Startup India’ Boosting Entrepreneurship

The Startup India scheme for job development was announced on January 16, 2016. It seeks to introduce a unified policy framework for the whole country while addressing all aspects of the startup ecosystem. It has 19 action items divided into three categories: “simplification and handholding,” “financial aid and incentives,” and “research and development.” It also includes “industry-academic partnership and incubation.” Under the provisions of this plan, startups are eligible for several perks, including tax breaks and investment. The Startup India initiative also offers government financial assistance for budding entrepreneurs.

Best Practices

Individual state governments have enacted a few enabling policies to support and promote local business owners. As a result of these efforts, a thriving startup environment has emerged. 

The maturity of these ecosystems varies by state, and states must take several measures to create a healthy startup environment, such as:

• Policy for new businesses
• The nodal department, the officer in charge, and the team
• A mechanism for online implementation
• Mentoring program
• Support for Intellectual Property (IP)
• Collaborations
• Women entrepreneurship 
• Collaboration with other departments

How the Startup India Scheme Is Boosting Entrepreneurship

On January 16, 2016, the Indian government announced the ‘Startup India program to encourage the spirit of entrepreneurship in the country. This effort aims to develop a huge pool of job developers through entrepreneurship rather than merely providing work for the youth. The following are the primary components of this initiative:

• The government will establish an INR 100 billion corpus fund to support private venture capitalists registered with the Securities and Exchange Board of India (SEBI), which would then fund startups in manufacturing, agriculture, education, and health.
• The government has launched a mobile app and website for registration. It will serve as a single point of contact for permissions, approvals, and applications for the Startup India scheme for development.
• Startups will be forced to self-certify their compliance with 9 environmental labour regulations. For the next 3 years, no labour inspection will take place. As a consequence, the burden of regulations would be lessened.
• The government will pay the patent cost, designs, and trademarks for a company with an 80% discount to boost the development and securing of intellectual property.
• The startup will be income tax-free for the first three years if it does not distribute the dividend. Investment in capital gain would be tax-free.
• A startup India centre would be established to help startups acquire funding and mentorship through organised programs to promote knowledge sharing. 
• With the cooperation of national and state governments, foreign and Indian ventures, Capital funds, banks incubators, legal partners, universities, consultants, angel investors, and institutes will serve as a single point of contact on a hub and spoke model.
• Manufacturing startups will be exempt from the “earlier experience and turnover” criterion for government procurement programs if they will take their factory of manufacturing to India. They must also meet the project’s requirements as per central and state governments and public sector undertakings (PSUs).
• Within 90 days of filing their application, startups would be allowed to close their doors.
• A mechanism that guarantees credit will allow startups to receive debt capital via the formal system of banking through the National Credit Guarantee Trust Company (NCGTC)/SIDBI, which also has an annual corpus of INR 5 billion for the coming four years. 

Drawbacks of the Startup India Scheme

The Startup India scheme for development is indeed making great strides. Despite all, the transformation road is not very easy. And there are going to be multiple issues that act as an obstacle. 

• The primary goal of the Startup India initiative is to instil an entrepreneurial spirit among the general public. This system, just as any other, needs widespread public engagement as well as a favourable business policy. If the Startup India effort fails to gain traction at the level of implementation, it will follow in previous initiatives’ footsteps. 
• Second, it is an expert criticism of the 3-year income tax refund, claiming that it is challenging for a startup to succeed in 3 years.  
• To get funds, the unit needs an innovation recognition and certification from the Department of Industrial Policy and Promotion (DIPP), which is an additional barrier to overcome.
• The establishment of the INR 100 billion-corpus fund has also been criticised since it would reward capitalists with private venture taxpayers’ money.

Conclusion

The Startup India scheme for development is different from other government programs in its fundamental methodology and aim. Prior programs aimed to provide work possibilities for the country’s youth in various industries. However, Startup India seeks to channel the youth’s enthusiasm into entrepreneurship, which will create jobs. 

As a result, the Startup India initiative aims to transform the nation’s youth into employment creators rather than job seekers. If the government scheme achieves its goals, it will be a game-changer for the Indian economy.