Startup India

 Startup India is a flagship initiative launched by the

Government of India on 16th January, 2016 to build a
strong eco-system for nurturing innovation and
startups in the country which will drive economic growth and
generate large scale employment opportunities.
 Startup India was a campaign that was first addressed by
the PM Narendra Modi on 15th August 2015 at Red Fort,
New Delhi.
o This campaign was introduced under the
Government of India as an initiative to develop over
75 startup support hubs in the country.
 The Government through this initiative aims to empower
startups to grow through innovation and design.
 The Standup India scheme was launched on 5th April,
2016 to facilitate bank loans from Scheduled
Commercial Banks (SCBs) between Rs.10 lakh to Rs.1
Crore to at least one Scheduled Caste (SC) or Scheduled Tribe
(ST) and one woman per bank branch for setting up a
greenfield enterprise in trading, services or manufacturing
sector.
 The scheme is expected to benefit at least 2.5 lakh
borrowers.
 The Startup India scheme is based majorly on three
pillars which are mentioned below:
 Providing funding support and incentives to the various
start-ups of the country.
 To provide Industry-Academia Partnership and Incubation.
 Simplification and Handholding.
 Organized by the Department for promotion of industry
and internal trade, the major objective of Startup India
is to discard some of the restrictive States Government
policies which include:
 License Raj
  Land Permissions
 Foreign Investment Proposals
 Environmental Clearances
 The government has been working towards recognising the
real potential of startups operating across diverse segments.
 The govt’s focus has been on three C’s – capital, courage
and connections – which Prime Minister Modi describes as
the main pre-requisites for setting up a business.
 Due to this, there has been a significant rise in entrepreneurs,
particularly from Tier-2 and Tier-3 cities.
 The participation of women has also increased under
the Startup India programme.

Definition of a Startup
 For government purposes, an entity is classified as a Startup
by DPIIT if it meets the following criteria:
 It must be incorporated as a private limited company
under the Companies Act 2013, registered as
a partnership firm under the Partnership Act 1932,
or be a limited liability partnership under the
Limited Liability Partnership Act 2008 in India.
 Such an entity is considered a Startup for a
maximum of 10 years from its registration date.
 Furthermore, the entity’s annual turnover should be
at most Rs 100 crore in any financial year following its
registration.
 Startups should be focused on innovative product or
service development or improvement, possess a
scalable business model, and have the potential for
significant wealth creation or employment generation.
 It’s important to note that entities created by splitting or
restructuring existing businesses are not classified as
Startups.
Registration for Startup India

 A person must follow the below-mentioned steps that are

important for the successful registration of their business
under the Startup India scheme:
 A person should incorporate their business first
either as a Private Limited Company or as a Limited
Liability Partnership or as a Partnership Firm along
with obtaining the certificate of Incorporation, PAN, and
other required compliances.
 A person needs to log in to the official website of Startup
India where he/she has to fill all the essential details of
the business in the registration form and upload the
required documents.
 A letter of recommendation, Incorporation/Registration
Certificate, and a brief description of the business are
some of the essential documents required for the
registration purpose.
 Since the start-ups are exempted from income tax
benefits, therefore, they must be recognized by the
Department of Industrial Policy and Promotion
(DIPP) before availing these benefits. Also, they
should be certified by the Inter-Ministerial Board
(IMB) to be eligible for IPR related benefits.
 After successful registration and verification of the
documents, you will be immediately provided with a
recognition number for your startup along with a
certificate of recognition.

Startup India Benefits

 After the launch of the Startup India scheme, a new program
was launched by the government named the I-MADE
program which focused on helping the Indian
entrepreneurs in building 1 million mobile app start-
ups.
 The government of India had also launched the Pradhan
Mantri Mudra Yojana which aimed to provide financial
 supports to entrepreneurs from low socioeconomic
backgrounds through low-interest rate loans.
 Some of the key benefits of Startup India are as follows:
 To reduce the patent registration fees.
 Improvement of the Bankruptcy Code ensuring a 90-day
exit window.
 To provide freedom from mystifying inspections and
capital gain tax for the first 3 years of operation.
 To create an innovation hub under the Atal Innovation
Mission.
 Targeting 5 lakh schools along with the involvement
of 10 lakh children in innovation-related programs.
 To develop new schemes that will provide IPR
protection to startup firms.
 To encourage entrepreneurship throughout the
country.
 To promote India as a start-up hub across the world.

Startup Action Plan

 The Action Plan proposes a 19-point action list which will
enable setting up of incubation centers, easier patent
filing, tax exemption on profits, setting up a Rs.10,000
crore corpus fund, ease of setting-up of business, a
faster exit mechanism, among others.
1. Compliance regime based on self certification: This
self-certification will apply to laws like payment of
gratuity, contract labour, employees provident fund,
water and air pollution acts.
2. Startup India hub: A startup India hub will be created
as a single point of contact for the entire startup
ecosystem to enable knowledge exchange and access to
funding.
3. Simplifying the startup process: A startup will be to
able to set up by just filling up a short form through a
 mobile app and online portal. A mobile app will be
launched on April 1 through which startups can be
registered in a day. There will also be a portal for
clearances, approvals and registrations.
4. Patent protection: Government will promote awareness
and adoption of Intellectual Property Rights (IPRs) by
startups and help them protect and commercialise IPRs.
5. Funds of funds with a corpus of Rs 10,000 crore: In
order to provide funding support to startups, the
government will set up a fund with an initial corpus of Rs
2,500 crore and a total corpus of Rs 10,000 crore over
four years. The fund would be managed by private
professionals drawn from the industry while LIC will be a
co-investor in the fund.
6. Credit Guarantee Fund: The credit guarantee fund for
start-ups would help flow of venture debt from the
banking system to start-ups by standing guarantee
against risks. A National Credit Guarantee Trust Company
is being envisaged with a budgetary allocation of Rs 500
crore per year for the next four years.
7. Exemption from Capital Gains Tax: Currently,
investments by venture capital funds in startups are
exempt from this law. Now, the same is being extended
to investments made by incubators in startups.
8. Income Tax exemption for startups: Income tax
exemption to startups announced for three years.
9. Tax exemption on investments above Fair Market
Value.
10. Startup fests: Innovation core programs for
students in 5 lakh schools. There will also be an annual
incubator grand challenge to create world class
incubators.
11. Launch of Atal Innovation Mission: Atal
Innovation Mission started to give an impetus to
innovation and encourage the talent among the people.
 12. Setting up of 35 new incubators in
institutions: PPP model being considered for 35 new
incubators, 31 innovation centres at national institutes.
13. Setting up of 7 new research
parks: Government shall set up seven new research
parks – six in IITs, one in IISc with an initial investment of
Rs 100 crore each.
14. Promote entrepreneurship in
biotechnology: Five new bio clusters, 50 new bio
incubators, 150 technology transfer offices and 20 bio
connect offices will be established.
15. Innovation focused programmes for
students: There will be innovation core programs for
students in 5 lakh schools.
16. Panel of facilitators to provide legal support
and assist in filing of patent application.
17. 80 per cent rebate on filing patent
applications by startups.
18. Relaxed norms of public procurement for
startups.
19. Faster exits for startups.

Challenges Faced by Indian Startups

 Funding Challenges:
 Indian startups encounter difficulties in securing
adequate funding for their ventures. Limited access to
capital inhibits their growth potential and hampers
innovation. Startups face challenges in attracting
investors and obtaining venture capital due to various
factors such as risk aversion, uncertain market
conditions, and lack of investor confidence.
 Revenue Generation Struggles:
 Many startups face challenges in generating
sustainable revenues. They often struggle to find
viable business models, monetize their products or
 services, and achieve profitability. Limited market reach,
competition from established players, and insufficient
customer acquisition pose additional hurdles.
 Lack of Supportive Infrastructure:
 The absence of a robust infrastructure ecosystem
can impede the growth of startups.
 Challenges include inadequate physical infrastructure,
limited access to technological resources, and a dearth of
incubation centers, mentorship programs, and networking
opportunities. Startups require supportive
environments to thrive and access necessary
resources, expertise, and guidance.
 Regulatory Environment and Tax Structures:
 Startups in India face regulatory hurdles and complex
tax structures.
 Cumbersome compliance processes, bureaucratic red
tape, and ambiguous regulations create obstacles for
startups. Taxation complexities can add to the
administrative burden and impact profitability.

Government Measures & Initiatives to Promote

Startup Culture in the Country
 As part of the “Make in India” initiative, the government
proposes to hold one Start-Up fest at the national level
annually to enable all the stakeholders of the Start-up
ecosystem to come together on one platform.
 Launch of Atal Innovation Mission (AIM) – to
promote Entrepreneurship through Self-Employment and
Talent Utilization (SETU), wherein innovators would be
supported and mentored to become successful entrepreneurs.
It also provides a platform where innovative ideas are
generated.
 Incubator set up by PPP – To ensure professional
management of Government-sponsored or funded incubators,
the government will create a policy and framework for setting-
 up of incubators across the country in public-private
partnerships. The incubator shall be managed and operated by
the private sector.
 35 new incubators in existing institutions. Funding
support of 40% shall be provided by the Central
Government, 40% funding by the respective State
Government and 20% funding by the private sector for
establishment of new incubators.
 35 new private sector incubators. A grant of 50% (subject
to a maximum of INR 10 crore) shall be provided by
Central Government for incubators established by the
private sector in existing institutions.
 A Startup India Seed Fund Scheme has been implemented
with effect from April 1, 2021. The scheme aims to provide
financial assistance to startups for proof of concept, prototype
development, product trials, market entry and
commercialisation.
 National Startup Awards: It seeks to recognize and reward
outstanding startups and ecosystem enablers that are
contributing to economic dynamism by spurring innovation and
injecting competition.
 States Startup Ranking: The States’ Startup Ranking is an
annual capacity building exercise which has been developed
with the objective to build a conducive startup ecosystem
across the country, through sustained efforts of States and
Union Territories.
 SCO Startup Forum: The first-ever Shanghai Cooperation
Organisation (SCO) Startup Forum was launched in October
2020 to develop and improve startup ecosystems collectively.
 Prarambh: The ‘Prarambh’ Summit aims to provide a platform
to startups and young minds from around the world to come up
with new ideas, innovation and invention.
 MAARG: The MAARG mentorship platform aims at facilitating
intelligent matchmaking between mentors & startups across
varied sectors at scale.
  National Initiative for Developing and Harnessing
Innovations (NIDHI)
 Startup India Action Plan (SIAP)
 Ranking of States on Support to Startup Ecosystems
(RSSSE)
 PMMY (Pradhan Mantri Mudra Yojana)

Scenario of the Startup Ecosystem in India

 India has emerged as the 3rd largest ecosystem for
startups globally as of 31st May 2023. India ranks 2nd in
innovation quality with top positions in the quality of
scientific publications and the quality of its universities among
middle-income economies.
 Indian Startup Ecosystem has seen exponential growth in
past few years (2015-2022):
 15X increase in the total funding of startups
 9X increase in the number of investors
 7X increase in the number of incubators
 As of May 2023, India is home to 108 Unicorns with a total
valuation of USD 340.80 Bn.
 Out of the total number of unicorns, 44 unicorns were
born in 2021 and 21 unicorns were born in 2022.

States’ Startup Ranking

 The States’ Startup Ranking is a yearly capacity building
exercise created and released by DPIIT that evaluates
all of India’s states and Union Territories on their efforts
to build an ecosystem conducive to startup growth.
 States’ Startup Ranking was launched in February 2018 to
achieve the vision of building a robust startup
ecosystem in the country.
 It aims to evaluate the Indian startup landscape through
the eyes of state policy intervention and identify state
 practices that accelerate ecosystem growth and
development.
 The states ranking has led each state to have
dedicated startup policies and through annual rankings,
it tracks the evolution of these policies and the overall efforts
of states in ecosystem building.
 Objectives:
 Help bring to the fore progress made by the States/
UTs for promoting the Startup ecosystem.
 Foster competitiveness & propel the States/ UTs to
work proactively.
 Facilitate States/ UTs to identify, learn and
replicate good practices.
 Classification: States and Union Territories are classified
into 5 Categories:
 Best Performers
 Top Performers
 Leaders
 Aspiring Leaders
 Emerging Start-up Ecosystems.
o Note: The ‘Beginner list’ was part of earlier
rankings but has been discontinued since 2019.

States’ Startup Ranking 2022 (4th Edition)

 States and UTs were divided into two categories:
 Category A (Population> 1 crore) and Category B
(Population< 1 crore)
 7 broad Reform Areas:
 The participants were evaluated across 7 broad Reform
Areas consisting of 25 Action Points such as:
o Institutional Support
 o Fostering Innovation and Entrepreneurship
o Access to Market
o Incubation and Mentorship support
o Funding Support
o Capacity building of enablers
o Roadmap to a sustainable future.
 15% of the total scores were awarded based on 10,000+
survey responses collected in 9 languages (telephonic
and web-based).

Ranks States

Gujarat
Best performer Karnataka
Kerala

Maharashtra
Top performers Odisha
Punjab

Andhra Pradesh
Leader Assam
Madhya Pradesh

Bihar
Aspiring leaders Haryana
Andaman and Nicobar Islands

Chhattisgarh
Emerging states Delhi
Jammu and Kashmir