Lok Sabha Question No. 3906 (UNSTARRED), answered on 2019-07-17
Subject: Strengthening of Start-ups
Ministry: COMMERCE AND INDUSTRY
Asked by: Janardan Singh Sigriwal

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

## LOK SABHA

UNSTARRED QUESTION NO. 3906 TO BE ANSWERED ON WEDNESDAY, THE 17 th  JULY, 2019

## STRENGTHENING OF START-UPS

## 3906. SHRI JANARDAN SINGH SIGRIWAL:

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

वाणिज्य एवं उद्योग मंत्री

- (a) whether the Government has any plans to strengthen the start-up ecosystem at local level in the country under start-up India initiative;
- (b) if so, the details thereof indicating proactive steps taken in this regard;
- (c) whether the Government has any data regarding rising trend in funding of startups in the country during the last three years;
- (d) if so, the details thereof; and
- (e) the  measures  being  taken  by  the  Government  to  improve  the  situation  in  this regard?

## ANSWER

## वाणिज् यएवंउद्योग मंत्रालयमेंराज् यमंत्री( श्रीसोम प्रकाश) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI SOM PARKASH)

- (a)  to  (e): Department  for  Promotion  of  Industry  and  Internal  Trade  (DPIIT)  under Startup  India  initiative  has  taken  several  steps  to  strengthen  startup ecosystem  at  local  level  in  the  country.  The  steps  taken  are  listed  at Annexure I. While funding of Startups in India has seen a rising trend, the data thereof is not centrally maintained.

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## ANNEXURE REFERRED TO IN REPLY TO LOK SABHA UNSTARRED QUESTION NO. 3906 FOR ANSWER ON 17.07.2019

## Steps taken under Startup India initiatives

## Simplification and Handholding

## 1. Compliance Regime based on Self-Certification

-  List of 36 industries in 'white' category has been published on Central Pollution Control Board's (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;  27 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 - 19,874 Startups have been recognised till 12th July 2019
- o Learning & development module - over 2,30,000 registrations achieved
-  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.
-  3,157  mentor,  investor  and  incubator  connections  have  been  established  through  the portal for Startups

## 3. Startup India Hub

-  Over 1,34,000 queries have been handled by the Startup India Hub
-  Over 3,29,000 registrations have been achieved on the Hub as of July, 2019.

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

-  425  facilitators  for  Patent  and  Design  and  606  facilitators  for  Trademark  applications have been empanelled to assist Startups in fling of patents and trademarks
-  1496  applications  have  received  rebate  of  up  to  80%  on  patent  fees  and  have  also received legal assistance as of 31 st May 2019
-  Patent filing  has  been  made  faster  for  Startups  and  accordingly,  389  applications  were granted expedited examination and 103 patents were granted as of 31 st May 2019.
-  Trademark facilitation has been extended to 2761 Startups as of 31 st May 2019

## 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  Department  for  Promotion  of  Industry  and  Internal  Trade  (DPIIT) 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 DPIIT. 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 Rs. 10,000 crore

-  Fund of Funds for Startups has been established with a corpus of Rs. 10,000 crore for extending assistance to startups. As of 10 th July 2019,
- o Total  commitments  under  FFS  stand  at  Rs.  3123.20  Cr.  crore  to  47  Alternative Investment Funds (AIFs) while drawdown by AIFs is Rs. 512.58 crore
- o 254  Startups  have  received  funding  under  FFS  with  catalysed  investment  of  Rs. 1701.03 crore

## 8. 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 Rs. 50 lakh 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.

## 9. Tax Exemption to Startups for 3 Years

-  Provision  has  been  made  for  Startups  (Companies  and  LLPs)  to  avail  income  tax exemption  for  a  continuous  period  of  3  years  in  a  block  of  7  years,  if  they  are incorporated between 1 st April 2016 and 31 st March 2021.
-  183 Startups have been approved for availing tax benefits as of 12 th July 2019

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

-  Department for Promotion of  Industry and Internal Trade issued a notification number G.S.R. 127(E) dated 19 th February, 2019 amending the definition of startup and further providing  criteria  for  availing  exemption  from  the  provisions  of  section  56(2)(viib). Thereby,  startups  raising  funds,  where  the  total  amount  of  share  capital  and  premium does  not  exceed  INR  25  Crore,  may  avail  exemption  from  the  provisions  of  section 56(2)(viib) via self-declaration to CBDT.
-  As on 12 th July 2019, a total of 1076 applications for Angel Tax Exemption have been received. 45 applications have been found to be incomplete, and 221 applications were repeat or modified applications. CBDT has exempted 810 startups under this provision.

## Industry-Academia Partnership and Incubation

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

-  8,878 Schools selected for setting up Atal Tinkering Labs and Rs. 12 Lakh each has been disbursed to 3,020 tinkering labs.

## 12. Harnessing Private Sector Expertise for Incubator Setup

-  39 green-field incubators and Established Incubation centres (EICs) have been given Rs 96.59  crore.  Further  63  Atal  Incubation  and  Established  Incubation  Centres  have  been selected for further disbursement and are currently undergoing due-diligence.

## 13. Building Incubation Centres at National Institutes

-  11 TBIs (Technology Business Incubators) have been approved for which Rs 42.23 crore have been sanctioned and Rs 18.69 crore have been disbursed to TBIs.
-  15 Startup Centres have been approved for joint set up by Department of Science and Technology and Ministry of Human Resource Development and an amount of Rs 37.50 lakh (Rs 3.75 lakh each for 10 Startup Centres) has been released for 10 Startup Centres by Ministry of Human Resource Development

## 14. Setting  up  of  7  New  Research  Parks  modelled  on  the  Research  Park  Setup  at  IIT Madras

-  8  new Research Parks have been identified to be built over 5  years at 7  IITs and  IISc Bangalore.
-  Government has sanctioned total funding of Rs 680 crore towards development of these research parks with over Rs 233 crore being disbursed so far.

## 15. Promoting Startups in the Biotechnology Sectors

-  Rs 195.9 crore has been disbursed out of Rs 401.79 crore Sanctioned to 4 bio-clusters at Kalyani, Bangalore, Faridabad and Pune;
-  Rs 174 crore has been  disbursed  out  of  Rs  272  crore  Sanctioned  to  41  Bio-incubators supported through the BioNEST Program;
-  Rs  16.95  crore  has  been  sanctioned  of  which  Rs  6.48  crore  has  been  disbursed  to  4 BIRAC Regional Centres operationalized at Hyderabad, Bengaluru, Pune and Bhubaneswar.
-  BIRAC Ace Fund of Rs 150 crore equity fund has been approved as fund of funds to Bio incubators. Rs 82 crore out of this fund of funds has been committed and Rs 6.23 crore has been disbursed.
-  BIRAC  Seed  Fund  of  Rs  24  crore  has  been  sanctioned  and  Rs  8.5  crore  has  been disbursed to 13 Bio- Incubators

## 16. Launching of Innovation Focused Programs for Students

-  NIDHI  (National  Initiative  for  Developing  and  Harnessing  Innovations)  is  Grand challenge  conducted  to  promote  entrepreneurship  amongst  student  community.  224 applications have been received. Out of 30 finalists selected, 12 student run teams have been awarded Rs 10 Lakh each.
-  Under  Uchchatar  Avishkar  Yojana,  148  projects  have  been  sanctioned  and  Rs  220.75 crore has been released.
-  Under  MANAK  (Million  Minds  Augmenting  National  Aspiration  and  knowledge) scheme, Rs 10,000 has been granted to 1,03,497 students in the last 3 years

## 17. 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 under automatic route
-  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  ten  years, which was earlier seven years.
- o The requirement of minimum investment amount by an Angel Fund in any venture capital undertaking has been reduced from Rs. 50 lakh to Rs. 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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