Lok Sabha Question No. 3886 (UNSTARRED), answered on 2018-03-19
Subject: Strengthening of Startup Ecosystems
Ministry: COMMERCE AND INDUSTRY
Asked by: CHANDRA PRAKASH JOSHI, HARISH CHANDRA MEENA, RAMDAS CHANDRABHANJI TADAS, CH. MALLA REDDY, SANTOSH AHLAWAT

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY

## DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION

## LOK SABHA

UNSTARRED QUESTION NO. 3886. TO BE ANSWERED ON MONDAY, THE 19 TH  MARCH, 2018.

## STRENGTHENING OF STARTUP ECOSYSTEMS

## 3886.  SHRI CHANDRA PRAKASH JOSHI:

SHRI HARISH MEENA:

SHRI RAMDAS C. TADAS:

SHRI CH. MALLA REDDY:

SHRIMATI SANTOSH AHLAWAT:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state:

## वाणिज् यवव द्योग म त्री

- (a) the  details  of  the  progress  made  and  number  of  startups/startup  hubs registered so far under Startup India Programme since its inception, State/UTwise;
- (b) whether the existing ecological mechanism is sufficient to finance the startups in the country, if so, the details thereof;
- (c) whether the Government has launched States startups ranking framework to rank States for establishing a robust ecosystem for supporting startups, if so, the details thereof; and
- (d) the other proactive steps taken/ proposed to be taken by the Government to strengthen  the  startups  ecosystems  both  at  National  and  local  level  for desired encouragement to the startups in the country?

## ANSWER

## वाणिज् यवव द्योग म त्रालयमेंराज् यम त्री(श्री सी.आर.चौधरी) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI C.R. CHAUDHARY)

- (a): The  details  of  the  progress  made  under  'Startup  India'  initiative  since  its inception  are  provided  at  Annexure  I.  So  far,  7987  Startups  have  been recognised under the Startup India initiative.
- (b): Government  has  taken  number  of  steps  to  support  the  existing  ecological mechanism  to  finance  Startups.  A  'Fund  of  Funds  for  Startups  (FFS)'  has been established under the Startup India initiative to provide funding support

for  Startups.  Under  the  FFS,  a  total  amount  of  Rs.  600  crore  has  been released to SIDBI. Further, Rs. 1050.7 crore has been committed by SIDBI to 24  Alternative  Investment  funds  (AIFs)  and  Rs.  122.86  crore  has  been disbursed  to  17  AIFs,  who  in  turn  have  invested  Rs.  517.92  crore  in  109 Startups.

- (c): Yes,  Madam.The  Government  has  launched  the  States'  startups  ranking framework on 6 February, 2018. It is expected that this initiative shall support in achieving following objectives:
- i. Help bring to fore progress made by the States/ UTs for promoting Startup ecosystem
- ii. Foster competitiveness & propel the States/ UTs to work proactively
- iii. Facilitate States/ UTs to identify, learn and replicate good practices

The  'State  Startup  Ranking  Framework'  is  spread  across  7  areas  of interventions with a total of 38 action points and overall score of 100 marks. The  areas  of  interventions  include  Startup  policy  and  implementation, incubation support, seed funding support, venture funding support, simplified regulations,  ease  of  public  procurement  and  awareness  and  outreach.  In order  to  evaluate  States  in  a  balanced  and  transparent  manner,  the implementation of action points shall be assessed on supporting documents submitted  by  the  State  Government  as  well  as  feedback  from  Startup ecosystem  components.  This  exercise  will  trigger  a  healthy  competition among the States and motivate them to provide robust ecosystem support to Startups.

- (d): As per the Startup India Action Plan launched in January 2016, Startup India Hub was envisioned to work in a hub and spoke model and collaborate with Central  &  State  governments.  Since  the  launch  of  Startup  India  initiative, many  State  Governments  have  been  facilitated  by  Startup  India  Hub  to strengthen the startups ecosystems at the State level.

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## ANNEXURE- I

## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (a)  OF  THE  LOK  SABHA UNSTARRED QUESTION NO. 3886 FOR ANSWER ON 19.03.2018.

## Progress made under the Startup India initiative

## Simplification and Handholding

## 1.  Compliance Regime based on Self-Certification

-  List of 36 industries in 'white' category has been published on CPCB's website.  CPCB  has  exempted  such  industries  from  all  the  applicable self-certifications under 3 Environment related Acts listed in the Startup India Action Plan.
-  Ministry of Skill Development and Entrepreneurship (MSDE) has issued advisory  to  states  to  allow  Startups  to  self-certify  compliance  with  the Apprenticeship Rules, 1992 of Apprenticeship Act, 1961.
-  Startups  have  been  allowed  to  self-certify  compliance  in  respect  of  6 Labour  laws;  26  states  have  confirmed  compliance  to  the  advisory issued on 12.01.2016 and new advisory issued on 6.4.2017 by Ministry of Labour and Employment (MoLE).

## 2.  Rolling out of Mobile App and Portal

-  Startup  India  portal  has  been  developed  to  provide  access  to  the following:
- o Startup  recognition  -  7987  Startups  have  been  recognised  till  14 th March 2018
- o Advertising space for Startups
- o Learning & development  module  -  over  1,97,000 registrations achieved
-  The  portal  acts  as  a  one  stop  solution  for  all  queries  related  to  the Startup India initiative
-  Startup  India  mobile  app  has  been  developed  to  provide  on  the  go services and information to users.

## 3.  Startup India Hub

-  84,000+ queries have been handled by the Startup India Hub
-  460+ Startups have been mentored for incubation and funding support
-  30,000+ registrations have been achieved on the Hub as of February, 2018.

## 4.  Legal Support and Fast-tracking Patent Examination at Lower Costs

-  423 facilitators for Patent and Design and 596 facilitators for Trademark applications have been empanelled to assist Startups in fling of patents and trademarks
-  768 applications have received rebate of up to 80% on patent fees and have also received legal assistance
-  Patent filing has  been  made  faster  for Startups and  accordingly 126Startups have been facilitated
-  Trademark facilitation has been extended to 858Startups as of January, 2018

## 5.  Relaxed Norms of Public Procurement for Startups

-  Relaxed  norms  for  public  procurement  for  micro,  small  and  other enterprises  have  been  provisioned  in  the  Procurement  Policy  by  the Ministry of Micro, Small and Medium Enterprise
-  All  Central  Ministries /  Departments /Department of Public Enterprises/ Central  Public  Sector  Undertakings  have  been  authorised  to  relax conditions of prior experience and prior turnover with respect to MSEs in all public procurements subject to meeting quality and technical specifications
-  Further, Rule 173(i) has been incorporated in GFR, 2017 which provides for  relaxation  of  conditions  of  prior  turnover  and  prior  experience  for Startups,  and
-  Rule 170(i) of GFR 2017 has been amended on 25th July 2017 allowing all  Startups  as  recognized  by  DIPP  exemption  from  submission  of Earnest Money Deposit/Bid Security in public procurement tenders.

## 6.  Faster Exit for Startups

-  Insolvency and Bankruptcy Board has been constituted
-  MCA  has  notified  the  relevant  sections  55  to  58  of  Insolvency  and Bankruptcy  Code,  2016  pertaining  to  the  Fast  Track  process  on 16.6.2017 and also notified that the process shall apply to Startup (other than the partnership firm) as defined by DIPP. For Startups, Insolvency Resolution process to be completed within 90 days as against 180 days for other entities.

## Funding Support and Incentives

7.  Providing Funding Support through Fund of Funds (FFS) with a Corpus of Rs. 10,000 crore
2.  Fund of Funds for Startups of Rs. 10,000 crore shall be released over two Finance Commission cycles, that is, by the year 2025
3.  Rs. 500 crore has been released to SIDBI in FY16 and Rs. 100 crore in FY 17
4.  Total commitments  under  FFS  stand  at Rs.1050.7 crore to 24 Alternative Investment  Funds  (AIFs)  while  drawdown  by  AIFs  is Rs.122.86 crore
5.  109Startups have received funding under FFS with catalysed investment of Rs.517.92 crore

## 8.  Tax Exemption on Capital Gains

-  Section 54 EE has been introduced under the Finance Act, 2016 which provides  for  exemption  of  capital  gain  arising  out  of  transfer  of  long term  capital  asset  (not  exceeding  Rs.  50  lakh  in    a  financial  year) invested in a fund notified by Central Government
-  Section 54 GB of Income-tax Act, 1961 has been amended to provide exemption from  tax  on  capital  gains  arising  out  of  sale  of  residential house or a residential plot of land if the amount of net consideration is invested in equity shares of an eligible Startup for utilizing the same to purchase specified asset.

## 9.  Tax Exemption to Startups for 3 Years

-  Provision has been made for Startups (Companies and LLPs) to avail income  tax  exemption  for  3  years  in  a  block  of  7  years,  if  they  are incorporated between 1 st April 2016 and 31 st March 2019.
-  87Startups have been approved for availing tax benefits

## 10.  Tax Exemption on Investments above Fair Market Value

##  Removal of Angel Tax

Tax  exemption  on  investment  above  Fair  Market  Value  has  been introduced on 14th June 2016.

## Industry-Academia Partnership and Incubation

## 11.  Launch of Atal Innovation Mission (AIM)

-  941 schools selected for  establishing  tinkering  labs  and  Rs.  12  Lakh each has been disbursed to 374 tinkering labs

## 12. Harnessing Private Sector Expertise for Incubator Setup

-  6  existing  Incubators have  been  sanctioned scale-up grant of Rs. 2.5 crore each by NITI Aayog
-  13 New Incubators approved for funding support by NITI Aayog

## 13.  Building Innovation Centres at National Institutes

-  15 Startup Centres have been approved for joint set up by Department of  Science  and  Technology  (DST)  and  Ministry  of  Human  Resource Development (MHRD)
-  Amount of Rs. 37.50 lakh (Rs. 3.75 lakh each for 10 Startup Centres) has been released as 1st instalment of the grant for 10 Startup Centres by MHRD
-  11  TBIs  (Technology  Business  Incubators)  have  been  approved  and Rs. 42 crore have been sanctioned and Rs. 17 crore disbursed to TBIs

## 14.  Setting  up  of  7  New  Research  Parks  modelled  on  the  Research  Park Setup at IIT Madras

-  IIT Kharagpur at a cost of Rs. 100 crore is under construction and Rs. 74.83 Cr. released to IIT Kharagpur
-  IIT Mumbai at a cost of Rs. 100 crore is under construction and Rs. 34 Cr. released to IIT Bombay
-  The Research Park at IIT Gandhinagar has been sanctioned by DST at a total cost of Rs. 90 crore and the Department has already disbursed instalment of Rs. 40 crore
-  5  more  Research  Parks  at  IIT  Kanpur,  IIT  Delhi,  IIT  Guwahati,  IIT Hyderabad and IISc to be supported by MHRD approved with a budget of Rs. 375 Crore for a period of 3 years.

## 15.  Promoting Startups in the Biotechnology Sectors

-  Department of Biotechnology (DBT) has sanctioned Rs. 1 crore under Biotech Equity fund to be given to each bio-incubator. The initiative has already helped 3 Bio-incubators that have been selected as recipients of the above mentioned Equity Fund.
-  30  bio-incubators  have  been  supported  through  funding  support  with Rs. 185 crore sanctioned and Rs. 119 crore disbursed. The impact has been multi-fold as a total of 290 start-ups have received benefits from these  bio-incubators  under  various  programmes  like  Biotechnology Ignition Grant, IIPME, Sparsh, Grand Challenges, BioNEST, etc.
-  In respect of Bengaluru-Boston Biotech Gateway to India: 4 entrepreneurs have joined and 1 is joining the Harvard University, USA to share ideas and receive mentorship

## 16.  Launching of Innovation Focused Programs for Students

- (a) Innovation Core program with an outreach to 10 lakh innovations from 5 lakh schools
-  4  regional  workshops  organized  &  revamped  MANAK  (Million  Minds Augmenting National Aspiration and Knowledge) approved
-  Over  1  lakh  INSPIRE  (Innovation  in  Science  Pursuit  for  Inspired Research ) Awardees competed at District & State Level
-  588 were selected to participate in the 6th National Level Exhibition and Project Competition, Delhi
-  Top 60 projects were showcased at the Annual Festival of Innovations in RashtrapatiBhavan from 4th-10th March 2017
- (b) NIDHI  (National  Initiative  for  Developing  and  Harnessing  Innovation)Grand challenge program
-  19 new TBIs established
-  9 TBIs supported for Seed Support System (SSS)
-  10  NIDHI-PRAYAS  (Promoting  and  Accelerating  Young  and  Aspiring technology entrepreneurs) and 10 NIDHI-EIR (Entrepreneurs-in-
- Residence) sanctioned
-  6  new  centres  of  excellence  (COEs)  have  been  recommended  to receive funds for COEs in FY2017-18
- (c) UchhattarAvishkarYojana (UAY)
-  Rs. 475 crore for 2016-18 has been earmarked for 3 years
-  Rs. 75 crore has been disbursed for research proposals from IITs under 6 domains
-  92 projects have been recommended for approval

## 17.  Other incentives :

-  External Commercial Borrowing (ECB) guidelines for Startups: Startups can borrow up to $3 million or equivalent  per financial  year,  either  in rupees, or any convertible foreign currency or a combination of both, for
- a minimum average maturity period of three years  Foreign venture capital  investors  (FVCI)  are  now  allowed  to  invest  in Startups  irrespective  of  any  sector  without  Reserve  Bank  of  India's approval  SEBI (Foreign Portfolio Investors) Regulations, 2014 have  been amended to permit FPIs to invest in unlisted Non-Convertible debentures and securitised debt instruments  The SEBI Board has approved five key amendments  to SEBI (Alternative Investment Funds) Regulations, 2012 with respect to 'Angel Funds': o The upper limit for number of angel investors in a scheme has been increased from forty nine to two hundred o Angel Funds will be allowed to invest in start-ups incorporated within five years, which was earlier 3 years. o The requirement of minimum investment amount by an Angel Fund in  any  venture  capital  undertaking  has  been  reduced  from  Rs.  50 lakh to Rs. 25 lakh. o The lock-in requirements of investment made by Angel Funds in a venture capital undertaking has been reduced from three years to one year.
- o Angel  Funds  are  allowed  to  invest  in  overseas  venture  capital undertakings upto 25% of their investible  corpus  in  line  with  other AIFs.
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