Lok Sabha Question No. 2980 (UNSTARRED), answered on 2017-03-20
Subject: Incubators and Tinkering Labs under Startup India
Ministry: COMMERCE AND INDUSTRY
Asked by: VIJAYSINH MOHITE PATIL, RAJESH RANJAN  (PAPPU  YADAV), JAYAKUMAR JAYAVARDHAN, JAYADEV GALLA, ASHOK SHANKARRAO CHAVAN, SANJAY SHAMRAO DHOTRE, RAHUL RAMESH SHEWALE, BIDYUT BARAN MAHATO, SUDHEER GUPTA, KUNWAR HARIBANSH SINGH, RAJEEV SHANKARRAO SATAV, GAJANAN CHANDRAKANT KIRTIKAR, SATYA PAL SINGH, DHANANJAY BHIMRAO MAHADIK, T. RADHAKRISHNAN, SUPRIYA SADANAND SULE

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

## LOK SABHA

UNSTARRED QUESTION NO. 2980. TO BE ANSWERED ON MONDAY, THE  20 TH  MARCH, 2017.

## INCUBATORS AND TINKERING LABS UNDER STARTUP INDIA

2980.  SHRI MOHITE PATIL VIJAYSINH SHANKARRAO:

SHRI RAJESH RANJAN:

DR. J. JAYAVARDHAN:

SHRI JAYADEV GALLA:

SHRI ASHOK SHANKARRAO CHAVAN:

SHRI SANJAY DHOTRE:

SHRI RAHUL SHEWALE:

SHRI BIDYUT BARAN MAHATO:

SHRI SUDHEER GUPTA:

KUNWAR HARIBANSH SINGH:

SHRI SATAV RAJEEV:

SHRI GAJANAN KIRTIKAR:

DR. SATYAPAL SINGH:

SHRI DHANANJAY MAHADIK:

SHRI T. RADHAKRISHNAN:

SHRIMATI SUPRIYA SULE:

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

## वाणिज् यवव द्यग ं ्री

- (a) whether the Government has achieved the aims and objectives of Startup India Action Plan, if so, the details thereof including the industry-academia incubators set up so far, year-wise and the funds and incentives provided so far under the plan in the country, State/UT-wise;
- (b) the details of the institutional arrangement put in place for the selection of institutions to operate the incubators including the pace of selection in comparison to the targets set for the same and the steps taken to improve the quality of the incubators;
- (c) whether  the  Government  proposes  to  set  up  its  first  startup  district  with  incubation centres and tinkering labs and if so, the details thereof including the funds allocated for the purpose along with the organisations/agencies that will operate the said incubators, State/UT-wise;
- (d) whether  there  is  paucity  of  incubators  in  the  country,  if  so,  whether  the  Government proposes to rope in private organisations to provide mentorship facilities to entrepreneurs, if so, the details thereof; and
- (e) whether the Government proposes to create sector specific incubators, if so, the details thereof?

## 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): The  achievements  under  the  Startup India Action Plan are enclosed  as Annexure I. The details regarding the industry-academia incubators being set up / set up so far are provided in Annexure-II.
- (b): NITI Aayog under Atal Innovation Mission has invited applications for setting up Atal  Incubation  Centres  (AICs)  and  providing  scale  up  support  to  Established Incubation  Centres  (EICs).  The  applications  received  are  shortlisted  based  on eligibility  criteria.  The  short-listed  applicants  are  subjected  to  screening  by  an inter-ministerial screening-cum-selection committee (SSC) headed by Secretary, Department of Science & Technology with representatives from the Department of  Biotechnology,  Department of Industrial Policy & Promotion, Ministry of Skill Development  &  Entrepreneurship  and  the  Atal  Innovation  Mission  (AIM)  team. The recommendations of the SSC are put up for the consideration of the Mission High  level  Committee  (MHLC)  chaired  by  Vice  Chairman,  NITI  Aayog  for  final selection.

To  ensure  the  quality  of  operation  of  the  incubation  centres,  clear  goals  and deliverables  are  being  fixed  for  each  selected  incubation  centre  for  continuous monitoring. The managers of the incubation centres will be provided training for effective  implementation  of  the  programme.  A  Hand  Book  for  managing  the incubation centres has been prepared to guide the incubation centres' professionals.

As  per  the  Startup  India  Action  Plan,  35  new  Incubators  are  to  be  set  up  in existing  institutions,  and  35  new  private  sector  Incubators  shall  be  set  up.  The funding  shall  be  provided  by  NITI  Aayog  as  part  of  Atal  Innovation  Mission. Ministry  of  Human  Resources  Development  and  Department  of  Science  and Technology  will  jointly  set  up/scale-up  18  Technology  Business  Incubators  at NITs/IITs/IIMs.  50  new  Bio-Incubators  will  be  set  up  in  research  institutes  and universities across India by Department of Biotechnology. Out of these, 10 new Incubation  Centres have  been  shortlisted by  NITI  Aayog  under Atal  Innovation Mission (3658 applications were received). They shall release a grant of INR 10 crore per incubator in 5 years. Also, 6 existing Incubators have been approved for scale-up grant by NITI Aayog. 16 Technology Business Incubators are being set up jointly by Department of Science and Technology and Ministry of Human Resources Development. 10 have already been approved and 6 more are being considered  for  approval.  A  total  of  20  (out  of  50)  bio-incubators  have  been funded by Department of Biotechnology.

- (c): No, Madam.
- (d): Keeping in view the large requirement of mentors, NITI Aayog proposes to rope in  credible  private  sector  organisations  as  well  as  experts  from  industry  for providing mentorship support in the incubation  centres being set up under Atal Innovation Mission.
- (e): NITI Aayog under Atal Innovation Mission has invited applications for setting up sector specific incubation centres such as agriculture and allied fields, biotechnology, electricity, new and renewable energy and environmental sustainability, education, health and pharmaceuticals, information & communication  technology,  manufacturing,  water,  sanitation  and  solid  waste management, housing, transport and other emerging areas of  social  /  national importance. Department of Biotechnology has also funded 20 bio-incubators so far.  Further,  16 Technology  Business  Incubators  will  be  jointly  set  up  setup/scaled-up by Department of Science and Technology and Ministry of Human Resources Development.

**********

## ANNEXURE REFERRED TO IN REPLY TO PART (a) OF THE LOK SABHA UNSTARRED QUESTION NO. 2980 FOR 20 TH  MARCH 2017.

## Achievements

## 1.  Recognition

-  1835 applications have been received for recognition, out of which 713 had the required  documents  and  have  been  recognised  as  Startups  by  DIPP  as  on 10.03.2017.

## 2.  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; 12 states have confirmed compliance to the advisory issued on 12.01.2016 by Ministry of Labour and Employment (MoLE)

## 3.  Startup India Hub

-  37,195 queries have been handled by the Startup India Hub
-  267 Startups have been mentored for incubation and funding support

## 4.  Rolling out of Mobile App and Portal

-  Startup India portal has been developed to provide access to the following:
-  Startup recognition
-  Incubator recognition
-  Advertising space for Startups
-  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 services such as Startup recognition, Incubator recognition, etc. as well as, notifications and information to its users on-the-go
5.  Legal Support and Fast-tracking Patent Examination at Lower Costs
-  Panel  of  over  409  facilitators  for  Patent  and  Design  and  475  facilitators  for Trademark applications has been constituted
-  104 applications have received rebate of up to 80% on patent fees and have also received legal assistance free of cost
-  25 Startups have made request for expedited examination (Form 18(A)) whereas, Trademark facilitation has been extended to 47 Startups

## 6.  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

-  States have been issues an advisory to comply with the same

## 7.  Faster Exit for Startups

-  Under the Insolvency and Bankruptcy Code 2016, firms which are recognised as fast  track  firms  by  MCA  will  be  able  to  wind  up  their  business  in  90  days  as compared to the 180 day period for other firms
-  Liquidation provisions under the code have been notified on 9 th December 2016
-  MCA is in the process of notifying Startups as 'fast track firms'

## 8.  Providing Funding Support through Fund of Funds (FFS) with a Corpus of INR 10,000 crore

-  The fund of INR 10,000 crore shall be released over two Finance Commission cycles, that is, by the year 2025
-  Rs. 500 crore has been released to SIDBI in FY 2015-16 and Rs.100 crore has been released to SIDBI in FY 2016-17
-  Rs.  129  crore  has  been  sanctioned,  out  of  which,  Rs.  114  crore  has  been released by SIDBI to 5 Venture Funds for the FY2016-17

## 9.  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 INR 50 lakhs 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.

## 10.  Tax Exemption to Startups for 3 Years

-  In  the  Union  Budget  2017-18,  the  Government  has announced that  a Startup would be able to avail income tax exemption for three consecutive assessment years out of a block of seven years, which was earlier five years.

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

##  Removal of Angel Tax

Under  the  Income  Tax  Act,  1961,  where  a  Startup  (company)  receives  any consideration for issue of shares which exceeds the Fair Market Value (FMV) of such shares, such excess consideration is taxable in the hands of recipient as Income from other sources. Tax exemption has been introduced on 14th June 2016 for investments made in Startups above Fair Market Value.

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

-  500 Tinkering Labs are to be established in schools under the Atal Innovation Mission, of which 257 Tinkering Labs have been approved. Each school shall receive an amount of INR 20 lakhs over the next four years
-  Rs. 12 Lakh each to 220 tinkering labs for the current financial year has been disbursed
-  6 existing Incubators have been sanctioned for scale-up grant by NITI Aayog

## 13.  Building Innovation Centres at National Institutes

-  9 TBIs (Technology Business Incubators) have been funded by DST
-  An amount of Rs. 37.50 lakhs (Rs. 3.75 lakh each for 10  Startup Centres) has been released as 1 st instalment of the grant to the Startup Centres

## 14.  Promoting Startups in the Biotechnology Sectors

-  DBT has sanctioned INR 1 crore under Biotech Equity fund to be given to each bio-incubator. The initiative has already assisted 3 Bio-incubators that have been selected as recipients of the above mentioned Equity Fund.
-  20 bio-incubators have been supported by DBT. The impact has been multi-fold as 290 start-ups have received benefits from these bio-incubators under various programmes like Biotechnology Ignition Grant, Industry Innovation Programme on Medical Electronics (IIPME), Sparsh, Grand Challenges, BioNEST, etc.

## 15.  Key regulatory issues which have been addressed are as follows :

-  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 fifty lakhs to twenty five lakhs.
- 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 up to 25% of their investible corpus in line with other AIFs.

******

## ANNEXURE II

## ANNEXURE REFERRED TO IN REPLY TO PART (a) OF THE LOK SABHA UNSTARRED QUESTION NO. 2980 FOR 20 TH  MARCH 2017.

## Industry-Academia Incubators

-  Atal Innovation Mission (AIM) has  been launched with Self-Employment and Talent Utilization  (SETU)  Program  to  serve  as  a  platform  for  promotion  of  world-class Innovation  Hubs,  Grand  Challenges,  Startup  businesses  and  other  self-employment activities, particularly in technology driven areas.

500 Tinkering Labs are to be established in schools under the Atal Innovation Mission, of which, 257 Tinkering Labs have been approved. Each school shall receive an  amount  of  INR  20  lakhs  over  the  next  four  years,  INR  12  Lakh  each  has  been disbursed  to  220  tinkering  labs  in  FY  2016-17.  6  existing  Incubators  (out  of  232 applications received) have been sanctioned for scale-up grant of INR 10 crore by NITI Aayog.

-  In order to harness Private Sector Expertise for Incubator Setup, Government will create a policy and framework for setting-up of incubators across the country in public private partnership. Expertise of private sector needs to be leveraged for setting up of 35 new Incubators in existing institutions and 35 new private sector. 10 new Incubation Centres  have  been  shortlisted  (3658  applications  received  and  63  shortlisted).  They shall receive a grant of INR 10 crore for 5 years. DIPP has written to 250+ corporate houses for  setting  up  Incubators,  and  also  provided  a  handbook  for  guidance  in  this regard.
-  16 Technology Business Incubators and 15 Startup Centres are to be jointly set up by DST and MHRD. 10 have been approved and 6 are in advanced stage. 15 Startup Centres are being jointly set up by DST and MHRD, and approval for all 15 is in place. Each Startup Centre shall receive a grant  INR 50 lakhs per year. An amount of INR 37.50  lakhs  (INR  3.75  lakh  each  for  10  Startup  Centres)  has  been  released  as  1st instalment of the grant for 10 Startup Centres.
-  Setting  up  of  7  New  Research  Parks  These  are  modeled  on  the  Research  Park Setup at IIT Madras to propel successful innovation through incubation and joint R&D efforts between academia and Industry. The Research Park at IIT Gandhinagr has been sanctioned by DST at a total cost of INR 90 crores and has already disbursed an initial instalment of INR 40 crores. The other 6 Research Park proposals i.e. IIT Guwahati, IIT Hyderabad, IIT Kanpur, IISc Bangalore and IIT Delhi would be directly funded by DHE, MHRD.
-  Promoting Startups in the Biotechnology Sector - 3 Bio-Clusters have been funded (Kalyani, Bangalore and Faridabad); 1 is under consideration. DBT has sanctioned INR 1  crore  under  Biotech  Equity  fund  to  be  given  to  bio-incubators.  The  initiative  has already  helped  3  Bio-incubators  that  have  been  selected  as  recipients  of  the  above mentioned Equity Fund. A total of 20 (out of 50) bio-incubators have been funded by DBT. 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. INR 125 crore has been sanctioned by DBT so far. 20 Bio-Connect Offices will begin operations in Q4 FY 2017-18 .

*******