Govt. Schemes for startups
Many startup founders face problems because they could not get resources to convert their ideas into reality.
It can be a lack of capital or lack of knowledge.
But Govt. of India has launched various programs to encourage startups. Some schemes can really help your startups in the initial stage.
If you want to start your own startup then this article is for you where you will get to know about the schemes initiated by the Union Government.
Fund of Funds
This is the plan where govt. has kept aside a corpus of Rs.10,000 crore under the Startup India action plan.
Till Jan 31, the amount of Rs 5,089.55 crores has been invested into 391 government-recognized startups.
Dunzo, FreshToHome, Jumbotail, Unacademy, Uniphore, CureFit, Vedantu, Vogo, Zostel, etc., were some of the notable startups funded through FFS.
The money under FFS is not invested directly into DPIIT registered startups instead it is contributed to SEBI- registered Alternative Investment Funds(AIFs) and then these AIFs invest that money into startups.
The allocation fund is done by SIDBI(Small Industries Development Bank of India) and it had committed Rs. 4376.95 Crores to 62 AIFs till January 31, 2021.
But these Alternative Investment Funds need to invest at least twice the amount invested under FFS in those startups.
Seed Fund Scheme
Angel Investors and Venture capitalists only invest in startups that are showing some results and have started their operations because they need some proof to assess whether the startups will grow in the future or not.
And a company can get a loan only if it has some Assets to back that loan.
But what about startups that have a good idea and potential to revolutionize the entire ecosystem but could not come into existence just because of lack of resources.
In the initial stages to start some operations, for proofing and to develop a prototype initial capital is needed but because of a lack of resources, many startups fail without even testing their idea.
That is why this step has been initiated by the Govt. of India,
DPIIT registered startups can get funding through partner INCUBATORS under Seed Fund Scheme (SISFS).
DPIIT has a corpus of Rs. 945 Crores so that early-stage startups can get seed funding for Proofing of their Idea, Prototype development, Product Trails, and Market Entry.
As per the data from Startup India’s official website It will support an estimated 3,600 Entrepreneurs through 300 Incubators in the next 4 years according.
This initiative by govt can help early-stage startups to get to the point where they can raise funding from Angle Investors or can get a loan from Commercial Banks to conduct their further operations.
Also Read: All about Angel Investment
Intellectual Property Rights (IPR)
Early-stage startups tend to lose so much of their precious time in handling regulatory requirements.
That is why government decided to help startups with Intellectual Property services and resources like
Tracking of their Application:
The patent application for patent registration services is faster for recognized startups than other companies.
Rebate on Filling of Application:
- Prices for filling application for registration of patents is only Rs. 1600 on other hand it is Rs.8000 for other companies.
- There is a 50% discount on registration of Trade Mark and for other companies the charges are Rs. 10,000.
Free Legal Advice
Registered startups are also eligible for getting all the legal advice related to IPRs from facilitators, all for free. Central Govternment bears the entire fees of these facilitators, startups are only liable to pay statutory fees.
Govt. of India has provided various tax exemption to startups.
The recognized startups that are granted an Inter-Ministerial Board Certificate are 100% exempted from income-tax for a period of 3 consecutive years out of 10 years since incorporation
Note: Startups incorporated on or before 1st Aril 2016 to 1st April 2021, which has been now extended to 1st April 2022, can avail of this tax exemption
Except that there is multiple other Income tax benefit as well, like exemption on long term capital gains.
Easy Incorporation Process
To encourage the startup and entrepreneurship culture in India, Govt has reduced the number of procedures to incorporate a company to 3 which were 10 previously.
Now only 4 days are required to incorporate a company earlier that were 18 to start a business in India.
Ease of Exit
Sometimes, if a startup doesn’t work as per expectations then founders face problems in winding up.
But Govt. has taken care of this as well, registered startups can wind up their operations within 90 days on other hand for other companies it is 180 days
Learning and Development program
To encourage entrepreneurship govt has launched a learning development program to guide budding entrepreneurs throughout their journey.
Also Read: 3 Innovative Edtech Startups Revolutionizing Indian Education System
This program is launched by Govt. of India in partnership with Upgrad. It offers a free 4-week program where you will get to learn from 40+ successful founders on topics that are very essential if you are planning to Start up.
This program covers topics like:
- How to validate your Idea with prospective consumers and the business environment
- Financial and Legal knowledge required to run a business and Business Planning
- How to pitch an idea and approach investors for funding including how to understand the investor’s mindset.
Most of the above-mentioned benefits are available only if your startup is registered under DPIIT(Department of promotion of Industry and Internal Trade).
You can check out the Startup India and SIDBI official website to know more about it and some other schemes.