Startup India plan: Here's what you need to know

Last year PM Modi had announced ‘Startup India, Stand Up’, an initiative to boost startups and newer innovations in India. Now, a few months down and he is out with the Startup action plan. A 30-page action plan has been introduced in such a way that it paves a smoother path for startups and remove hurdles that could hinder their growth. Here’s a brief summary about what has been announced at the Startup India event. The government will be rolling out a mobile app on April 1, especially for startups. The procedure of setting up and registering for a startup will be simplified using this mobile app. The Atal Innovation Mission has been announced to help incubate start-ups. It will grant seed funds and help strengthen existing incubation facilities. It will also offer pre-incubation training to entrepreneurs, among other things. Start-ups can self-certify their compliance with environment and labour laws. There will be no inspection for three years. For patent protection, the government will be setting up a panel of legal facilitators that will help file patents. It will also make the process of filing for patents easier and transparent. One can expect fast tracked patent applications too. Startups will also be given 80 percent rebate in filing patents, however, this is a pilot launch for one year. [caption id=“attachment_225837” align=“aligncenter” width=“640”]  Image: Reuters[/caption] The Modi government plans to relax registration procedures for startups. Startups will get 90-days open window to close their businesses in case of failure. A fund of Rs 10,000 crore is planned for the growth and development of the startups. It will be an infusion of Rs 2,500 crore a year.  In case a start-up is looking to shut down operations, then a person in charge of the company will be appointed and the assets of the company will be liquidated and its creditors paid within six months. The government has also announced credit guarantee fund worth Rs 500 crore per year. Tax exemption for startups have been announced to promote their growth. Starting April 1, 2016, startups will be exempted from income-tax for three years. This exemption will be given to those with/invested in capital gains in the funds of fund recognised by the government. Besides, investments made by incubators above fair market value (FMV) will also be exempted. (Also read: CP Gurnani on the tech ecosystem in India ) To further promote startups, the government plans national and international startup fests. It plans 13 startup centres and 18 technology business incubators that will help setting up as well as scaling. There 31 centres of innovation will be set up at national institutions. The government also plans to set up 7 research parks. Then, 50 new bio-technology incubators, 150 technology transfer offices and 20 bio connect offices will also be created. (Also read: Flipkart's Sachin Bansal believes India isn't ready for internet IPOs yet ) Students can also expect innovation focused programs. These programs will be targeted at school kids. A Grand Challenge Program (National Initiative for Developing and Harnessing Innovations) will award Rs 10 lakhs to 20 student innovations. However, to leverage these facilities, one has to adhere to certain rules to be recognised as a startup. The yearly turn over cannot exceed Rs 25 crore and a registered company/private company will be recognised as a startup, among other things. The business of the startup should be ‘a new, innovative product that will add value to customers and their experience’. However, this is slightly tricky as who will decide whether the product is innovative? However, this may help with newer innovations rather than simply copying an existing model.