Lok Sabha Question No. 680 (UNSTARRED), answered on 2020-09-16
Subject: National Seed Fund
Ministry: COMMERCE AND INDUSTRY
Asked by: Jayadev Galla

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

## UNSTARRED QUESTION NO. 680. TO BE ANSWERED ON WEDNESDAY, THE 16 TH  SEPTEMBER, 2020.

## NATIONAL SEED FUND

## 680.   SHRI JAYADEV GALLA:

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

## वाणिज्य एवं उद्योग मंत्री

- (a) the status of National Seed Fund proposed in the 2020-21 Budget;
- (b) the reasons that the country stands at 136 th position on 'starting a business' parameter under Ease of Doing Business table;
- (c) the impact of COVID-19 on Startup India programme and the steps taken by the Government to address the said impact; and
- (d) the present status of Startup India Initiative started in 2016 and the number of employment opportunities that have been created by Startups so far?

## ANSWER वाणिज्य  एवं उद्योग मंत्री (श्री पीयूष गोयल) THE MINISTER OF COMMERCE & INDUSTRY (SHRI  PIYUSH GOYAL)

- (a): An  EFC  note  on  Startup  India  Seed  Fund  Scheme,  with  a  total proposed  corpus  of  Rs.  945  Crore,  has  been  formulated  by  the Department. The EFC note was circulated for Inter Ministerial consultations to the concerned Departments/Ministries. The comments/inputs received from the concerned Departments/Ministries are incorporated in the EFC Note on Startup India Seed Fund Scheme and EFC Note has been finalized.

Further, the grant of exception for the proposal of Startup India Seed Fund  Scheme  under  clause  2(v)  of  DoE  OM  No.  42(02)PFC-I/2014 dated 04.06.2020 and the budgetary support for FY 2021-22 onwards has been solicited from Department of Expenditure.

- (b): India's  rank  under  'Starting  a  Business'  indicator  has  improved  from 158 in the World Bank's Doing Business Report (DBR), 2015 (released in  October,  2014)  to  136  in  DBR,  2020  (released  in  October,  2019). During the period, India's 'Distance to Frontier' score under 'Starting a Business'  indicator  has  jumped  from  68.42  to  81.6  indicating  India's advancement  towards  the  global  best  practices.  The  improvement  in rank  has  occurred  due  to  major  reforms  undertaken  in  a  systematic manner over the last five years.

With an aim to make starting a business quicker and easier in line with global best practices, transformational reforms have been undertaken. One of the major reforms undertaken is the introduction of a new webform 'SPICe+ and AGILE-PRO' which integrates ten different services from  three  Central  Ministries  and  one  State  Government.  These services are - Name reservation, Company incorporation, registration of -PAN, TAN, DIN, EPFO, ESIC, GST & Profession Tax (Maharashtra);  and  opening  of  bank  account.  With  this  initiative, requirement  of  preparing  and  notarizing  affidavit,  and  requirement  of putting  rubber  stamp  with  company  name  have  been  eliminated. Registration under Shops & Establishments Act is also made completely  online  and  is  free  of  cost.  Obtaining  digital  signature certificate  has  been  made  completely  online,  which  can  be  obtained within a day.

- (c): The impact  of  COVID-19  on  Startup  India  programme  and  the  steps taken by the Government to address the said impact are at Annexure-I.
- (d): Since the launch of Startup India initiative on 16 th January 2016, a total of 36,106 startups have been recognized by DPIIT in 586 districts, as on  6 th September  2020.  Major  achievements  under  Startup  India initiative are  at Annexure-II.

A total number of 4,22,986 employment has been reported by 34,267 DPIIT Recognized startups as on 6 th September 2020.

******

## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (c)  OF  THE  LOK  SABHA UNSTARRED QUESTION NO. 680 FOR ANSWER ON 16.09.2020.

The global macroeconomic outlook for the current financial year 2020-21 has been adversely affected by COVID-19 pandemic which has impacted most countries in the world  across  continents.  The  pandemic  has  cast  its  shadow  across  various economic activities with dislocation in global production, supply chains and trade.

To  address  these  adverse  times,  the  Government  of  India  has  been  preparing strategies and action plans not only for business continuity and sectoral revival but also to improve Ease of Doing Business in the country through various   notifications/amendments/circulars  highlighting  measures  to  improve  the business environment in India.

Regulatory  measures  have  been  taken  by  Central  government,  Reserve  Bank  of India,  Securities  &  Exchange  Board  of  India  (SEBI),  Insurance  Regulatory  and Development  Authority  (IRDAI)  and  the  sectoral  ministries  to  boost  businesses  in India.  For  entrepreneurs, certain measures in terms of tax, regulatory and RBI led monetary relief have been introduced.

39 such regulatory changes, to enhance ease of doing business, ease raising capital and reduce compliance burden have been undertaken.The list of regulatory reforms is enclosed at Annexure -A.

## Other initiatives taken by the Government of India for Startups are:

-  DPIIT had launched the United Against COVID-19- Innovation Challenge to identify innovative solutions to combat COVID-19. Applications were received for solutions to manage the over COVID situation including logistics solutions, testing solutions, Critical care equipment, large area sanitisation and various other critical aspects related to COVID-19.
-  SIDBI  has launched Covid-19 Startup  Assistance  Scheme  (CSAS)  for startups which aims to aid innovative startups that have demonstrated ability to adapt to economic impact from Covid-19 and ensured its employees safety and financial stability. SIDBI recognizes the operational and financial challenges being faced by startups and has been making efforts to provide financial assistance and stability to such startups through schemes like CSAS. Through this scheme, startups can receive a loan of up to Rs 2 crore.
-  SIDBI has also announced a concessional interest rate of 5 percent for MSME loans under the SIDBI Assistance to Facilitate Emergency Response against Covid-19 (SAFE Scheme). These loans would be provided within 48 hours, with no collateral and minimum paperwork for MSMEs that are manufacturing products  or  delivering  services  related  to  the  Covid-19  fight  are  eligible  for these loans.
-  Availability of additional financial window for healthcare sector under scheme called  SIDBI  Make  in  India  Soft  Loan  Fund  for  Micro  Small  and  Medium Enterprises (SMILE) ) for financing the healthcare sector including hospitals, nursing  home,  clinics,  etc.  for  their  requirements  related  to  fighting  Corona Virus has also been launched.

## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (d)  OF  THE  LOK  SABHA UNSTARRED QUESTION NO. 680 FOR ANSWER ON 16.09.2020.

## Major achievements under Startup India Initiative

Startup  India  initiative  was  announced  by  Hon'ble  Prime  Minister  of  India  on  15th August, 2015. The flagship initiative aims 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.  Further to this, an Action Plan for Startup India was unveiled by Prime Minister of India on 16th January, 2016. The Action Plan comprises of 19 action items spanning across areas such as 'Simplification  and  handholding',  'Funding  support  and  incentives'  and  'Industryacademia partnership and incubation'.

Government  of  India  has  made  fast  paced  efforts  towards  making  the  vision  of Startup  India  initiative  a  reality.  Substantial  progress  has  been  made  under  the Startup India initiative, which has stirred entrepreneurial spirit across the country.

The Department for Promotion of Industry and Internal Trade (DPIIT) is mandated to coordinate implementation of Startup India initiative with other Government Departments.  Apart  from  DPIIT,  the  initiatives  under  Startup  India  are  driven primarily by five Government  Departments viz. Department of Science and Technology (DST), Department of Bio-technology (DBT), Ministry of  Human Resource Development (MHRD), Ministry of Labour and Employment and Ministry of Corporate Affairs(MCA) and NITI Aayog.

Since the launch of initiative in January 2016, there has been a substantial progress under  Startup  India  Action  Plan.  Many  other  initiatives  beyond  the  Startup  India Action  Plan  have  been  undertaken  for  development  of  overall  growth  of  Startup movement  in  the  country.  Major   achievements  made  so  far  under  Startup  India initiative are enumerated below.

## 1. Startup India Hub

A dedicated Startup Hub team was setup under Invest India. Team members have been assigned to different states for assisting them in formulating and implementing policies to facilitate growth of startups. A comprehensive portal has been set up to assist startups. 4,29,971 users registered on the Startup India Portal as of 13 th September 2020. A total of 1,73003 queries, as on 11 th September 2020, have been addressed through the Startup India portal and Startup India Twitter seva.

## 2. Recognition of Startups

-  An online process has been institutionalized for recognition of Startups on the Startup India portal
-  An entity is considered a Startup if:
- o Upto a period of ten years from the date of incorporation/ registration,  if  it  is  incorporated  as  a  private  limited  company  (as defined in the Companies Act, 2013) or registered as a partnership firm (registered under section 59 of the Partnership Act, 1932) or a

limited  liability  partnership  (under  the  Limited  Liability  Partnership Act, 2008) in India.

- o Turnover of the entity for any of the financial years since incorporation/  registration  has  not  exceeded  one  hundred  crore rupees.
- o Entity is working towards innovation, development or improvement of products  or  processes  or  services,  or  if  it  is  a  scalable  business model  with  a  high  potential  of  employment  generation  or  wealth creation.
- o Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a 'Startup'.
-  As of 6th September 2020, 36,106 startups have been recognized by Department for Promotion of Industry and Internal Trade(DPIIT) in 586 districts  and  4,22,986 total employment has been reported by 34,267 startups

## 2.1 Compliance Regime based on Self Certification

Ministry of Environment, Forest & Climate Change (MoEF&CC) has published a list of 36 white category industries. Startups falling under the "White category" would be able to self-certify compliance in respect of 3 Environment Acts -

1.  The Water (Prevention & Control of Pollution)Act, 1974
2.  The Water (Prevention & Control of Pollution) Gess (Amendment)Act, 2003
3.  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 are effective after concurrence of States/UTs. The Acts are:

1.  The  Building  and  Other  Constructions  Workers'  (Regulation  of Employment & Conditions of Service )Act, 1996
2.  The Inter- State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
3.  The Payment of Gratuity Act, 1972
4.  The Contract Labour (Regulation and Abo I ition) Act, 1970
5.  The Employees' Provident Funds and Miscellaneous Provisions Act, 1952
6.  The Employees' State Insurance Act, 1948.

27  states  and  UTs  have  implemented  the  process  of  self-  certification  to startups under 6 labour laws. 9 States (Haryana, Madhya Pradesh, Maharashtra,  Rajasthan,  Gujarat,  Uttar  Pradesh,  Punjab,  Uttarakhand,  and Delhi)  have  integrated  their  portals  with  ShramSuvidha  Portal.  Overall,  169 DPIIT recognized Startups have availed the benefits of self-certification.

## 2.2 Easing Public Procurement

-  The requirement of prior turnover and prior experience has been relaxed to encourage startups to participate  in  tenders.  Further,  startups  have  been exempted from the requirement of earnest money deposit
-  'GeM Startup Runway' has been launched for startups to sell products and services  to  Government.  As  of  24th  April  2020,  5,263  DPIIT  recognized startups have registered on Government e-Marketplace (GeM).
-  25,857 orders have been placed to startups. The value of orders served by startups is to the tune of about Rs.976 crore, as of 24th April 2020.
-  Additionally, Startups can now register and participate in all public orders on Central Public Procurement  Portal and  get exemptions  on  prior experience, prior turnover and earnest money deposit requirements.
-  .  GeM has  relaxed the requirement of approved Trademark certificate for DPIIT Recognized Startups . An application for trademark will be sufficient.

## 2.3 Startup Intellectual Property Protection Scheme

-  Startups  are  eligible  for  80%  rebate  in  patent  filing  fees  and  50%  on trademark filing fees. Additionally, Startups are also provided the facility of expedited  examination  of  patent  applications  to  reduce  the  time  taken  in granting patents.
-  510 patent facilitators and 392 trademark facilitators have been empanelled,as of June 2020, under this scheme to provide free-of-charge services to Startups.
-  As of June 2020, 3618 patent applications have been granted 80% rebate on the filing fee . 6832 trademark applications have been granted a 50% rebate on filing fee.

## 2.4 Tax Exemption to Startups for 3 years

-  The  provisions  of  section  80-IAC  of  the  Income  Tax  Act  provide  for  a deduction of an amount equal to 100% of the profits and gains derived from an eligible  business  by  an  eligible  start-up  for  3  consecutive  assessment years  out  of  7  years,  at  the  option  of  the  assessee,  subject  to  certain conditions.The  Finance  Act,  2020  provides  for  an  amendment  to  section 80-IAC of the Income Tax Act so as to provide that the deduction under the said section 80-IAC shall be available to an eligible start-up for a period of 3 consecutive assessment years out of 10 years beginning from the year in which it is incorporated. This amendment will take effect from 1st April 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years.
-  To avail these benefits, a Startup must get a Certificate of Eligibility from the Inter-Ministerial Board (IMB). 296 startups have been granted income tax exemptions till 45th IMB meeting.

## 2.5 Tax Exemption on Investments above Fair Market Value

DPIIT recognized startups are exempt from tax under Section 56(2)(viib) of the Income  Tax  Act  when  such  a  Startup  receives  any  consideration  for  issue  of shares which exceeds the Fair Market Value of such shares. The startup has to file a duly signed declaration in Form 2 to DPIIT {as per notification G.S.R. 127 (E)}  to  claim  the  exemption  from  the  provisions  of  Section  56(2)  (viib)  of  the Income  Tax  Act.  As  of  7th  September  2020,  with  regard  to  declarations received from  entities,  furnished  in  Form  2,  intimation  regarding  receipt  of declaration in Form 2 has been mailed in the cases of 2930 entities.

## 2.6 Faster Exit for Startups

-  Ministry  of  Corporate  Affairs  has  notified  Startups  as  'Fast  track  firms' enabling them to wind up operations within 90 days vis-a-vis 180 days for other companies

## 2.7 Fund of Funds for Startups

-  Fund of Funds for Startups (FFS) with a total corpus of Rs 10,000 crore was established with contribution spread over the 14th and 15th Finance Commission  cycle  based  on  progress  of  implementation.  Startup  Fund  of Funds is operational and is managed by SIDBI.
-  As of  7 th September 2020, an amount  Rs.1322.0544 cr stands released to SIDBI,  out  of  which  Rs.500cr  was  released  in  2015-16;  Rs.100  cr  was released in 2016-17; Rs.431.3044 cr released in 2019-20 and Rs.290.75 cr was  released in 2020-21. Rs.1054.97 cr was  provisioned under  FFS for  2020-21.
-  As of 7 th September 2020, SIDBI has committed Rs. 4016.95 Cr to 56 SEBI registered  Alternative  Investment  Funds  (AIFs).  These  funds  have  raised  a corpus fund  of  Rs.  30,303  Cr.   Rs.  1183.86  Cr.  have  been  drawn  from  the FFS and Rs. 4035.71 Cr. have been invested into 361 startups.

## 3. Participation of States in Strengthening Startup Ecosystems

DPIIT  is  engaging  intensively  with  the  State  Governments  to  develop  strong Startup ecosystems across the country.

State/UT Startup Ranking Framework was launched on 6th February 2018. The key objective of the Startup States Ranking Framework 2018 (SRF- 2018) was to encourage States and UTs to take proactive steps towards strengthening the Startup ecosystem  within their jurisdiction. There were 38 action points categorized  into  7  broad  areas  such  as  Startup  Policy  and  Implementation, Incubation support, Seed Funding, Angel and Venture Funding, Simplification of Regulations,  Easing  Public  Procurement  and  Awareness  &  Outreach.  The ranking  methodology  aimed  to  create  a  healthy  competition  among  States  to further learn, share and adopt best practices. A compendium of good practices was  also  launched,  listing  95  good  practices  implemented  by  various  State Governments. Knowledge Workshops were held to assist States in formulating policies and executing appropriate programs. Visits to USA  and Israeli ecosystems were facilitated for State Government representatives to enable the transfer  of  information  and  knowledge  from  the  best  ecosystems  of  the  world. The final rankings of SRF 2018 were announced on 20th December, 2018 and the States were  felicitated  by DPIIT. 27  States  and  3  Union  Territories participated in the exhaustive ranking exercise.

As  a  result  of  SRF  2018,  new  Startup  policies  were  launched,  necessary amendments  were  made,  new  Government  orders  were  issued  and  many Startups  were  supported  .Some  of  the   major  impacts  of  the  ranking  exercise include Implementation of Startup Policies in 25 States, Seed Funding to 3213 Startups; Funding of 163 Startups through Venture Funds; 17 States announcing incentives for women  entrepreneurs; Incubation area of 10.2 lakh Sq.ft supported by State Governments; Establishment of 596 Entrepreneurship Cells across  340  districts;  Registration  of  1996  mentors  across  19  States  and organization of 233 Startup events across 21 States.

The Department has launched States' Startup Ranking Framework for 2019 with the key objective to encourage States and UTs to take proactive steps towards strengthening  the  Startup  ecosystems  within  their  jurisdictions.  To  establish uniformity  and  ensure  standardization  in  the  ranking  process,  States  and  UTs have  been  divided  into  Category-X  and  Category-Y,  wherein  the  Y  category entails all UTs, except Delhi, and all states in North East India, except Assam ; Category X contains all other states.

State Ranking Framework 2019 is spread across 7 areas of intervention with a total  of  30  action  points,  as  compared  to  the  38  action  points  in  the  Previous Year State Ranking Framework. The framework aimed to evaluate States/UTs in a balanced and transparent manner and has thus made documentary evidence of compliance on action points by the State/UT Government a pre- requisite for collection of feedback. The consideration period (the period in which compliance on  action  points  will  be  considered  for  the  evaluation  process)  for  the  2019 ranking exercise is made from 1st May 2018 to 30th September 2019.

As a part of  capacity  development  of the  state  governments, 3(three)  two-day knowledge exchange workshops were organized in Jaipur, Mumbai, and Kochi. Video conferences were also conducted to help the states and UTs in resolving their queries. A delegation of government officials of more than 15 states was a part  of  International  Exposure  Visits  conducted  in  USA  and  Germany  to understand and learn key Startup initiatives in these successful Startup nations.

This was followed by evaluation of documentary evidence by the states by an Evaluation  Committee,  which  constituted  a  mix  of  experts  from  private  and government  organisations.  A  parallel exercise of  feedback  collection  was conducted  by  an  external  agency  appointed  by  DPIIT.  The  beneficiary  data provided by States was collated across each applicable action point. A total of 25 States/UTs participated in this exercise and more than 60,000 calls have been made. Feedback was collected from more than 6500 beneficiaries in more than eleven languages.

Today, 29 state and UTs have their own startup policies. Various states have been  working  diligently  towards  strengthening  their  startup  ecosystems,  by providing  strong  institutional  and  regulatory  support  to  startups,  easing  public procurement  norms,  setting-up  incubators,  providing  funding  opportunities  to startups,  and  organising  various  awareness  and  outreach  events  on  both national and international level.

All the exercises under State Ranking Framework 2019 are now complete and the results have been finalized.

## Results of SRF 2019 Category X

| State       | Category         |
|-------------|------------------|
| Gujarat     | Best Performer   |
| Karnataka   | Top Performers   |
| Kerala      | Top Performers   |
| Bihar       | Leaders          |
| Maharashtra | Leaders          |
| Odisha      | Leaders          |
| Rajasthan   | Leaders          |
| Haryana     | Aspiring Leaders |
| Jharkhand   | Aspiring Leaders |
| Punjab      | Aspiring Leaders |
| Telangana   | Aspiring Leaders |
| Uttarakhand | Aspiring Leaders |

| Andhra Pradesh   | Emerging Startup Ecosystem   |
|------------------|------------------------------|
| Assam            | Emerging Startup Ecosystem   |
| Chhattisgarh     | Emerging Startup Ecosystem   |
| Delhi            | Emerging Startup Ecosystem   |
| Himachal Pradesh | Emerging Startup Ecosystem   |
| Madhya Pradesh   | Emerging Startup Ecosystem   |
| Tamil Nadu       | Emerging Startup Ecosystem   |
| Uttar Pradesh    | Emerging Startup Ecosystem   |

| State/ UT                   | Category                   |
|-----------------------------|----------------------------|
| Andaman and Nicobar Islands | Best Performer             |
| Chandigarh                  | Leader                     |
| Nagaland                    | Aspiring Leader            |
| Mizoram Sikkim              | Emerging Startup Ecosystem |

## Category Y

## Note:

-  The results are in alphabetical order within each category.
-  Category X comprises of all states and UTs except Category Y
-  Category Y comprises of all North Eastern states except Assam and all UTs except  Delhi

## 4. Startup India Yatra

DPIIT  has  also  made  efforts  to  engage  with  the  Startup  ecosystem  through extensive outreach via bootcamps, social media, print and digital platforms. The Startup India Yatra is an initiative that travels to Tier 2 and Tier 3 cities of India to search for entrepreneurial talent and help develop Startup ecosystem. Day long bootcamps were conducted which included awareness workshops, idea validation  and  pitching  sessions.  Startup  Yatra  has  been  conducted  across 23 States in 207 districts impacting 78346 aspiring entrepreneurs. A total of 1,424 incubation offers have been given to the startups as a result of this initiative.

## 5. Capacity Development Program for Women Entrepreneurs (WING- Women Rise Together)

Startup India has launched a training program for aspiring and existing women entrepreneurs  -  WING  across  the  country.  This  will  focus  on  conducting workshops,  providing  mentorship  support  and  an  opportunity  to  present  their startups/ideas  to  stakeholders  of  the  startup  ecosystem.  The  workshops  will provide training on the following topics:

- o Legal and Compliance
- o IP and Patent Protection
- o Financial Management
- o Marketing Prowess

These are 2-day workshops providing domain specific knowledge and one-onmentorship  after  every  session.  17  workshops  have  been  conducted  across Kerala, Telangana, Karnataka, Punjab, Assam, Nagaland, Odisha and Rajasthan till February 2020. 68 incubation offers, 55 mentor connects, Resource Partner incentives to 110 participants have been offered . The aim is to  conduct  about  140  workshops  across  the  country  and  train  about  7000 women.

## 6. Grand Challenges

DPIIT has engaged with various Government Departments and assisted them in launching Startup challenges in various sectors and domains.

- o DPIIT  launched  the  Ease  of  Doing  Business  (EoDB)  Grand  Challenge inviting innovative ideas from individuals, startups or other enterprises to implement Artificial Intelligence (AI), Big Data Analytics, Internet of Things (IoT), Blockchain and other cutting-edge technologies, for re-engineering related  Government  processes.789  startups  applications  were  received through  Startup  India  website  were  screened  and  winners  have  been announced for problem statements.
- o Under  the  Swachh  Bharat  Grand  Challenge,  Startup  India  worked  with Ministry  of  Water  and  Sanitation  to  recognise  Startups  spearheading novel innovations in the field of waste management, water management, air  quality  management  and  sanitation.  The  initiative  has  helped  the Ministry  to  identify  relevant  solutions  for  environmental  challenges.  Two startups under each sector, have been awarded cash grants.
- o DPIIT  in  collaboration  with  Ministry  of  Agriculture  has  launched  an Agriculture Grand Challenge inviting solutions on 12 problem statements. Winners of the challenge have received mentorship, free of cost incubation  for  a  period  of  3  months,  opportunities  to  conduct  pilot programs and funding support in the form of grants.
- o DPIIT  in  collaboration  with  Central  Reserve  Police  Force  (CRPF),  has launched   Startup  India  CRPF  Grand  Challenge  challenge  to  address critical  issues  hampering  growth  of  the  security  sector  in  the  country  by leveraging technical expertise and  best  fundamental  concepts thus helping talented and creative innovators to pursue promising avenues at the  frontier  of  technology.  Demo  day  was  organized  to  validate  the products of 16 startups. Rs 2 lakhs for winner (one winner per problem statement) to be disbursed and product trial opportunities with CRPF to be provided to the startups.
- o DPIIT  in  collaboration  with  Ayushman  NHA  launched  the  Ayushman Bharat PMJAY  Startup Grand Challenge to generate cutting-edge solutions  for  supporting  the  National  Health  Authority  towards  more effective implementation of Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) and empowering 500 million people to gain access to affordable healthcare. Cash price of Rs 2 lakhs for winners per problem statement  to  be  disbursed  along  with  mentorship  and  facilitation  for funding and procurement including opportunities for testing and validation.
- o Startup India launched Single Use Plastic Grand Challenge to incentivize innovators and Startups to develop design solutions across three problem statements.  Through  this  challenge, first winners  for  each  problem statement  (3  startups)  received  cash  price  of  INR  3  lakhs  and  second winners  for  each  problem  statement  (3  startups)  received  cash  price  of INR 2 lakhs
- o The  Department  of  Animal  Husbandry  and  Dairying,  in  partnership  with Startup India, launched the 'Animal Husbandry Startup Grand Challenge', to  scout  for  innovative  and  commercially  viable  solutions to address the problems faced by the animal husbandry and dairy sector. The challenge was  launched  by  Hon'ble  Prime  Minister,  Shri  Narendra  Modi,  on  11th September  2019  at  a  national  animal  disease  control  programme  in Mathura.  The  challenge  was  open  for  application  to  startups  from  11th

September  2019  to  30th  October  2019,  on  the  Startup  India  portal  www.startupindia.gov.in. 157 applications were received in total for the six problem statements that were identified as below:

- o Value added products
- o Single use plastic alternatives
- o Eliminate milk adulteration
- o E-commerce solutions
- o Product traceability
- o Breed improvement and animal nutrition

The  Department  of  Animal  Husbandry  and  Dairying  (DAHD)  provided innovative startups with solutions to the above-mentioned  problem statements with the following:

- o Cash Grants: Two winners under each problem statement to be awarded with cash grants worth
-  INR 10 Lakh (Winner)
-  INR 7 Lakh (Runner-up)
- o Incubation to 10 startups
- o Mentorship: Virtual masterclass for each problem statement organized for startups to provide mentorship and guidance
- o Ministry  of  Textiles  along  with  Startup  India  launched  a  Grand challenge for startups in January 2020. The theme targets the single use plastic bag alternative and incentivizes innovators and Startups to develop design solutions. The solutions must also have the same or greater functionality as the products they are designed to replace and must  be  designed  with  current  production  methods  in  mind.  Under various  problem  statements,  the  challenge  aims  to  identify  and shortlist  innovative  enterprise  stage  Startups  and  provide  them  with the cash rewards. The challenge is split in 2 problem statements
- o Single Use plastic alternative
- o Multi Use plastic alternative

Apart from channelizing resources from the Government, Market opportunities  and  mentorship  have  been  provided  by  way  of  organizing Corporate  Grand  Challenges  in  partnership  with  Softbank,  Whatsapp, Western Digital, International Accelerator etc.

## 7. International Bilateral Cooperation

One of  the  key  objectives  under  the  Startup  India  program  is  to  help  connect Indian Startup ecosystems  to  global  Startup ecosystems  through  various engagement models. Startup India has launched Bridges with 10 countries in order to provide a soft-landing platform to startups from the partner nations and to promote investments.

Key  international  partnerships  have  been  executed  by  Startup  India  and  their benefits are described below.

## 7.1 India Israel Innovation challenge

Objective: To  promote  exchange  of  technology  and  best  practices  between startup ecosystems in India and Israel.

The innovation challenge was launched by the Hon'ble Prime Ministers of India and Israel in July 2017, calling on Israeli and Indian startups to develop solutions for critical problems in the field of agriculture, water and healthcare.

Outcome: The  challenge  was  hosted  online  and  received  665  applications (Healthcare: 311, Agri-tech: 217, Water-tech: 137) from Indian innovators and startups. 18 Startups were selected from the challenge and were awarded, as per following:

-  6 Indian winners were granted Rs. 5 lakhs each and 6 months free of cost  incubation  at  T-Hub,  Hyderabad  (Healthcare)  and  iCreate, Gujarat (Agri-tech, Water-tech)
-  12 Indian winners were given grant of Rs. 2 lakhs each

## 7.2 India Portugal Startup Hub (IPSH)

Objective: To  strengthen  and  foster  the  connection  between  the  startup ecosystem of India and Portugal

The  India  Portugal  Startup  Hub  was  launched  by  Prime  Minister Antonia Costa and his Indian counterpart, Prime Minister Narenda Modi, in June 2017.  Earlier in 2017, the Portuguese Government announced the 'Startup Visa' program during the India  - Portugal Summit. The 'Startup Visa' program is a visa facilitation program for Indian  entrepreneurs,  aimed  at  those  who  want  to  launch  their startups in Portugal.

## 7.3 India Sweden Startup Sambandh

Objective:

To deepen engagement among stakeholders of the startup ecosystems of India and Sweden.

India  Sweden  Startup  Sambandh  was  launched  at  Stockholm  from October 12-13, 2017 and provides guidance to Startups from both the countries for sustainable growth of their businesses.

## 7.4 India Singapore Entrepreneurship Bridge

To enable Startups, investors and aspiring entrepreneurs of India and

Objective: Singapore to connect with one another with a focus on:

-  Knowledge exchange
-  Networking opportunities
-  Capacity building

The India-Singapore Entrepreneurship Bridge (In Spreneur) was launched on 7th January, 2018 at the ASEAN - India Pravasi Bharatiya Divas Conference by the then Hon'ble External Affairs Minister of India, Late Smt. Sushma Swaraj.

The  first  initiative  in  this  engagement  was  the  ASEAN  India  Grand Challenge that aimed to support ASEAN startups with a commercially viable solution that can solve India's priority sectors through a market access program in 5 States of India. The themes for the challenge are as follows:

-  IoT for smart cities
-  Financial technology & financial inclusion
-  Renewable energy
-  Agriculture & rural development
-  Digital health & Clean India

## 7.5 Indo-Dutch #StartUpLink

Objective:

To  promote  exchange  of  technology  and  best  practices  between Startup ecosystems in India and Netherlands.

The Indo-Dutch Startup Link acts as a one-stop platform for Startups from  India  and  Netherlands.  The  initiative  helps  enable  Startups, investors,  incubators  and  aspiring  entrepreneurs  of  both  countries  to connect with one another, facilitate knowledge exchange, and provide pilot  opportunities  for  Startups.  Hon'ble  Minister  for  Foreign  Trade  & Development  Cooperation,  Netherlands,  Ms.  Sigrid  Kaag  along  with Mayor  of  Bangalore,  Sampath  Raj  launched  the  Indo-Dutch  StartUp Link portal on May, 2018.

Startup  India  Hub  and  Netherlands  Enterprise  Agency  partnered  for their  respective  countries.  The  initiative  helps  startups  through  their lifecycle with specific focus on aspects like funding, market expansion, feasibility testing, business structuring advisory, enhancement  of marketing skills, and technology commercialization.

## 7.6 Japan India Startup Hub

Objective:

## Outcome:

The challenge was hosted and invited applications from Indian startups in fields of artificial intelligence, machine learning, face recognition, and cyber  security.  422  applications  were  received  and  out  of  which  one startup was awarded the cash grant of USD 50,000.

## 7.7 India Finland Tech Hub

Objective:

To  promote  exchange  of  technology  and  best-practices  between Startup Ecosystems in India and Finland.

The India Finland Tech Hub was launched in December 2018 at Slush 2018 by the Ambassador of India in Finland. The India - Finland Tech Hub aims to act as a gateway for Indian startups looking to expand to Finland  and  vice  versa  and  facilitate  entry  and  innovation  exchange between the two countries.

To  promote  exchange  of  technology  and  best-practices  between startup ecosystems in India and Japan

The Japan India Startup Hub was launched in 29th October, 2018 by the  Hon'ble  Prime  Ministers  of  India.  AnMoU  was  signed  between Ministry  of  Economy,  Trade  and  Industry  of  Japan,  and  Ministry  of Commerce and Industry, Government of India. The innovation challenge was launched under Japan India Startup Hub.

## 7.8 India Korea Startup Hub

Objective:

To  promote  exchange  of  technology  and  best-practices  between startup ecosystems in India and Korea.

The Hon'ble Prime Ministers of India and Korea launched the India  Korea  Startup  Hub  in  Seoul  on  21st  February  2019.  The  Hub  was conceptualized as part of a joint statement signed between the Ministry of  Commerce  and  Industry  of  the  Republic  of  India  and  Ministry  of SMEs and Startups of The Republic of Korea to enable collaborations between startups, investors, incubators, and aspiring entrepreneurs of both countries and provide them requisite resources for market entry and global expansion. Two challenges were launched as a part of the India-Korea Startup Hub.

- Outcome: The challenge was hosted online and received 130 applications (Credit Fraud Detection-  28  Startups;  Cyber  Security-  25  Startups)  from  Indian innovators and startups. Three startups were selected as the winners and were awarded a cash prize worth USD 25,000, USD 15,000 and

Rating -56 Startups; Predictive Analytics21 Startups; USD 10,000 along with a pilot opportunity.

The second challenge was hosted online and received 190 applications (Preventive Care -59 Startups; Integrated Business Model55 Startups;  Primary  Care-  44  Startups;  Secondary/Tertiary  Care-  24 Startups;  Enablers-  8  Startups).  One  Startup  was  selected  as  the winner and was awarded USD 10,000 as the prize money.

## 7.9 Indo-Russia Innovation Bridge

Objective:

To  promote  exchange  of  technology  and  best-practices  between Startup Ecosystems in India and Russia.

The Indo-Russia Innovation Bridge aims to enable startups, investors, incubators,  and  aspiring  entrepreneurs  of  both  countries  to  connect with each other. Two challenges were launched.

- Outcome: The first challenge was hosted online and received 256 applications in fields  including  Fintech,  HR  Tech,  Internet  of  Things,  B2C  Digital Products,  Soft  /  SaaS  for  E-commerce.   4  startups  out  of  these received travel grant up to Rs. 216,400 for 2 months free acceleration

along with a paid pilot opportunity in Moscow.

The  second  challenge  invited  tech-enabled  innovative  solutions  from both Indian & Russian startups in the Education sector. 218 applications  were  received,  out  of  which  10  startups  have  been shortlisted  for  the  final  pitching  round.  The  winning  startup  was awarded cash prize of USD 25,000

## 7.10 UK-India Startup Launchpad

Objective: To  promote  exchange  of  technology  and  best  practices  between Startup ecosystems in India and UK.

Outcome: 19th September 2019 at the TechXchange 2019.

UK  -  India  Startup  Launchpadwas  launched  by  DPIIT  and  DFID  on

## 8. Organizing  Startup  Fests  for  Showcasing  Innovation  and  Providing  a Collaboration Platform

-  India has proposed to form the Special Working Group (SWG) on Startups and  Innovation  this  year,  chaired  by  the  Department  for  Promotion  of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India. DPIIT also envisions to launch and organize the SCO Startup  Forum  in  October  2020.  The  Startup  Forum  shall  aim  to  promote startups and improve the startup ecosystems in the  SCO  Member States.  The heads of states from all the 8 member nations in the SCO shall meet in November 2020 and may officially announce the SWG on Startups and Innovation.
-  The Department has organized various Startup events. Some of such key events are as follows:
- I. Roundtable  headed  by  Minister  of  Commerce  and  Industry  with Venture Fund managers in April 2018 at Mumbai;
- II. Roundtable with Singapore delegation led by Enterprise Singapore & TiE Singapore in August 2018 at Delhi;
- III. Roundtable  with  Japanese  startups  led  by  JETRO  in  September 2018 at Delhi;
- IV. Roundtable headed by Secretary DPIIT with Venture Fund managers in August 2018 at Delhi;
- V. Roundtable  with  Finance  Secretary  on  banking  regulations  faced by startups in September 2018 at Delhi;
- VI. Startup India Global Venture Capital Summit in December 2018 at Goa;
- VII. Roundtable headed by Secretary DPIIT on Angel Tax regulations in February 2019 at Delhi;
- VIII. Startup Manthan @ Aero India in February 2019 at Bengaluru;
- IX. Speed Mentoring Session for Women Entrepreneurs in March 2019 at Delhi;
- X. Roundtable headed  by Secretary, DPIIT on Accreditation of investors in  April  2019 at Delhi;
- XI. Roundtable headed by Secretary DPIIT on Regulatory issues faced by stakeholders of startup ecosystem April 2019 at Delhi;
- XII. Roundtable with Central Government Departments on best practices for promoting startups in May 2019 at Delhi
- XIII. Roundtable  headed  by  Secretary,  DPIIT  on  journey  and  hurdles faced by Startups in November 2019 at Delhi
- XIV. Second edition of Startup India Global Venture Capital Summit in December 2019 at Goa;
- XV. Roundtable  headed  by  Minister  of  Commerce  and  Industry  to discuss regulatory concerns of investors in December 2019 at Goa
- XVI. Roundtable  headed  by  Secretary  DPIIT on  Regulatory  issues pertaining to Startups held in January 2020 at Delhi;
- XVII. Roundtable headed by Secretary DPIIT on mobilization of surplus funds  available  with  pension,  insurance  and  PSUs for  investment into Startups in January 2020 at Delhi.
- XVIII. Roundtable  headed  by  Chairman  -  Airport  Authority  of  India on mobilization  of  surplus  funds  available  with  PSUs  for  investment into Startups in February 2020 at Delhi.
- XIX. Roundtable headed by Secretary -Ministry of Labour and Employmenton mobilization of surplus funds available with pension fund for investment into Startups in February 2020 at Delhi.
- XX. Roundtable headed by Secretary DPIIT on action taken report on regulatory  concerns  of  Investors  and  other  stakeholders  of  the Startup Ecosystem in February 2020 at Delhi.
- XXI. Roundtable headed by Joint Secretary DPIIT taxation concerns of the startup stakeholder community in March 2020 at Delhi.
- XXII. Videoconference headed by Minister of Railways and Commerce & Industry  to  assess  the  impact  of  COVID-19  and  lockdown  in  the country on Startup ecosystem.  in April 2020.
- XXIII. Videoconference  headed  by  Joint  Secretary  DPIIT on  taxation concerns of the startup stakeholder community in May 2020.
- XXIV. Videoconference headed by Joint Secretary DPIIT on mobilisation of Surplus fund available with Insurance Companies for investment into  Startups  through  Alternative  Investment  Fund  (AIF)  in  June 2020.
- XXV. Videoconference headed by Joint  Secretary  DPIIT  to  discuss  the possibility of mobilization of surplus funds available with insurance companies for investment into startups through Alternative Investment Fund (AIF) in August 2020.

## 9. Regulatory Reforms

Recognizing that disruptive business models and innovative technologies may face  regulatory  hurdles,  DPIIT  has  held  extensive  consultations  with  all  the stakeholders  and  has  worked  with  relevant  Government  Agencies  to  make regulatory  changes. 39  such  regulatory  changes,  to  enhance  ease  of  doing business,  ease of  raising  capital  and  reduce  compliance  burden  have  been undertaken. The list of regulatory reforms is enclosed at Annexure -A

## 10. National Startup Awards

National Startup Awards (NSA) is an initiative of the Department for Promotion of  Industry  and  Internal  Trade  to  recognize  and  reward  outstanding  startups and ecosystem enablers that are building innovative products or solutions and scalable  enterprises,  with  high  potential  of  employment  generation  or  wealth creation, demonstrating measurable social impact. The measure of success will not only be the financial gains for the investors but also the contribution to the social good.

The journey of conceptualizing National startup Awards started in 2019, with 3 key considerations:

- Identification of categories which would represent the spread of sectors in which startups/ entrepreneurs are thriving
- Identification of parameters against which the startups would be evaluated
- Creation of a robust evaluation methodology which evaluates startups on the  basis  of  innovation,  scalability/  business  growth  and  contribution  to society, economic & environment.

On  the  basis  of  the  above-mentioned  criteria,  National  Startup  Awards 2020 have recognized exceptional startups across various categories that are:

-     Providing  innovative  solutions  to  solve  real  problems  and  challenges  for India
-     Developing innovative technologies, products and solutions from India into the world
-     Building businesses that are scalable, sustainable and responsible
-     Delivering measurable developmental gains

The  applications  for  the  'National  Startup  Awards  2020'  were  hosted  on  the Startup India portal - www.startupindia.gov.in - through which a total of 1,641 Startups and 41 ecosystem enablers (incubators and accelerators) participated in the first edition of the National Startup Awards.

A  4-stage  evaluation  process  was  followed  for  the  applications  received.  The applications were pre-screened by the Startup India Team for DPIIT-recognition and other legal documentation, followed by second round of evaluation and due diligence  by  a  third-party  knowledge  partner  for  the  program.  The  shortlisted startups are  given an opportunity to present their ideas to an expert jury panel with public & private sector stalwarts, over video conferencing.

A total of 15 panels were organized on 4 weekends to come up with winners and runner-up's for NSA 2020

- 197 startups, 9 incubators and 5 accelerators presented their pitches infront of the jury
- Each  panel  comprised  of  industry  leaders  from  their  respective  sectors, startup ecosystem experts, sector experts from the Govt.

The winning startups will get cash prizes along with opportunities to present their solutions to relevant public authorities and corporates, for potential pilot projects and work orders. The awards will also recognize leading accelerators and incubators across the country.

*******

## Regulatory Reforms For Enabling Small Businesses or Startups (Since January, 2016)

## Reserve Bank of India

1.  Startup  enterprises  permitted  to  access  loans  under  External  Commercial Borrowing Framework up to USD 3 million.(Oct, 2016)
2.  A  Securities  and  Exchange  Board  of  India  (SEBI)  registered  Foreign  Venture Capital  Investor  (FVCI)  may  contribute  up  to  100%of  the  capital  of  an  Indian company engaged in any activity mentioned in Schedule 6 of Notification No. FEMA 20/2000, including startups irrespective of the sector in which it is engaged, under the automatic route. (Aug, 2017)
3.  An  Indian  startup  having  an  overseas  subsidiary,  may  open  a  foreign  currency account with a bank outside India for the purpose of crediting to it foreign exchange earnings out of exports/ sales made by the said entity and/ or the receivables, arising out of exports/ sales, of its overseas subsidiary. (June, 2016)
4. SOFTEX form filed by software exporters moved online. (Feb, 2019)

## Securities and Exchange Board of India (SEBI)

5.Lock in period for investments made by an Angel Fund reduced to 1 year from 3 years  as  amended  by  the  SEBI  (Alternative  Investment  Funds)  (Amendment) Regulations,2016, w.e.f. 04-01-2017.

- 6.Angel Funds are allowed to invest in overseas venture capital undertakings upto 25%  of  their  investible  corpus  in  line  with  other  AIFs  as  provided  by  the  SEBI (Alternative Investment Funds) (Amendment) Regulations, 2016, w.e.f. 04-01-2017.
- 7.The upper limit for number of angel investors in a scheme is increased from forty nine to two hundred as  amended  by SEBI (Alternative Investment Funds) (Amendment) Regulations, 2016,w.e.f. 04-01-2017
- 8.The requirements of minimum investment amount by an Angel Fund in any venture capital undertaking is reduced from fifty lakhs to twenty five lakhs as amended by SEBI (Alternative Investment Funds) (Amendment) Regulations, 2016,w.e.f. 04-012017
- 9.'Operating  Guidelines  for  Alternative  Investment  Funds  in  International  Financial Services Centres' issued by SEBI. (Nov, 2018)

## Ministry of Corporate Affairs

- 10.The financial statement, with respect to private company (if such private company is a start-up) may not include the cash flow statement. (June, 2017)
- 11.A private company, which is considered as a start-up for a period of five years from the date of its incorporation, is also allowed to accept deposits from members without any restriction on the amount. (Sep, 2017)
- 12.Startup defined for the purpose of Companies Act, 2013: As per the definition, a start-up company means a private company incorporated under the Companies Act,

## Annexure-A

2013 and recognised as a 'start-up' in accordance with the notification issued by the Department for Promotion of Industry and Internal Trade. (June, 2017)

13.Exemption from procedural compliance (e.g. such as issue of an offer circular or creation  of  a  deposit  repayment  reserve)  for  raising  deposits  from  shareholders. (June, 2017)

14.In relation to a private company (if such private company is a startup), the annual return  shall  be  signed  by  the  Company  Secretary,  or  where  there  is  no  Company Secretary, by the Director of the company. (June, 2017)

15.A private company (if such private company is a startup) is required to conduct at least one meeting of the Board of Directors  in each half of a calendar year and the gap between the two meetings is not less than ninety days. (June, 2017)

16.Name Reservation for Company incorporation: Rule 8, Companies (Incorporation) Rules,  2014  substituted  with  Companies  (Incorporation)  5th  Amendment  Rules, 2019,which provides for new regulations on resemblance with an existing company name, new categories of undesirable names of a company and list of words which can be used only after obtaining approval. (May, 2019)

17.Amendment  in  Companies  (Share  Capital  and  Debentures)  Rules,  2014:  The Ministry  of  Corporate Affairs  issued  a  notification  on  16th  August,  2019  increasing the  period  in  which  ESOPs  could  be  granted  to  promoters  and  directors  (holding more  than  10%  equity)  of  Startups,  from  5  years  to  10  years  from  the  date  of incorporation  and  thereby  aligned  the  provisions  of  the  Companies  (Share  Capital and Debentures) Rules with the provisions referred to in the DPIIT notification dated 19th Feb, 2019.

The notification also enhanced the limit on shares with Differential Voting Rights in the Company from 26% of the total post-issue paid up equity capital of the Company to  74%  of  the  total  voting  power.  Further,  the  condition  for  the  company  to  have consistent  track  record  of  distributable  profits  for  the  last  three  years  for  issue  of DVR shares has been removed. (August 2019)

18.Corporate  Social  Responsibility  Funds:  In  reference  to  section  135  of  the Companies Act 2013, Schedule VII has been amended to include  Contribution to incubators  funded  by  Central  Government  or  State  Government  or  any  agency  or Public  Sector  Undertaking  of  Central  Government  or  State  Government,  and contributions  to  public  funded  Universities,  Indian  Institute  of  Technology  (IITs), National  Laboratories  and  Autonomous  Bodies  (established  under  the  auspices  of Indian Council of Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE), Defence Research and Development Organisation (DRDO), Department of Science and Technology (DST), Ministry of Electronics and Information  Technology)  engaged  in  conducting  research  in  science,  technology, engineering  and  medicine  aimed  at  promoting  Sustainable  Development  Goals (SDGs). (October 2019).

19.As part of Government of India's Ease of Doing Business (EODB) initiatives, the Ministry of Corporate Affairs has launched a new integrated Web Form christened 'SPICe+' replacing  the  existing  SPICe  form.  SPICe+  would  offer 10  services  by  3 Central  Govt  Ministries  &  Departments  (Ministry  of  Corporate  Affairs,  Ministry  of Labour  &  Department  of  Revenue  in  the  Ministry  of  Finance)  and  One  State Government(Maharashtra),  thereby  saving  as  many  procedures,  time  and  cost  for Starting  a  Business  in  India  and  would  be  applicable  for  all  new  company incorporations  w.e.f.23rd  February  2020.  SPICe+  has  two  parts:  Part  A-for  Name reservation  for  new  companies  and  Part  B  offering  a  bouquet  of  services  viz.  (i) Incorporation (ii) DIN allotment (iii) Mandatory issue of PAN (iv) Mandatory issue of TAN  (v)  Mandatory  issue  of  EPFO  registration  (vi)  Mandatory  issue  of  ESIC registration  (vii)  Mandatory  issue  of  Profession  Tax  registration(Maharashtra)  (viii) Mandatory Opening of Bank Account for the Company and (ix) Allotment of GSTIN (if so applied for) (February 2020)

20.Amendment  in  Companies  (Share  Capital  and  Debentures)  Rules,  2014:  The Ministry of Corporate Affairs issued a notification on 05th June, 2020 increasing the period  in  which  Sweat  Equity  shares,  from  5  years  to  10  years  from  the  date  of incorporation  and  thereby  aligned  the  provisions  of  the  Companies  (Share  Capital and Debentures) Rules with the provisions referred to in the DPIIT notification dated 19th Feb, 2019. (June 2020)

21.Amendment in Companies (Acceptance of Deposits) Rules, 2014: The Ministry of Corporate  Affairs  issued  a  notification  on  07th  September,  2020  increasing  the period  of  issuance  of  convertible  note,  from  5  years  to  10  years  from  the  date  of issue and thereby aligned the provisions of the Companies (Acceptance of Deposits) Rules, 2014 with the provisions referred to in the DPIIT notification dated 19th Feb, 2019. (September 2020)

22.Amendment in Companies (Acceptance of Deposits) Rules, 2014: The Ministry of Corporate  Affairs  issued  a  notification  on  07th  September,  2020  whereby  the maximum  limit  in  respect  of  deposits  to  be  accepted  from  members  by  a  private company  shall  not  apply  to  a  start-up  company  for  10  years  from  the  date  of  its incorporation, instead of 5 years. (September 2020)

## Ministry of Finance, Department of Revenue

23.In the case of a domestic company, where its total turnover or the gross receipt in the previous year does not exceed two hundred and fifty crore rupees, income tax shall be charged at the rate of 25 percent of the total income. (Feb, 2018)

24.Definition of eligible business as stated in Section 80-IAC aligned with Startups definition. (April, 2018)

25.Introduction of Section 54EE in the Income Tax Act, 1961: Exemption from tax on long-term capital gain if such long-term capital gain is invested in a fund notified by Central  Government.  The  maximum  amount  that  can  be  invested  is  Rs  50  lakh. (May, 2016)

26.Amendment in Section 54GB of Income Tax Act: 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  prescribed  stake  of  equity  shares  of  eligible Startup for utilizing the same for purchase of specified asset. (Feb, 2016)

27.Minimum  Alternate  Tax  credit  allowed  to  be  carried  forward  up  to  fifteenth assessment years instead of ten assessment years. (2017)

28.Exemption under section 80-IAC of Income Tax Act: Exemption to eligible Startup for any 3 consecutive assessment years out of 7 years (earlier 5 years) beginning from the year in which such eligible Startup is incorporated.(April, 2018)

29.Exemption  from  tax  under  the  provisions  of  section  56(2)(viib)  to  Startups  for issue  of  shares  above  fair  market  value  on  the  basis  of  a  self-declaration  to  the Central Board of Direct Taxes. The aggregate amount of paid up share capital and share premium of the startup after issue or proposed issue should not exceed Rs. 25 Crore (Feb, 2019)

30.Taxation of convertible notes  - Period for which a bond, debenture, debenturestock  or  deposit  certificate  was  held  prior  to  conversion  shall  be  considered  for determining  the  period  of  holding  of  such  shares  or  debentures  acquired  upon conversion. (March, 2016)

31.Amendment  in  Section  54GB  of  Income  Tax  Act  w.e.f  1st  April  2020:  (August 2019)

i.The  condition  of  minimum  holding  of  50%  of  share  capital  or  voting  rights  in  the start-up relaxed to 25%

ii.Extension  of  period  under  which  benefit  under  section  54GB  from  for  sale  of residential property can be availed up to 31st March, 2021

iii.Condition restricting transfer of new asset being computer or computer software is to relaxed from 5 years to 3 years w.e.f. 1-4-2020

32.Amendment in Section 79 of Income Tax Act (August 2019): Eligible Startups to carry forward their losses on satisfaction of any one of the two conditions:

i.Continuity of 51% shareholding/voting power or ii.Continuity of 100% of original shareholders carrying voting power

33.Pass through of losses allowed to Investment Funds i.e. Category I and II AIF similar to pass through of income. These amendments will take effect from the 1st April,  2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years (August 2019)

34.The investment made by Venture Capital Fund of Category-I AIF in a startup was exempted from the applicability of the provisions of section 56(2)(viib) of the IT Act. This  exemption  has  been  extended  to  all  sub-categories  of  Category-I  AIF  and Category-II AIF via introduction of 'specified funds' in the said section (August 2019)

35.The Finance Act 2020 provides for amendment in section 80-IAC of the Incometax Act relating to special provision in respect of specified business. The provisions of section 80-IAC, inter alia, provide for a deduction of an amount equal to hundred per  cent.  of  the  profits  and  gains  derived  from  an  eligible  business  by  an  eligible start-up for three consecutive assessment years out of ten years vis-à-vis the earlier norm  of  seven  years  at  the  option  of  the  assessee  and  the  total  turnover  of  its business does not exceed hundred crore rupees in the previous year relevant to the assessment year for which deduction under this section is claimed. This amendment will  take  effect  from  1st  April,  2021  and  will,  accordingly,  apply  in  relation  to  the assessment year 2021-2022 and subsequent assessment years. (Feb 2020)

36.The Finance Act 2020 provides for amendment in section 80-IAC of the Incometax Act relating to special provision in respect of specified business. The provisions of section 80-IAC, inter alia, provide for a deduction of an amount equal to hundred per  cent.  of  the  profits  and  gains  derived  from  an  eligible  business  by  an  eligible start-up for three consecutive assessment years out of ten years at the option of the assessee  and  the  total  turnover  of  its  business  does  not  exceed  hundred  crore rupees  vis-à-vis  the  earlier  norm  of  twenty-five  crore  rupees  in  the  previous  year relevant to the assessment year for which deduction under this section is claimed. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. (Feb 2020)

37.The Finance Act 2020 provides for amendment in sections 156, 191 and 192 of the Income Tax Act laying to enable employees receiving specified security or sweat equity share as perquisite under section 17(2)(vi) of an eligible startup referred to in section 80-IAC, to deduct or pay, as the case may be, tax on such income within fourteen  days  after  the  expiry  of  forty-eight  months  from  the  end  of  the  relevant assessment year; or from the date of the sale of such specified security or sweat equity share by the assessee; or from the date of the assessee ceasing to be the employee of the person, whichever is earlier, on the basis of rates in force of the financial year in which the said specified security or sweat equity share is allotted or transferred. This amendment will take effect from 1st April, 2020. As per the earlier norms, the said perquisite including ESOPs were taxed in the hands of the employee at the time of exercise of the option.

## Ministry of Electronics and Information Technology

38.Removal of clause from Electronic Development Fund (EDF) operating guidelines stating that if a fund draws from Fund of Funds for Startups, then they cannot draw from EDF and vice versa. (Nov, 2018)

## Ministry of Commerce and Industry, Department for Promotion of Industry and Internal Trade

39.Amendment  in  the  definition  of  a  Startup:  An  entity  shall  be  considered  as  a Startup  upto  a  period  of  ten  years  from  the  date  of  incorporation/  registration  and turnover of the entity for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees. (Feb, 2019)

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