Lok Sabha Question No. 4813 (UNSTARRED), answered on 2023-03-29
Subject: Startups in Emerging Technology
Ministry: COMMERCE AND INDUSTRY
Asked by: Jagdambika Pal, Vincent H Pala

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

## LOK SABHA

UNSTARRED QUESTION NO. 4813. TO BE ANSWERED ON WEDNESDAY, THE 29 TH  MARCH, 2023.

## STARTUPS IN EMERGING TECHNOLOGY

## 4813.  SHRI JAGDAMBIKA PAL: SHRI VINCENT H. PALA:

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

## वाणिज्य एवं उद्योग मंत्री

- (a) whether the Government has collected any data on the number of corporations and startups in the emerging technology space such as Web 3 that has been incorporated in India;
- (b) whether the Ministry has taken any steps to protect these new-age startups;
- (c) if so, the details thereof and if not, the reasons therefor;
- (d) whether the Government is aware of the talent drain in the Web 3 ecosystem as a result of heavy taxation and uncertain regulatory framework around the sector;
- (e) if so, the details thereof and if not, the reasons therefor; and
- (f) the details of the action taken by the Government in this regard?

## ANSWER

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

The Government with an intent to build a strong ecosystem for nurturing innovation and startups of the country launched Startup India initiative

- (a) to (c): on 16th January 2016.

In order to meet the objectives of the initiative, the Government unveiled an Action Plan for Startup India that laid the foundation of Government support. 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'. Realising the action items, various programs are implemented by the Government  under  Startup  India  initiative  to  recognise,  develop  and promote   the startups to be able to raise private investments.

|             | Details of programs implemented by the Government to support startups in the country across various sectors including emerging technologies are placed at Annexure-I . Sustained Government efforts in this direction have resulted in increasing the number of recognised startups in India from 442 in 2016 to 92,683 in 2023 (as on 28th February 2023). More than 4,000 recognised startups are engaged in sectors relating to emerging technologies such as Internet of Things (IoT), robotics, artificial                                                                                                                                                                                                                                                                                                                                                             |
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| (d) to (f): | Web3 refers to the next generation of the internet, characterized by decentralized technology and increased user control over data and privacy. The Web3 sector is relatively new and still evolving. Currently, there is no specific regulation for Web3 other than the provisions of the Information Technology Act 2008 and the Information Technology (Intermediary Guidelines and the Digital Media Ethics Code) Rules 2022. Further, the Ministry of Electronics and Information Technology (MeitY) has released the National Strategy on Blockchain. This document provides strategies and recommendations for the Indian Blockchain ecosystem to harness the benefits of this emerging technology by focusing on technological and administrative aspects. The strategy document is available at https://www.meity.gov.in/content/national- strategy-on-blockchain. |

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## ANNEXURE-I

## ANNEXURE REFERRED TO IN REPLY TO PART (a) to (c) OF THE LOK SABHA UNSTARRED QUESTION NO. 4813 FOR ANSWER ON 29.03.2023.

The details of various programs undertaken by the Government to promote startups across the country are as under:

- 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 Credit Guarantee Scheme  for Startups  (CGSS) : The Government has established  the  Credit  Guarantee  Scheme  for  Startups  for  providing  credit guarantees  to  loans  extended  to  DPIIT  recognized  startups  by  Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs) and Venture Debt Funds  (VDFs)  under  SEBI  registered  Alternative  Investment  Funds.  CGSS  is aimed at providing credit guarantee up to a specified limit against loans extended by Member Institutions (MIs) to finance eligible borrowers viz. DPIIT recognised startups.
- 4 Regulatory Reforms : Over 50 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 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 DPIIT recognised startups subject to meeting quality and technical specifications. Further, Government e-Marketplace (GeM) Startup Runway  has  been  developed  which  is  a  dedicated  corner  for  startups  to  sell products and services directly to the Government.
- 6 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 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.

- 7 Self-Certification under Labour and Environmental laws : Startups are allowed to self-certify their compliance under 9 Labour and 3 Environment laws for a period of 3 to 5 years from the date of incorporation.
- 8 Income Tax Exemption for 3 years: Startups incorporated on or after 1st April 2016 can apply for income tax exemption. The recognized 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.
- 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 15 countries 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 Exemption for the Purpose Of Clause (VII)(b) of Sub-section (2) of Section 56 of the Act (2019) : A DPIIT recognized startup is eligible for exemption from the provisions of section 56(2)(viib) of the Income Tax Act.
- 13 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.
- 14 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.

- 15 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.
- 16 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.
- 17 National  Startup  Awards  (NSA) :  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 employment generation or wealth creation, demonstrating measurable social impact. Handholding support is provided to all the finalists across various tracks  viz.  Investor  Connect,  Mentorship,  Corporate  Connect,  Govt.  Connect, International Market Access, Regulatory Support, Startup Champions on Doordarshan and Startup India Showcase, etc.
- 18 States' Startup Ranking Framework (SRF) : States' Startup Ranking Framework is  a  unique 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.
- 19 Startup Champions on Doordarshan : Startup Champions program on Doordarshan is  a  one-hour  weekly  program  covering  stories  of  award  winning/ nationally recognised startups. It is telecasted in both Hindi and English across Doordarshan network channels.
- 20 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.
- 21 TIDE  2.0  Scheme :  Technology  Incubation  and  Development  of  Entrepreneurs (TIDE  2.0)  Scheme  was  initiated  by  Ministry  of  Electronics  and  Information Technology (MeitY) in the year 2019 to promote tech entrepreneurship through financial and technical support to incubators engaged in supporting ICT startups using  emerging  technologies  such  as  IoT,  AI,  Block-chain,  Robotics  etc.  The
- Scheme  is  being  implemented  through  51  incubators  through  a  three-tiered structure with an overarching objective to promote incubation activities at institutes of higher learning and premier R&D organisations.
- 22 Domain specific Centres of Excellence : MeitY has operationalised 26 Centres of Excellence (CoEs) in diverse areas of national interest for driving self-sufficiency and creating capabilities to capture new and emerging technology areas. These domain specific CoEs act as enablers and aid in making India an innovation hub in emerging through democratisation of innovation and realisation of prototypes.
- 23 SAMRIDH Scheme : MeitY has launched the 'Start-up Accelerator Programme of MeitY for Product Innovation, Development and Growth (SAMRIDH)' with an aim to  support  existing  and  upcoming  Accelerators  to  further  select  and  accelerate potential software product based startups to scale.
- 24 Next  Generation  Incubation  Scheme  (NGIS) :  NGIS  has  been  approved  to support software product ecosystem and to address a significant portion of National Policy on Software Product (NPSP) 2019.
- 25 Biotechnology Industry Research Assistance Council (BIRAC) :  An industryacademia interface agency of Department of Biotechnology, Ministry of Science & Technology is supporting biotech startups in  all  biotech  sectors  including  clean energy and emerging technologies. Project based funding is provided to startups and  companies  for  product/technology  development  under  its's  key  Schemes including  Biotech  Ignition  Grant  (BIG),  Small  Business  Innovation  Research Initiative  (SBIRI)  and  Biotechnology  Industry  Partnership  Programme  (BIPP). Incubation  support  to  the  startups  and  companies  is  also  provided  through Bioincubators  Nurturing  Entrepreneurship  for  Scaling  Technologies  (BioNEST) Scheme.

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