Lok Sabha Question No. 3251 (UNSTARRED), answered on 2022-03-23
Subject: Private FDI
Ministry: COMMERCE AND INDUSTRY
Asked by: Khagen Murmu

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

UNSTARRED QUESTION NO. 3251.

TO BE ANSWERED ON WEDNESDAY, THE 23 RD      MARCH, 2022.

## PRIVATE FDI

## 3251.  SHRI KHAGEN MURMU:

Will the Minister of COMMERCE AND INDUSTRY वाणिज्य एवं उद्योग मंत्री

be pleased to state:

- (a) whether the Government agrees with the view that it cannot depend much on private FDI to help India have a significant presence on the innovation map; and
- (b) if so, the steps taken/being taken by the Government keeping in mind that to imbibe a culture of innovation, the rules need to be amended and failures need to be taken in its stride?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री सोम प्रकाश ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI SOM PARKASH)

Foreign Direct Investment (FDI) is one of the major drivers for economic growth of the country as it is one of the sources of non-debt finance for the country. FDI infuses long term sustainable capital in the economy and contributes towards technology transfer, development of strategic sectors,  greater  innovation,  competition  and  employment  creation

- (a) & (b): amongst other benefits.

FDI  is  not  the  only  contributor  to  India's  significant  present  on  the innovation map. Government has taken various initiatives/measures to build aatma-nirbharta and nurture innovation. Some of these include :

1. Startup India initiative: Startup India was launched with an aim to build a strong ecosystem for nurturing innovation and entrepreneurship to drive sustainable economic  growth  and  generate  large scale employment opportunities. The Government has made fast paced efforts towards making the vision of Startup India initiative a reality. Substantial progress  has  been  made  under  the  initiative, which  has  stirred entrepreneurial spirit across the country. The details of various programs undertaken by the Government to promote startups across the country under Startup India initiative are placed as Annexure I.

2. Production Linked Incentives (PLIs): For enhancing India's Manufacturing Capabilities and Enhancing Exports, the PLI Scheme in the 14 key sectors were introduced, with the objective to make Indian manufacturers globally competitive, attract investment in the areas of core  competency  and  cutting-edge  technology,  ensure  efficiencies, create economies of scale, enhance exports and make India an integral part of the global supply chain.

3. Measures to boost Intellectual Property Rights (IPR) Filing - with adoption  of  National  IPR  policy  in  2016,  the  Government  has  taken several  initiatives  to  encourage  innovation  in  the  country  through spreading awareness about importance and need to protect valuable IPR, appropriate legislative amendments to improve and expedite the processing of IPR applications, reduction in various fees to boost filing from startups, MSMEs, educational institutes, and various infrastructural measures including adoption of IT and technology. As result of these measures, India's rank in Global Innovation Index has improved from 81 in 2015 to 46 in 2021. 4. Taxation benefits: Government has provided various tax incentives for  promoting  R&D.  These  includes  allowance  for  expenses  (both revenue  and  capital)  incurred  for  in-house  scientific  R&D  where  the research relates to the business of the entity undertaking such research. Deductions are also allowed for payments made to scientific research organizations, including approved  research  consortia, universities, colleges,  or  other  research  institutions. Apart from  the  income  tax incentives, government also provides benefits of concessional customs duty,  and  goods  and  services  tax  (GST)  for  research  purposes. 5.   Corporate  Social  responsibility  (CSR):  CSR has  been  made mandatory through provisions under Section 135 of the Companies Act, 2013. Under the law, a company needs to spend at least 2% of their average  net  profit  made  during the  3  immediately  preceding  financial years for CSR activities. The scope of CSR for private companies has been expanded to allow them to support research and innovation by the Government-funded incubators, or agencies funded by central and State Governments or public state utilities.

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## ANNEXURE  REFERRED  TO  IN  REPLY  TO   PARTS  (a)  &  (b)  OF  THE  LOK SABHA UNSTARRED QUESTION NO. 3251 FOR ANSWER ON 23.03.2022.

1. Startup India Action Plan : An Action Plan for Startup India was unveiled on 16 th  January  2016.  The  Action  Plan  comprises  of  19  action  items  spanning across areas such as 'Simplification and handholding', 'Funding support and incentives'  and  'Industry-academia  partnership  and  incubation'.  The  Action Plan  laid  the  foundation  of  Government  support,  schemes  and  incentives envisaged to create a vibrant startup ecosystem in the country.
2. Fund of Funds for Startups (FFS) Scheme : The Government has established FFS with corpus of Rs. 10,000 crore, to meet the funding needs of startups. DPIIT is the monitoring agency and Small Industries Development Bank of India (SIDBI) is the operating agency for FFS. The total corpus of Rs. 10,000 crore is envisaged to be provided over the 14th and 15th Finance Commission cycles based on progress of the scheme and availability of funds. It has not only made capital available for startups at early stage, seed stage and growth stage but also played a catalytic role in terms of facilitating raising of domestic capital, reducing dependence on foreign capital and encouraging home grown and new venture capital funds.
3. Startup  India  Seed  Fund  Scheme  (SISFS) :  Easy  availability  of  capital  is essential for entrepreneurs at the early stages of growth of an enterprise. The capital  required  at  this  stage  often  presents  a  make-or-break  situation  for startups  with  good  business  ideas.  The  Scheme  aims  to  provide  financial assistance  to  startups  for  proof  of  concept,  prototype  development,  product trials, market entry and commercialization. Rs. 945 crore has been sanctioned under the SISFS Scheme for period of 4 years starting from 2021-22.
4. Regulatory  Reforms :  51  regulatory  reforms  have  been  undertaken  by  the Government since 2016 to enhance ease of doing business, ease of raising capital and reduce compliance burden for the startup ecosystem.
5. Income Tax Exemption for 3 years : Startups incorporated on or after 1st April 2016 can apply for income tax exemption. The recognised startups that are granted an Inter-Ministerial Board Certificate are exempted from income-tax for a period of 3 consecutive years out of 10 years since incorporation.
6. Ease  of  Procurement :  To  enable  ease  of  procurement,  Central  Ministries/ Departments  are  directed  to  relax  conditions  of  prior  turnover  and  prior experience in public procurement for all Startups subject to meeting quality and technical  specifications.  Further,  Government  e-Marketplace  (GeM)  Startup Runway; a dedicated corner for startups to sell products & services directly to the Government.
7. Support for Intellectual Property Protection : Startups are eligible for fasttracked patent application examination and disposal.  The  Government launched Start-ups Intellectual Property Protection (SIPP) which facilitates the
8. startups  to  file  applications  for  patents,  designs  and  trademarks  through registered facilitators in appropriate IP offices by paying only the statutory fees. Facilitators under this Scheme are responsible for providing general advisory on different IPRs, and information on protecting and promoting IPRs in other countries.  The  Government  bears  the  entire  fees  of  the  facilitators  for  any number of patents, trademark or designs, and startups only bear the cost of the statutory fees payable. Startups are provided with an 80% rebate in filing of patents and 50% rebate in filling of trademark vis-a-vis other companies.
8. Self-Certification  under  Labour  and  Environmental  laws :  Startups  are allowed to self-certify their compliance under 6 Labour and 3 Environment laws for a period of 3 to 5 years from the date of incorporation.
9. International Market Access to Indian Startups : One of the key objectives under the Startup India initiative is to help connect Indian startup ecosystem to global startup ecosystems through various engagement models. This has been done though international Government to Government partnerships, participation in international forums and hosting of global events. Startup India has launched bridges with over 13 countries (Brazil, Sweden, Russia, Portugal, UK,  Finland,  Netherlands,  Singapore,  Israel,  Japan,  South  Korea,  Canada, Croatia)  that  provides  a  soft-landing  platform  for  startups  from  the  partner nations and aid in promoting cross collaboration.
10. Faster Exit for Startups : The Government has notified Startups as 'fast track firms' enabling them to wind up operations within 90 days vis-a-vis 180 days for other companies.
11. Startup India Hub : The Government launched a Startup India Online Hub on 19 th  June 2017 which is one of its kind online platform for all stakeholders of the entrepreneurial ecosystem in India to discover, connect and engage with each other. The Online Hub hosts Startups, Investors, Funds, Mentors, Academic Institutions,  Incubators,  Accelerators,  Corporates,  Government  Bodies  and more.
12. States' Startup Ranking Framework : States' Startup Ranking Framework is a  first-of-its-kind  initiative  to  harness  strength  of  competitive  federalism  and create a flourishing startup ecosystem in the country. The major objectives of the ranking exercise are facilitating states to identify, learn and replace good practices, highlighting  the policy  intervention  by  states for  promoting  startup ecosystem and fostering competitiveness among states to create best Startup ecosystem. Two rounds of State ranking exercise have been conducted with far-reaching impact across the startup ecosystem of the country.
13. Exemption for the Purpose Of Clause (VII)(b) of Sub-section (2) of Section 56 of the Act : A DPIIT recognized startup is eligible for exemption from the provisions of section 56(2)(viib) of the Income Tax Act.
14. National Startup Awards : National Startup Awards is an initiative to recognize and  reward  outstanding  startups  and  ecosystem  enablers  that  are  building innovative products or solutions and scalable enterprises, with high potential of
16. employment generation or wealth creation, demonstrating measurable social impact. Handholding support is provided to all the finalists across 9 key tracks viz. Investor Connect, Mentorship, Corporate Connect, Govt. Connect, International Market Access, Regulatory Support, Benefits under Startup India initiative, Startup Champions on Doordarshan and Startup India Showcase.
15. Startup  India  Showcase : Startup  India  Showcase  is  an  online  discovery platform for the most promising startups of the country chosen through various programs  for  startups  exhibited  in  a  form  of  virtual  profiles.  The  startups showcased on the platform have distinctly emerged as the best in their fields. These innovations span across various cutting-edge sectors such as Fintech, EntrepriseTech,  Social  Impact,  HealthTech,  EdTech,  among  others.  These startups are solving critical problems and have shown exceptional innovation in their respective sectors. Ecosystem stakeholders have nurtured and supported these startups, thereby validating their presence on this platform.
16. National  Startup  Advisory  Council : The  Government  in  January  2020 notified  constitution  of  the  National  Startup  Advisory  Council  to  advise  the Government on measures needed to build a strong ecosystem for nurturing innovation and startups in the country to drive sustainable economic growth and generate large scale employment opportunities. Besides the ex-officio members,  the  council  has  a  number  of  non-official  members,  representing various stakeholders from the startup ecosystem.
17. Startup India: The Way Ahead :  Startup  India: The Way Ahead at 5 years celebration of Startup India was unveiled on 16 th  January 2021 which includes actionable plans for promotion of ease of doing business for startups, greater role of technology  in executing  various reforms, building capacities of stakeholders and enabling a digital AatmaNirbhar Bharat.
18. Startup  Champions  on  Doordarshan : Startup  Champions  program  on Doordarshan was launched on 16th January 2021. It is telecasted in both Hindi and English across Doordarshan network channels. It is a one-hour weekly program covering stories of award winning/ nationally recognised startups. The startups  which  have  been  part  of  this  program  have  reported  exponential increase in their overall visibility, demand for their products and even investor interest.
19. Startup  India  Innovation  Week :  The  Government  organises  Startup  India Innovation week around the National Startup Day i.e. 16 th  January,  with the primary goal was to bring together the country's key startups, entrepreneurs, investors, incubators, funding entities, banks, policymakers, and other national/international stakeholders to celebrate entrepreneurship and promote innovation.

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