Start-Up India

Introduction
On 69th Independence Day of India, standing at the historic Red Fort, Mr.
Narendra Modi announced the much needed Start-up India, Stand up
India campaign which is being welcomed by conglomerates like Soft
Bank by identifying it as the beginning of Big Bang for Indian Start-up
ecosystem. Does claims like this have any basis in reality ? Give 2
minutes to this blog post and youll form an opinion of your own.
What is Start-up India, Stand up India ?
A start-up ecosystem comprises of entrepreneurs, different kinds of

financial support such as debt financing, equity investments, grants, and
non-financial support including incubation, acceleration support,
mentoring and technical experts. It also includes the government policies
and programmes relevant to start-ups, academia and other organisations
and firms that in different ways interact with or support start-ups. The
kinds of new start-ups that offer an opportunity for growth and
employment generation are considered to be those that are innovating,
driven and looking to scale. Cash flow, creating a capacity to scale and
finding the right people have always posed to be major challenges for
India start-ups and these are the issues that Startup India, Stand up
India campaign is aimed at addressing.
The event that witnessed the inauguration of this scheme by Mr. Arun
Jaitley on 16 January 2016 was attended by top notch 40 CEOs, start-up
founders and investors from Silicon Valley, including Masayoshi Son, CEO
of Soft Bank , Sachin Bansal, founder of Flipkart and many others. The
event was a huge success as it was for the first time when two lakh
passes were sought to attend the Start-up India workshop at Vigyan
Bhavan, New Delhi which has a total seating capacity of only 1,350
individuals.
According to the scheme that is announced, a start-up is an entity that is

headquartered in India, which was opened less than 5 years ago and
have an annual turnover less than Rs. 25 Crore (US $ 3.7million).
Primarily, Startup India campaign is based on an action plan aimed at

promoting bank financing for start-up ventures to promote
entrepreneurship and encourage start-ups with jobs creation whereas
Stand up India initiative is aimed at promoting entrepreneurship among
SC/STs, women communities.
If we look back to the times before liberalisation, there was no such

climate for a startup ecosystem to thrive. Even after the establishment
of National Science and Technology Entrepreneurship Development
Board (NSTEBD) in 1982, there was no such ecosystem even in a far
sight. It was only in 1995-1996 that the startup ecosystem started to
develop. It was possible because India started gaining a lot of experience
and expertise in IT sector as more and more young boys and girls started
moving to U.S and Europe as IT professionals. Thats how sometimes the
evil of brain drain helps in disguise.
Major Action Plan
Prime Minister, Mr. Narendra Modi while addressing the first conference of
start-up entrepreneurs introduced the action plan to foster the new start-
ups. Here are the major key points of that action plan aimed at reviving
the ecosystem of Indian Start-ups:
1. To reduce the regulatory burden on start-ups, self-certification option will

be provided, and it will apply to laws like payment of gratuity, contract
labour, employees provident fund, water and air pollution acts.
2. Creation of start up India Hub for easy access to knowledge and funding at
one spot.
3.Ease of registration by filling up a short form through a mobile app.
4.Legal Support for fast-track patent examinations at lower costs. ( 80 %

rebate in fees for filing patent applications)
5. In order to provide the infant start-ups with funding, the government will set
up a fund with an initial corpus of Rs. 2500 crore and a total corpus of
Rs.10000 crore over four years. This credit guarantee fund for start-ups
would help the flow of venture debt from the banking system to start-ups
by standing guarantee against risks.
6. Exemption from Capital Gains Tax on investments made by incubators in
start-ups.
7. Income tax exemption for first three years.
8. Innovation core programmes for students in 5 lakh schools
9. The launch of Atal Innovation Scheme for encouraging innovation among
people.
10. Establishment of 35 incubators and 31 innovation centres at national
institutes on PPP model.
11. Establishment of 7 new research parks with an investment of Rs.100 crore
each.
12. Promotion of entrepreneurship in biotechnology by establishing 50 bio-
incubators, 150 technology transfer offices and 20 bio connect offices.
13. Faster exit option for start-ups in the case of bankruptcy or closure (within
a period of 90 days).
Possible Hiccups
Although the scheme looks promising for the initial boost, still there will
be some hindrances which should be looked into. In India, Startups have
always faced snags like corruption and government indifference, and the
fear of giant corporates that might oppose or kill the start-ups which
challenge them. The author is of the opinion that as far as government
indifference towards policy making in this regard is concerned, the clouds
seem to be clearing but the blight of corruption, and anti-competitive
practices still looms over the budding saplings of start-ups. The setting up
of inter-ministerial board led by the Department of Industrial Policy and
Promotion to decide on the innovative nature of a enterprise in order to
qualify the same as a start-up is also not a laudable step under this
scheme because it is quite evident from past experience that the direct
involvement of government is not desirable for the unbiased growth of
start-up ecosystem. The author would like to recommend that it is a
regulation which must be done away with if the government doesnt want
new start-ups to register in a foreign land like Flipkart ( a company
whose founder is an Indian citizen) did in 2007 by registering itself in
Singapore.
Conclusion
The action plan unveiled by Mr. Modi is a wave maker, but to make it a
radical stimulus for the growth of start-ups, it is very much necessary
that the power to decide the viability and existence of start-ups is taken
away from the inter-ministerial board. It is recommended that instead
of inter-ministerial board, a board of professional experts should be set
up to decide on the viability of start ups. Further, to make sure that this
board of professional experts takes unbiased decisions on the
applications received, a conclusive set of regulations should be made to
regulate its conduct while making any decision on the existence and
viability as well as eligibility for tax benefits of new start-ups. In the
case of any conflicts arising out of bigoted decisions, one should be given
an option to approach the Indian Judiciary.
Other than this board of professional experts, we need some effective

structural reforms that permit free and fair competition. For example,
Net neutrality is a policy requirement that will determine the future for
tech start-ups or any other startups which want to float themselves on
the net. The author is hopeful that if the above-mentioned policy and
structural reforms are done, then this campaign of Government of India
will prove to be Big Bang for the Indian start-up ecosystem.
If anyone wants to assess the current Net Neutrality Status of India

after the TRAI passed its regulations on Net Neutrality on 8th February
2016 , read the blog post Net Neutrality In India by the same Author at
: http://blog.ipleaders.in/net-neutrality-india/

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Introduction

What is Start-up India, Stand up India ?

A start-up ecosystem comprises of entrepreneurs, different kinds of

According to the scheme that is announced, a start-up is an entity that is

Primarily, Startup India campaign is based on an action plan aimed at

If we look back to the times before liberalisation, there was no such

Major Action Plan

1. To reduce the regulatory burden on start-ups, self-certification option will

3.Ease of registration by filling up a short form through a mobile app.

4.Legal Support for fast-track patent examinations at lower costs. ( 80 %

Other than this board of professional experts, we need some effective

If anyone wants to assess the current Net Neutrality Status of India

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