Start-Up India Scheme A Major Breakthrough
Start-Up India Scheme A Major Breakthrough. The Hon’ble Prime Minister of India, Shri Narendra Modi, has always emphasized upon the importance of equipping the youth with the necessary tools and machinery to become self-reliant. He focused on the importance of effectively utilizing the ideas of youth in building a prosperous nation. India comprises of the largest youth population, and this has always been seen as a positive point with regard to the startup ecosystem in India. But, due to inefficient administration and red tape, their true value had been hindered. January 16th, 2016 has been a landmark day, as on this day the Hon’ble PM unveiled his pet project of the Startup India scheme.
The project was inaugurated in Vigyan Bhavan comprising of young and zealous entrepreneurs. This project is a clear indicator to provide a hassle-free environment for initiating new ventures and encouraging young entrepreneurs to start off their own businesses. On this historic day, the Government not only inaugurated a visionary project but also provided a platform for interaction between young entrepreneurs and policymakers. As such an event has not been held in the most sophisticated startup ecosystems like the US and Israel so far, it is beyond doubt that the government must be applauded graciously for bringing the project into effect. It is a direct attempt to build another ecosystem along with conventional businesses. VIRTUAL CFO
Start-Up India Scheme
Such a policy framework is a great move towards the economic growth of the country irrespective of traditional business policies. But, it is important to understand the reformation of some of the important policies in order to have a better outcome. The scheme is entirely based upon the progress of young entrepreneurs and their business ventures. The policies are comprehensibly constructed aiming at reforming the tax regime, easier regulation norms for intellectual property rights, etc. But, before we discuss changes brought in the policy, it is important to understand what would fall under the category of startups. The term ‘startup’ is not defined under any of the Indian statutes, so under the scheme, an entity that is incorporated or registered in India in prior five years, with annual turnover not exceeding INR 25 crores in any preceding financial year, working towards the innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. The reliance has been placed upon bringing technological development and availability of services to the grass root levels.
Earlier, to bring a business idea into effect it used to take months, which was disappointing for many entrepreneurs and thereby, leading to brain drain. But, the scheme aims at enhancing a business climate to facilitate quick and smooth implementation of ideas. The issue of patentability left many entrepreneurs conscious about protecting their ideas. But, under the new scheme, the filing of patent registration has been eased including 80% reduction in filing patent fee. This would encourage entrepreneurs to operate in a hassle-free atmosphere. The expeditious process of patent registration would bring more productivity and encourage many young entrepreneurs to bring innovative ideas into action and thereby, creating more jobs in India. Self-certification would provide startups to protect themselves from prosecutions for three years, as no labour inspector will come and conduct any inquiry sou moto. Three years is a long period, but the entrepreneurs are required to comply with the rules and regulations, as any sort of unfair trade practices would lead to prosecution. There are instances where a startup may not yield expected results. Considering such situations, the scheme provides a mechanism where a startup can wind up within 30 to 60 days.
The scheme facilitates faster exists which is not expensive and less time-consuming. Till the Insolvency and Bankruptcy Bill, 2015 gets Presidential assent, the scheme has provided the process of winding up which could be initiated merely with an application filed with the Ministry of Corporate Affairs and a liquidator would be appointed to execute the process accordingly. But, such an application can be filed only by the entities falling within the category of startups. The scheme has also provided with a lenient tax regime where a three-year exemption would be provided to a startup. However, a little clarification is required to be made as no startup would immediately start earning profits. Therefore, it must be clarified on whether the scheme is applicable at the time when a startup is initiated or when the profit is made.
Throughout the nation, Prime Minister Mr Narendra Modi has received laudable responses. But, it is too soon to predict the outcome of these visionary projects. Although, the scheme focuses upon making India a Startup hub, as India stands third in the global startup ecosystem. But, various rules and regulations are yet to be formalized. A new ray of hope is seen in the young business community as the project has provided a stimulus to many young entrepreneurs to bring their ideas into action. The scheme cannot be judged now, but a regular assessment is required to make requisite upgradation to enhance a better implementation of the scheme. Overall, the project is a path-breaking step, and efficient policy implementation can lead to its success.