Lok Sabha Question No. 4317 (UNSTARRED), answered on 2016-12-12
Subject: Make in, Startup and Stand up India Programmes
Ministry: COMMERCE AND INDUSTRY
Asked by: RANGASWAMY DHRUVANARAYANA, KIRRON KHER, KUNWAR PUSHPENDRA SINGH CHANDEL, VEENA DEVI, UDIT RAJ, PRAHLAD SINGH PATEL, MOHANBHAI KALYANJIBHAI KUNDARIYA, POONAMBEN HEMATBHAI MAADAM

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY

## DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION

## LOK SABHA

UNSTARRED QUESTION NO. 4317. TO BE ANSWERED ON MONDAY, THE 12 TH  DECEMBER, 2016.

## MAKE IN INDIA, STARTUP AND STAND UP INDIA PROGRAMMES

## 4317.  SHRI R. DHRUVA NARAYANA:

SHRIMATI KIRRON KHER:

SHRI KUNWAR PUSHPENDRA SINGH CHANDEL:

SHRIMATI VEENA DEVI:

DR. UDIT RAJ:

SHRI PRAHLAD SINGH PATEL:

SHRI KUNDARIYA MOHAN BHAI KALYANJI BHAI:

SHRIMATI POONAMBEN MAADAM:

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

## वाणिज् यवव द्यग ं ्री

- (a) the status of implementation of 'Make in India', 'Startup' and 'Standup India' programmes in the country;
- (b) whether  the  Government  proposes  to  promote  Micro,  Small  and  Medium Enterprises (MSMEs) under the above said programmes;
- (c) if so, the details thereof including funds allocated/released/utilised along with the number of MSMEs set up so far, programme-wise and State/UT-wise; and
- (d) the other steps being taken by the Government to promote entrepreneurships among SC/ST and women under the said programme in the country?

## ANSWER

## वाणिज् यवव द्यग ााज् यं ्रीस् वतं ््रभााा(स्रींतंरीिरंमलााीरीतंाांि( THE MINISTER OF STATE (INDEPENDENT CHARGE) OF THE MINISTRY OF COMMERCE & INDUSTRY (SHRIMATI NIRMALA SITHARAMAN)

- (a): A statement indicating the status of implementation of 'Make in India, Standup and Startup India  programmes is annexed.
- (b) to (d):

A  number  of  initiatives  have  been  undertaken  by  Ministry  of  Micro, Small  and  Medium  Enterprises  to  encourage  and  promote  existing MSMEs including SC/ST and women entrepreneurs.  A large number of  schemes/programmes  are  being  implemented  to  address  various issues affecting the sector including credit flow, technology up gradation,  skill  development,  marketing  assistance  and  infrastructure development. The major schemes implemented include Credit Guarantee  Fund  Trust  for  Micro  and  Small  Enterprises  (CGTMSE), Credit Linked Capital Subsidy Scheme (CLCSS), National Manufacturing Competitiveness Programme (MMCP), Marketing Assistance & Technolgy Upgradation (MATU) scheme, Cluster Development, Support for Entrepreneurial and Managerial Development of SMEs through incubators, etc.

The  units  except  those  in  trading,  set  up  under  the  Standup  India Scheme would come under MSME segment.

*****

## ANNEXURE

## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (a)  OF  THE  LOK  SABHA UNSTARRED QUESTION NO 4317 FOR ANSWER ON 12 TH  DECEMBER 2016.

Make  in  India initiative  has  been  launched  to  project  India  as  a  preferred investment destination and a global manufacturing hub.  The major objective behind the initiative is to renew focus on job creation, skill development, fostering innovation and high quality standards in 25 sectors.  Make in India initiative focuses on four key areas to promote manufacturing and entrepreneurship viz. Policy Initiatives & New Processes; Robust Infrastructure; Focus Sectors; New Mind-set/Approach; As part of Make  in  India  initiative  several  steps  have  been  taken  collectively  by  all  the government  departments  and  States  to  promote  investments  from  Indian  and Foreign investors in the select 25 focus sectors.  It aims at promoting the 'ease of doing business' measures taken up by States and Central Government Ministries.

Startup India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities.

The efforts of the government are aimed at empowering Startups to grow through innovation  and  design.  It  is  intended  to  provide  the  much  needed  impetus  for  the Startups to launch and scale greater heights.

In order to meet the objectives of the initiative, the Honourable Prime Minister on 16 th January 2016 launched the Startup India Action Plan.

The  Startup  India  Action  Plan  consists  of  19  action  items  spanning  across  areas such  as  'Simplification  and  handholding',  'Funding  support  and  incentives'  and 'Industry-academia partnership and incubation'. Since the launch of the program, a number of forward looking strategic amendments to the existing policy ecology have been introduced, like:

## 1. Fund of Funds

For providing fund support for Startups, Government has created a 'Fund of Funds for  Startups  (FFS)'  at  Small  Industries  Development  Bank  of  India  (SIDBI)  with  a corpus  of  Rs.  10,000  crore.  The  FFS  shall  contribute  to  the  corpus  of  Alternate Investment  funds  (AIFs)  for  investing  in  equity  and  equity  linked  instruments  of various Startups. The FFS is managed by Small Industries Bank of India (SIDBI) for which  operational  guidelines  have  been  issued.  In  2015-16,  Rs.  500  crores  was released towards the FFS corpus.

## 2. Credit Guarantee Fund for Startups

-  Since  debt  funding  for  Startups  is  perceived  as  high  risk  activity,  a  Credit Guarantee Fund for Startups is being setup with a budgetary corpus of Rs 500 crore  per  year,  over  the  next  four  years,  to  provide  credit  guarantee  cover  to banks and lending institutions providing loans to Startups.
-  Once rolled out, the scheme, in the lines of credit guarantee scheme for MSME, is likely to provide a huge impetus for enabling flow of much needed credit to the Startups which may run into several thousands of crores.

## 3. Relaxed Norms in Public Procurement for Startups

Provision has been introduced in the procurement policy of Ministry of Micro, Small and  Medium  Enterprises  (Policy  Circular  No.  1(2)  (1)/2016-MA  dated  March  10, 2016) to relax norms pertaining to prior experience / turnover for Micro and Small Enterprises. Department of Expenditure has issued a notification for relaxing public procurement norms in respect of medium enterprises by all central Ministries/Departments.

## 4. Tax Incentives :

##  3 Year Tax Exemption

The Finance Act, 2016 (Section 80- IAC) has provision for Startups (Companies and LLPs)  to  get  income  tax  exemption  for  3  years  in  a  block  of  5  years,  if  they  are incorporated between 1st April 2016 and 31st March 2019. To avail these benefits, a Startup must get a Certificate of Eligibility from the Inter-Ministerial Board.

##  Removal of Angel Tax:

Tax  exemption  on  investments  made  in  excess  of  face  value  in  the  shares  of  a Startup company has been introduced on 14 June 2016.

##  Tax Exemption on Capital Gains:

Section  54  EE  has  been  introduced  in  the  Finance  Act,  2016  which  provides  for exemption of capital gain (not exceeding INR 50 lakhs in  a financial year) arising out of transfer of long  term  capital  asset  invested  in a  fund  notified  by  Central Government.

Standup India :    Government has launched the Standup India scheme on 5 th April, 2016.  The Scheme is intended to facilitate bank loans between Rs.10 lakh and Rs. 1crore to at  least  on Scheduled Caste/Scheduled Tribe borrower and at least one women  borrower  per  bank  branch  for  setting  up  greenfield  enterprises.    This enterpirse  may  be  in  manufacturing,  services  or  the  trading  sector.    The  scheme which is being implemented through all Scheduled Commercial Banks is to benefit at least 2.5 lakh borrowers.  The scheme is operational and the loan is being extended through Scheduled Commercial Banks across the country. The  total  number  of  entrepreneurs  belonging  to  Women,  Scheduled  Caste  and Scheduled Tribe  category  benefitted  under  the  scheme  are  11892,  2536  and  704 respectively as on 07.12.2016.

Being new enterprises, units except those in trading set up under the Standup India Scheme  would  come  under  MSME  segment.  To  extend  collateral  free  coverage, Government  of  India  has  released  Rs.500  crore  to  National  Credit  Guarantee Trustee Company (NCGTC) for setting up Credit Guarantee Fund for standup India (CGFSI),  Apart from providing credit facility, Standup India Scheme also envisages extending  handholding  support  to  the  potential  borrowers.  It  also  provides  for convergence with Central/State Government schemes.

Section 54GB of Income Tax Act, 1961 has been amended to provide for 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  eligible Startups.

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

A  scheme  for  Startups  IPR  Protection  (SIPP)  for  facilitating  fast  track  filing  of Patents,  Trademarks  and  Designs  by  Startups  has  been  introduced.  The  scheme provides for expedited examination of patents filed by Startups. This will reduce the time taken in getting patents. The fee for filing of patents for Startups has also been reduced up to 80%.

Panels of facilitators for Patents and Trademark applications have been formed to facilitate  the  process  of  patent  filing  and  acquisition.  The  facilitators  would  provide legal guidance and handholding through the entire patent acquisition process free of cost.

## 6. Self-Certification based Compliance Regime

Compliance norms relating to Environmental and Labour laws have been eased in order to reduce the regulatory burden on Startups thereby allowing them to focus on their core business and keep compliance costs low.

Ministry  of  Environment  and  Forests  (MoEF)  has  published  a  list  of  36  white category industries. Startups falling under the 'White category' would be able to selfcertify compliance in respect of 3 Environment Acts -

-  The Water (Prevention & Control of Pollution) Act, 1974;
-  The Water (Prevention & Control of Pollution) Cess (Amendment) Act,2003
-  The Air (Prevention & Control of Pollution) Act, 1981)

Further, Ministry of Labour and Employment (MoLE) has issued guidelines to State Governments whereby Startups shall be allowed to self-certify compliance in respect of 6 Labour laws. These shall be effective after concurrence of States/UTs. The Acts are:

-  The Building and Other Constructions Workers' (Regulation of Employment & Conditions of Service) Act, 1996
-  The InterState Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
-  The Payment of Gratuity Act, 1972
-  The Contract Labour (Regulation and Abolition) Act, 1970
-  The Employees' Provident Funds and Miscellaneous Provisions Act, 1952
-  The Employees' State Insurance Act, 1948

So  far 9  States  have  confirmed  compliance  to  the  advisory  issued  by  Ministry  of Labour and Employment (MoLE):

-  Rajasthan
-  Uttarakhand
-  Madhya Pradesh
-  Chhattisgarh
-  Delhi
-  Jharkhand
-  Gujarat
-  Chandigarh
-  Daman & Diu

## 7. Setting up Incubators

 Under Atal Innovation Mission, Niti Ayog will set up  Atal Incubation Centers (AICs) in public and private sector. NITI Aayog has received 3658 applications (1719 from  academic  institutions  and  1939  from  non-academic  institution)  for  setting  up Atal Incubation Centers (AICs) from both Public and Private sector organizations.

 Under the Mission, a grant-in-aid of Rs. 10 crore would be provided to scale up  an  existing  incubator  for  a  maximum  of  5  years  to  cover  the  capital  and operational costs in running the center. NITI Aayog has received 232 applications for providing scale up support for established incubation centers.

## 8. Setting up of Startup Centers and Technology Business Incubators (TBIs)

14  Startup  Centres  and  15  Technology  Business  Incubators  are  to  be  setup collaboratively  by  Ministry  of  Human  Resource  Development  (MHRD)  and  the

Department of Science and Technology (DST).  Out of the 14 Startup Centers, 10 have been approved. Once MHRD releases its share of Rs. 25 lakhs each for the Startup  centers,  the  Startup  centers  would  be  supported  by  DST  by  December, 2016.

The target of sanctioning 15 TBIs is expected to be achieved by December 2016.

## 9. Research Parks

Seven Research Parks will be set up as per the Startup India Action Plan. Out of these  7,  IIT  Kharagpur  already  has  a  functional  Research  Park.  Further,  DST  will establish 1 Research Park at IIT Gandhinagar and the remaining 5 shall be set up by Ministry of Human Resource Development (MHRD) at IIT Guwahati, IIT Hyderabad, IIT Kanpur, IIT Delhi and IISc Bangalore.

Standup India: Government has launched the Standup India scheme on 5th April, 2016.  The Scheme is intended to facilitate bank loans between Rs.10 lakh and Rs. 1crore to at  least  on Scheduled Caste/Scheduled Tribe borrower and at least one women  borrower  per  bank  branch  for  setting  up  greenfield  enterprises.    This enterpirse  may  be  in  manufacturing,  services  or  the  trading  sector.    The  scheme which is being implemented through all Scheduled Commercial Banks is to benefit at least 2.5 lakh borrowers.  The scheme is operational and the loan is being extended through Scheduled Commercial Banks across the country. The  total  number  of  entrepreneurs  belonging  to  Women,  Scheduled  Caste  and Scheduled Tribe  category  benefitted  under  the  scheme  are  11892,  2536  and  704 respectively as on 07.12.2016.

Being new enterprises, units except those in trading set up under the Standup India Scheme  would  come  under  MSME  segment.  To  extend  collateral  free  coverage, Government  of  India  has  released  Rs.500  crore  to  National  Credit  Guarantee Trustee Company (NCGTC) for setting up Credit Guarantee Fund for standup India (CGFSI),  Apart from providing credit facility, Standup India Scheme also envisages extending  handholding  support  to  the  potential  borrowers.  It  also  provides  for convergence with Central/State Government schemes.

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