Lok Sabha Question No. 322 (UNSTARRED), answered on 2017-12-18
Subject: CGF for Startups
Ministry: COMMERCE AND INDUSTRY
Asked by: INNOCENT

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT OF INDUSTRIAL POLICY & PROMOTION

## LOK SABHA

## UNSTARRED QUESTION NO. 322. TO BE ANSWERED ON MONDAY, THE 18 TH  DECEMBER,  2017.

## CGF FOR STARTUPS

## 322. SHRI INNOCENT:

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

## वाणिज्य एवं उद्योग मंत्री

- (a) The  achievements  made  under  'Startup  India'  programme  being  implemented  in  the country;
- (b) whether Government proposes to introduce certain schemes including Credit Guarantee Fund to enable Startups to get collateral free loans for their operations in the country;
- (c) if so, the details thereof including the terms and conditions of the schemes; and
- (d) the details of other financial support and incentives being extended to the Startups in the country?

## ANSWER

## वाणिज् यएवंउद्योगमंत्रालयमेंराज् यमंत्रीश्ी सी.आर.चौधरी) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHR I C.R. CHAUDHARY )

- (a) to (d): Details of the achievements made under 'Startup India' initiative are at Annexure-I . Under the Startup India initiative, a Fund of Funds for Startups (FFS) with a corpus fund  of  INR  10,000  crore  has  been  established  for  development  and  growth  of innovation  driven  enterprises.  Till  date,  a  total  amount  of  INR  600  crore  has  been released to SIDBI for the FFS. INR 605.7 crore has been committed by SIDBI and INR 90.62 crore has been disbursed to 17 Alternative Investment funds (AIFs), who in turn  have  invested  INR  337.02  crore  in  75  Startups.  Further,  as  on  1st  December, 2017,  a  total  of  5350  Startups  have  been  recognized  by  Department  of  Industrial Policy and Promotion (DIPP). A total of 74 Startups have been given tax exemption under Section 80 IAC of Income Tax Act.  The Startup India Hub has resolved 75,643 queries so far and there are 15000 registered users on the Startup India Hub. The Learning and Development module of the Startup India program has been used by 1,89,000 individuals so far. As regards the Credit Guarantee Fund, no decision has been taken by the Government of India in this regard.

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## ANNEXURE REFERRED TO IN REPLY TO PARTS (a) TO (d) OF THE  LOK SABHA  UNSTARRED  QUESTION  NO.  322  FOR  ANSWER  ON  18 TH DECEMBER, 2017.

## Achievements 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 selfcertifications  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
- o Advertising space for Startups
- o Learning & development module
-  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.
-  Startup India online hub was launched on 19.6.2017 to serve as a platform where all  the  stakeholders  of  the  Startup  ecosystem  can  collaborate  and synergise their efforts. It will facilitate location-wise and sectoral mapping. 15,000+  registrations  have  been  achieved  on  the  Hub  as  of  November, 2017.
3.  Startup India Hub
-  75,000+ queries have been handled by the Startup India Hub
-  450+ Startups have been mentored for incubation and funding support
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  filing  of  patents and trademarks
-  415  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 87 Startups have been facilitated
-  Trademark facilitation has been extended to 473 Startups
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 INR 10,000 crore
2.  Fund of Funds for Startups of INR 10,000 crore shall be released over two Finance Commission cycles, that is, by the year 2025
3.  INR 500 crore has been released to SIDBI in FY16 and INR 100 crore in FY 17
4.  Total commitments under FFS stand at INR 605.7 crore to 17 Alternative Investment Funds (AIFs) while drawdown by AIFs is INR 90.62 crore
5.  75 Startups have received funding under FFS with catalysed investment of INR 337.02 crore
8.  Tax Exemption on Capital Gains
7.  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 INR 50 lakh in  a financial year) invested in a fund notified by Central Government
8.  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  in  the  Finance  Act,  2016  Section  80-IAC  for Startups (Companies and LLPs) to avail income tax exemption for 3 years in a block of 5 years, if they are incorporated between 1 st April 2016 and 31 st March 2019.
-  In the Union Budget 2017-18, the Government has increased this period of profit-linked deductions available to eligible Startups to 7 years. Startup is eligible to avail income tax exemption for three consecutive assessment years out of a block of seven years, which was earlier five years.
-  75 Startups 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 INR 12 Lakh each has been disbursed to 374 tinkering labs
-  6  existing  Incubators  have  been  sanctioned  for  scale-up  grant  by  NITI Aayog
-  13 New Incubators approved for funding support

## 12.  Building Innovation Centres at National Institutes

-  15 Startup Centres are being jointly set up by Department of Science and Technology (DST) and Ministry of Human Resource Development (MHRD), and approval for all 15 is in place
-  Amount of INR 37.50 lakh (INR 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 INR 42 crore have been sanctioned and INR 17 crore disbursed to TBIs
13.  Setting up of 7 New Research Parks modelled on the Research Park Setup at IIT Madras
-  IIT  Kharagpur  at  a  cost  of  INR  100  crore  is  under  construction  and  INR 74.83 Cr. released to IIT Kharagpur
-  IIT Mumbai at a cost of INR 100 crore is under construction and INR 34 Cr. released to IIT Bombay
-  The Research Park at IIT Gandhinagar has been sanctioned by DST at a total  cost  of  INR  90  crore  and  the  Department  has  already  disbursed instalment of INR 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 INR 375 Crore for a period of 3 years.

## 14.  Promoting Startups in the Biotechnology Sectors

-  Department  of  Biotechnology  (DBT)  has  sanctioned  INR  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 INR 185 crore sanctioned and INR 119 crore disbursed. The impact has been multi-fold as a total of 290 start-ups have received benefits from these bioincubators  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 in the process of joining the Harvard University, USA to share ideas and receive mentorship

## 15.  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 Rashtrapati Bhavan 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-inResidence) sanctioned
-  6 new centres of excellence (COEs) have been recommended to receive funds for COEs in FY2017-18
- (c) Uchhattar Avishkar Yojana (UAY)
-  INR 475 crore for 2016-18 has been earmarked for 3 years
-  INR 75 crore has been disbursed for research proposals from IITs under 6 domains
-  92 projects have been recommended for approval

## 16.  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 INR 50 lakh to INR 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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