Startup India scheme decoded: Funding, eligibility and benefits for budding entrepreneurs

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What is the Startup India scheme

The Startup India scheme is a flagship initiative of the Indian Government that began in 2016 with the goal of fostering entrepreneurship and promoting innovation across the country. The scheme provides subsidies to startups, tax incentives, ease of compliance, and easy access to finance. By eliminating regulatory obstacles and promoting innovation, the scheme has the mission to make India a global hub for startups. It also seeks to provide employment and build a sustainable ecosystem that will allow new business to grow.

Eligibility criteria for startups

The company must be registered as a limited company, a partnership firm, or a limited liability partnership in order to qualify under the Startup India program. The company must not be over 10 years old and must have a turnover less than ₹100 crore in any of the previous financial years. On top of that, the startup should be innovation, product and service development, or product and service improvement focused, or it should have a scalable business model with significant potential for wealth creation and job generation. Importantly, the firm should not have been formed by subdividing or reorganizing an already existing venture.

Funding support and loan amount

The government has created a Fund of Funds for Startups (FFS) with a corpus of ₹10,000 crore as a vehicle to provide financial support. The fund does not invest in startups directly but invests funds through SEBI-registered venture capital funds and thereby ensures that emerging businesses receive the funds they need to scale up. Along with equity funding, startups can also avail loans and credit guarantee support under the program. The financing varies with the stage, sector, and potential of the start-up. This facilitation of capital is critical for start-up entrepreneurs who typically have a difficulty in securing conventional bank finance.

Key benefits and features of the scheme

Start-ups in the scheme enjoy different advantages, which include exemption of income tax for three straight years, exemption of capital gains tax under special conditions, and rebate in the fee for filing the patent application. They also enjoy quick closure procedures, which make it easier to close down businesses in case there is a need. Self-certification compliance with labour and environmental laws is another significant advantage, which reduces the regulatory expenses for new firms. The program also promotes networking and mentoring opportunities by providing startups with industry mentors, investors, and incubation centres across the country.

FAQs

1. How can a company sign up under the Startup India initiative?

Startups are able to register on the government's official Startup India portal or mobile app by furnishing documentation like certificate of incorporation and details regarding their business model.

2. Does every startup get funding under the scheme?

No, not every startup gets funding directly. Funding is dependent on the business model, scalability, and evaluation by SEBI-registered venture funds that are sponsored by the Fund of Funds.

3. Can service-based industries take advantage of the scheme?

Yes, service startups qualify provided they meet the innovation, scalability, and employment generation conditions set out under the scheme.