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Govt is open to changing definition of a 'startup': DIPP Secy

The government is inviting feedback from various sectors to modify the definition of Indian companies that can be classified as ‘startups‘.

March 14, 2017 / 04:21 PM IST

The government is inviting feedback from various sectors to modify the definition of Indian businesses that can be classified as ‘startups’.

DIPP secretary Ramesh Abhishek said that the definition of startups in its current form needs to undergo a change.

“We would be happy to make it even more broad-based. We are not hung up on definition. For example, startups working in biotech, nothing happens before eight years. Maybe we can have different periods for different kinds of be much more inclusive on the ground reality,” Abhishek said at an event on Monday.

The government is currently inviting feedback from the industry. “From Biotech sector, we have got a specific feedback. Some people have said it should be at least eight years (gestation period). Nothing is cast in stone but there has to be a logical reason,” Abhishek told Moneycontrol.

According to DIPP (Department of Industrial Policy and Promotion), an entity shall be considered as a 'startup' only if it has been incorporated in the last five years and its turnover does not exceed Rs 25 crore in the last five financial years.

Also, a company can be called a ‘startup’ in India only if it is working towards innovation or development of new products, processes or services driven by technology or intellectual property.

“The innovation criteria is deliberately kept otherwise we would not have been able to differentiate between a traditional firm and a startup. We are not diluting the criteria of being innovative,” he added.

Meanwhile, a startup investor, who wished to remain unidentified, said: “It is a little bit restrictive right now because creating caps of when the company was started or turnover, doesn’t necessarily, for us define what is a startup. There are sectors which could have longer gestation period or companies which could be more capital hungry. One needs to be flexible because finally we are trying to create businesses which will have lots of impact. Startups should best be self-regulated.”

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first published: Mar 6, 2017 02:01 pm