Shaping India’s growth with Startup India

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Context: The government is concerned about the minuscule number of start-ups becoming eligible for tax benefits under the Startup India programme. Introduction:

  • Only 39 start-ups have qualified for tax sops even after 18 months of flagship initiative launched by the government.
  • Till March (2017), only around 10 start-ups were found eligible for tax benefits.

Current Statistics for startups:

  • With 4200 startups registered in India, India ranks 3rd globally.
  • Indian startups draw$18 billion during 2010-15 including $9 billion in 2015 alone.
  • India is a home to almost 3100 startups starting per year standing just behind the US, UK, and Israel according to the NASSCOM report of 2015.

Need for start-up:

  • The Indian middle class is rising at a very high rate.
  • The 1991 reforms, globalization and rise of IT industry in India have been largely responsible for the rise of entrepreneurship in Indi
  • India’s infrastructure which is largely said to be in a nascent stage is now presenting a huge opportunity.
  • India’s demographics presents a huge opportunity for any business trying to create a dominant position in the global market
  • There is an evident change in the professional and social preferences of the new Indian population.

Start Up India Campaign:

  • Startup India is a campaign based on the action plan aimed at the promotion of bank financing for start-up ventures to boost entrepreneurship and encourage start-ups with job creation.
  • Startup campaign was started by the Prime Minister Narendra Modi in 2015.

About Start up India initiative:

  • Startup India is a flagship initiative of the government intended to build a strong eco-system for nurturing innovation and Startups in the country to drive sustainable economic growth and generate large scale employment opportunities.
  • The Start up India initiative is launched by the government in 2016.
  • It will provide a platform to bring together all stakeholders, stimulate dialogue on key challenges that the Indian innovation ecosystem currently faces, and possible solutions to address them.
  • The Government has launched the Action Plan for Startup India. With this Action Plan the Government hopes to accelerate spreading of the Startup movement.

Recent norms relaxed:

  • The recent relaxation in norms that include doing away with the requirement of ‘ letter of recommendation’ from an incubator/industry association for recognizing a company as a start-up or for tax benefits will also help increase the number of start-up that will qualify for tax benefits.
  • The change norms include broadening the scope of definition of start-ups to include ‘scalability of business model with potential of employment generation or wealth creation.
  • The Centre has decided to reappraise all rejected applications to give all applicants a “fair chance”.

Importance of startup India:

  • Start up India initiative is important for employment generation and wealth creation.
  • It will create a single point of contract for the entire startup ecosystem to enable knowledge exchange and access to funding.
  • Startup Indiawill help boost entrepreneurship and economic development
  • Startup Indiais about creating prosperity in India

Vision of Start up India:

  • The vision of Startup India is that the country must become a nation of job creators instead of being a nation of job seekers.
  • Startup India proposes to move further From digital/ technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education
  • It proposes to move from existing tier 1 cities to tier 2 and tier 3 citites including semi-urban and rural areas.
  • The Action Plan is divided across Simplification and Handholding; Funding Support and Incentives; Industry-Academia Partnership and Incubation among others
  • The government programme aims to fill gaps in the economy for the growth and development of startups and will aim to boost digital entrepreneurship at the grassroots.


  • The technical education funding in India is insufficient to promote innovation at the Universities and centers of technology.
  • The Start up-India needs to push more emphasis on research and development which is a bigger challenge
  • According to the data released by the World Bank the 2011 share of GDP on research and development spending was a mere 0.82 per cent for India, while for China it was at 1.79 per cent and the US at 2.77%.
  • One of the loopholes of the start up initiative is that it provides little to contain fraud and bad debt that may be arises due to the poor implementation of scheme.
  • The quality of education in the institutions found not matching with the organization’s standards for the required skill set and they have to expend on the training of the fresher’s.
  • In India, startups have always faced snags like corruption and government indifference, and the fear of giant corporate that might oppose or kill the start ups which challenge them.

Other challenges include: There are few things which are pre- requisite for successful implementation of the scheme. They are:

  • Electricity
  • Internet connectivity
  • Roads
  • Clean environment
  • Corruption


  • The government need to improve its policy so that the local people can participate in such investment rather than investing in bank.
  • Infrastructure need like road, electricity must be accomplished which will go a long way in development of the country.
  • Digital India mission need to be accelerated.
  • Industry educational institution collaboration needs to be ramped up as students in top notch universities are eager as well as able to drive innovations.
  • Overall financial health of banks and corporate must be good so as to promote the start ups as credit is needed for almost every start up.
  • It is also imperative to diversify the start-up ecosystem which is crowded around IT, software area into potential sectors of Agriculture, food processing , logistics, electronics sectors so that a sustainable growth engine can be delivered
  • There is need to re-look at our education system and incorporate a more practical fact driven system. Subjects like entrepreneurship should be made part of the curriculum.

Reduction of regulatory requirement through self certification in respect of laws pertaining to payment of gratuity, provident fund management, labor contract, pollution control measures to contain air and water pollution. Salient feature of 19 point Action plans of Start Up India, Stand Up India initiative are as below:

  1. To create all India hub to help budding entrepreneur to get access to financial help and for sharing of knowledge at a single contact point.
  2. Easy registration through mobile application. A mobile application for this purpose is schedule to launch on 1st April 2016.
  3. To promote awareness to Intellectual Property Rights (IPR) regulation the initiative aims to create a fast track system to spread awareness as well as low cost service to avail patent protection.
  4. The initiative intends to create a corpus of Rs 10000 Crore over four year period with initial corpus of Rs 2500 Crore. To manage this fund a committee will be formed of private professionals.
  5. To support the flow of funds to new startup initiatives a National Credit Guarantee Trust Company (NCGTC) is being formed with budget of Rs.500 Crore per year.
  6. Venture capital funds are exempted from capital gain tax.
  7. For next three years startup businesses will be exempted for next three years.
  8. Higher investment on startup business will also be exempted from paying taxes.
  9. It proposes annual incubator grand challenge to develop innovation bases study in over 5 lakk schools.
  10. To encourage young talents of country the Atal Innovation Mission will be launched.
  11. To set up over 75 startup support hubs in the Indian Institutes of Science Education and Research(IISERs), the Indian Institutes of Information Technology(IITs), National Institutes of Pharmaceutical Education and Research (NIPERs) and The National Institute of Technology(NITs). A PPP model is also being conceptualized for 35 new incubators.
  12. With initial investment of Rs 100 Crores the government plans to creat new research parks at IITs and Indian Institute of Science campuses.
  13. 50 new bio incubators, 20 new bio connect offices and 150 Technology Transfer offices will be set up by Government.
  14. To introduce innovation related programmes in over 5 lakh schools.
  15. For submitting patent applications of startup ventures government will provide a panel of facilitator for legal support and assistance.
  16. Rebate on 80% of total patent application fees will be provided under this initiative.
  17. Rules for trading and public procurement policies have been simplified for start up businesses.
  18. Exit rules have also been simplified.

Conclusion: India is becoming a hub for budding Startup companies, and the dream of making it the biggest and the most successful country can be achieved by Digitization and Digital marketing. Developed nations are now looking towards India to gain maximum from the huge untapped potential markets. Not only this but is recent years, different countries are taking different initiatives to link up their businesses with the Indian startups in almost all sectors including defense. Such joint venture can attract the huge foreign fund which can boost the country’s growth.

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