Lok Sabha Question No. 2923 (UNSTARRED), answered on 2017-03-20
Subject: Startup India Programme
Ministry: COMMERCE AND INDUSTRY
Asked by: JAY PRAKASH NARAYAN YADAV, V. PANNEER SELVAM, KIRIT SOMAIYA, A. ARUNMOZHITHEVAN, C.S. PUTTARAJU, KIRTI (JHA) AZAD, ANANT KUMAR DATTATREYA HEGDE

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

## LOK SABHA

UNSTARRED QUESTION NO. 2923. TO BE ANSWERED ON MONDAY, THE  20 TH  MARCH, 2017.

## STARTUP INDIA PROGRAMME

## 2923.  SHRI JAI PRAKASH NARAYAN YADAV:

SHRI V. PANNEERSELVAM:

DR. KIRIT SOMAIYA:

SHRI A. ARUNMOZHITHEVAN:

SHRI C.S. PUTTA RAJU:

SHRI KIRTI AZAD:

SHRI ANANTKUMAR HEGDE:

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

## वाणिज् यवव द्यग ं ्री

- (a) whether  the  Government  has  launched  Startup  India  Programme  to  promote  new entrepreneurs in the country;
- (b) if  so, the details thereof including the funds allocated/utilised for the purpose and the number of startups set up so far in the country;
- (c) whether certain startups have been closed down in the country and if so, the details thereof and the reasons therefor; and
- (d) the corrective steps taken by the Government to promote startups 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): Yes, Madam. Government has launched the Startup India Action Plan on 16 th January, 2016  with  an  objective  of  building  a  strong  eco-system  for  nurturing  innovation  and startups in the country.
- (b): The Startup India Action Plan consists of 19 action items spanning across areas such as  'Simplification  and  handholding',  'Funding  support  and  incentives'  and  'Industryacademia  partnership and  incubation'. For providing fund support to Startups, Government has created a 'Fund of Funds for Startups (FFS)', which is being managed by Small Industries Bank of India (SIDBI) with a corpus of Rs. 10,000 crore. The FFS shall  contribute  to  the  corpus  of  Alternative  Investment  funds  (AIFs)  for  investing  in equity and equity linked instruments of various Startups. Rs. 500 crores was released towards the FFS corpus in FY 2015-16 and Rs. 100 crores has been released in FY 2016-17.    As  on  10.03.2017,  713  startups  have  been  recognized  by  Department  of Industrial Policy and Promotion under startup India programme.
- (c): No data is available regarding the number of Startups which have been closed down in the country.
- (d): The details  of  steps  taken  by  the  Government  to  promote  startups  in  the  country  is given in the Annexure.

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## ANNEXURE  REFERRED  TO  IN  REPLY  TO  IN  PART  (d)  OF  THE  LOK    SABHA UNSTARRED QUESTION NO. 2923  FOR ANSWER ON  20 TH  MARCH 2017.

## Steps Undertaken

## 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.
-  146 applications could be considered for tax benefits, out of which, 10 Startups have been approved by IMB for availing tax benefit.

## 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 FY16
-  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 bioincubator. 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 upto 25% of their investible corpus in line with other AIFs.

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