
Receive Recognition Number
Upon successful submission, you will receive a unique recognition number. The DPIIT recognition certificate is typically issued within 2 working days after the online submission, provided all details are accurate and comply with the criteria. You can download the certificate from the portal.
Benefits of DPIIT Recognition (in summary)
- Tax Exemptions: Income tax exemption for 3 years, Angel Tax exemption.
- Easier Compliance: Self-certification for labour and environmental laws.
- IPR Benefits: 80% rebate on patent filing fees, faster IPR processing, list of facilitators.
- Funding Opportunities: Access to Fund of Funds, Seed Fund Scheme, Credit Guarantee, and connection with investors.
- Government Tenders: Relaxed norms for public procurement, exemption from prior experience/turnover criteria, and Earnest Money Deposit (EMD).
- Easier Exit: Fast-track winding up process.
- Networking and Mentorship: Access to a large ecosystem, incubators, mentors, and events.
It’s highly advisable to consult with a our tax experts to ensure proper business entity incorporation and to correctly apply for startup to maximize the benefits.