New Delhi: Prime Minister Narendra Modi launched a number of initiatives on Saturday to support the country's start-ups, including a 100 billion rupee ($1.5 billion) fund and a string of tax breaks for both the companies and their investors.
India, which already has a handful of new generation success stories, is seeking to encourage more cutting edge technology and other start-ups - supporting new businesses in a country which badly needs to accelerate a still sluggish economic recovery and create millions of jobs as the workforce expands.
Modi's high-profile event in New Delhi - attended by hundreds of investors and entrepreneurs, including the founder of taxi-hailing app Uber, Travis Kalanick - promised a shot in the arm for the sector, with exemptions from tax and compliance inspections for three years.
"I urge all entrepreneurs to create companies that solve India's problems and create jobs," he told a packed auditorium in New Delhi, speaking in Hindi.
"Start-up does not mean a billion dollar company where thousands of people work. It is about employing even 5 people, and developing India."
Online companies such as e-commerce marketplaces Flipkart and Snapdeal, along with ride-sharing company Ola, have highlighted the potential for home-grown technology successes in a country best known for capitalising on cheap engineering talent as the world's back office.
However, the push by Modi's government is the first time Indian policymakers have announced a set of policies directly aimed at promoting start-ups and entrepreneurship.
Modi said on Saturday start-up companies would benefit from cheaper and faster patent applications, enjoying 80 percent rebates on the cost of patents. A mobile app would allow companies to be set up within a day, he promised.
Moreover, they will be exempt from income tax for the first three years in which they make a profit. Their investors could also benefit: recognised funds of funds could see exemptions from capital gains tax, Modi said.
The announcements, at a government-organised conference on start-ups in New Delhi, comes months after Modi made a whirlwind tour of Silicon Valley, meeting the chief executives of Facebook Inc, Google Inc and Apple Inc.
India, with a rapidly expanding population of Internet users, is seen as one of the world's fastest growing start-up hotspots. Venture capital funds including Sequoia and Tiger Global have raised multi-billion dollar funds for their Indian investments in recent years.
The National Association of Software and Services Companies estimates the number of new companies launched in India grew by 40 percent in the last year.