Lok Sabha Question No. 56 (STARRED), answered on 2021-12-01
Subject: Startup India Scheme
Ministry: COMMERCE AND INDUSTRY
Asked by: Krupal Balaji Tumane

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

## LOK SABHA

## STARRED QUESTION NO. 56. TO BE ANSWERED ON WEDNESDAY, THE 1 ST  DECEMBER, 2021.

## STARTUP INDIA SCHEME

## *56. SHRI KRUPAL BALAJI TUMANE:

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

वाणिज्य  एवं उद्योग मंत्री

- (a) the salient features of the Startup India Scheme;
- (b) the details of the funds sanctioned, allocated and utilized so far in Maharashtra under the said scheme;
- (c) the details of the targets fixed and achievements made so far;
- (d) whether  the  Government  has  conducted  workshops  under  this  scheme  in Maharashtra to encourage women entrepreneurship;
- (e) if so, the details thereof, district-wise; and
- (f) the details of the outcome of these workshops?

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

- A Statement is laid on the Table of the House.
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(a) to (f):

## STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (f) OF THE LOK SABHA STARRED QUESTION NO. 56 FOR ANSWER ON 1 ST  DECEMBER, 2021.

- (a): Sir, Startup India is a flagship initiative of the Government  of  India,  intended  to  build  a  strong  ecosystem  for  nurturing  innovation  and  Startups  in  the country that will drive sustainable economic growth and generate large scale employment opportunities. Salient features of the Startup India Initiative are at Annexure-I .
- (b): Sir,  the  Government  of  India  as  part  of  Startup  India initiative has implemented following schemes to provide financial assistance  to startups through  Alternative Investment Funds (AIFs) and incubators:
- i. Fund of Funds for Startups (FFS) Scheme
- ii. Startup India Seed Fund Scheme (SISFS)

Fund of Funds for Startups (FFS) Scheme: A corpus of Rs. 10,000 Crore has been sanctioned under the FFS Scheme, spread over 14 th  and 15 th  Finance Commission cycles. As of October 2021, Rs. 2291.29 crore has been allocated  by  DPIIT  to  Small  Industries  Development Bank of India (SIDBI), the implementing agency, under this Scheme.

FFS Scheme does not directly provide financial assistance to startups, instead supports SEBIregistered Alternative Investment Funds (AIFs), who in turn  invest  money  in  growing  Indian  startups  through equity  and  equity-linked  instruments.  AIFs  supported under FFS are required to invest at least two times of the amount committed under FFS in startups.

As on 25 th November, 2021, for the State of Maharashtra, Rs. 1,847.97 crore has been invested by such AIFs, into startups, under the Scheme.

Startup India Seed Fund Scheme (SISFS) :  Rs.  945 Crore has been sanctioned under the SISF Scheme for period of 4 years starting from 2021-22.

As of 25 th  November 2021, Rs. 163.30 crore has been allocated (committed) to 41 incubators selected so far under  the  Scheme;  of  which  Rs.15  crore  has  been allocated for incubators from Maharashtra.

40% of total approved commitment is released as part of first installment to a selected incubator. Subsequent installments are released based on submission of proof of achievement of milestones.

As on 25 th   November, 2021, Rs. 2.10 crore has been disbursed to the selected incubators from the State of Maharashtra under the Scheme.

- (c): Government of India through Startup India initiative aims to empower Startups to grow through innovation, design and  entrepreneurship.  The  key  achievements  of  the initiative are enclosed as Annexure-II .
- (d) to (f): Promoting  women  entrepreneurship  has  been  a  key national agenda for the Government. Out of the 58,000+ DPIIT recognised startups, 46% of them have at-least one-woman  director.  As  Startup  India  is  a  national initiative, all it's programs  are aimed  at fostering innovation and entrepreneurship at a national level. The steps  taken  under  Startup  India  Initiative  to  promote women entrepreneurship all over India which are also available for the women entrepreneurs in the State of Maharashtra are at Annexure-III.

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## ANNEXURE REFERRED TO IN REPLY TO PART (a) OF THE LOK SABHA STARRED QUESTION NO. 56 FOR ANSWER ON 1 ST  DECEMBER, 2021.

## Salient features of Startup India Initiative

1.  The salient features of Startup India initiative are as under:-
- i. Startup India Action Plan : An Action Plan for Startup India was unveiled by  the  Hon'ble  Prime  Minister  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 'Industryacademia 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.
- ii. Startup India: The Way Ahead :  Hon'ble Prime Minister unveiled Startup India: The Way Ahead at 5 years celebration of Startup India 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.
- iii. 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.  Hon'ble  Prime  Minister  launched SISFS  on  16 th   January,  2021.  The  Scheme  aims  to  provide  financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization. It will support an estimated 3,600 entrepreneurs through 300 incubators in the next 4 years.
- iv. 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.
- v. 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.
- vi. 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.
- vii. 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.
- viii. 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.
- ix. 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.
- x. 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  employment  generation  or  wealth  creation,  demonstrating measurable social impact.
- xi. International 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, U.S.A, Germay) that provides a soft-landing platform for startups from the partner nations and aid in promoting cross collaboration.
- xii. Support for Intellectual PropertyProtection :Startups are eligible for fasttracked  patent  application  examination  and  disposal.  TheGovernment 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 visa-vis other companies.
- xiii. Faster Exit for Startups : Ministry of Corporate Affairs has notified Startups as 'fast track firms' enabling them to wind up operations within 90 days visa-vis 180 days for other companies.
2.  To avail above benefits applicable for eligible startups, the entities that meet the definition  as  prescribed  under G.S.R.  notification  127  (E)  dated  19 th   February

2019 are  eligible  to  apply  for  recognition  as  a  'Startup'  under  Startup  India initiative.As per the said notification, an entity shall be considered as a Startup:-

- i. 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) inIndia.
- ii. Turnover  of  the  entity  for  any  of  the  financial  years  since  incorporation/ registration hasnot exceeded one hundred crore rupees.
- iii. 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 ofemployment generation or wealth creation.

Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a 'Startup'.

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## ANNEXURE  REFERRED  TO  IN  REPLY  TO  PART  (c)  OF  THE  LOK  SABHA STARRED QUESTION NO. 56 FOR ANSWER ON 1 ST  DECEMBER,  2021.

## Achievements under Startup India Initiative

Startup India is a flagship initiative of Government of India launched on 16th January, 2016  with  an  aim  to  build  a  strong  ecosystem  for  nurturing  innovation  and entrepreneurship  to  drive  sustainable  economic  growth  and  generate  large  scale employment opportunities. Through this initiative the Government aims to empower Startups  to  grow  through  innovation,  design  and  entrepreneurship.  The  major achievements are listed below:

- a) Counted as one of the largest startup ecosystem in the world with more than 58,000 recognized startups. There is at least one recognised startup in every State and UT of India spread across over 631 districts.  In addition 30 States and UTs have announced specific Startup Policies to support startups.
- b) Recognised startups have reported over 6.31 lakhs job created with an average of 11 jobs created by each recognised startup.
- c) 49 key regulatory changes to enhance ease of doing business, raising capital and reducing  compliance  burden  have  been  undertaken  by  the  Government. This includes insurers, EPFO, non-government provident funds, superannuation, and gratuity funds to invest in AIFs, thereby enabling billions of dollars' worth of domestic capital being made available for the Indian startup ecosystem.
- d) Startups recognised under Startup India initiative can self-certify their compliance against the 6 labour laws and 3 environmental laws. 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 Shram Suvidha Portal. Overall, 169 DPIIT recognized Startups have availed the benefits of self-certification.
- e) 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,  has  been launched. As of 3 rd  October, 2021, 11,386 startups had been onboarded on GeM, with 93,908 orders from public entities totaling more than Rs. 4,000 crores.
- f) Government of India has established a Fund of Funds for Startups Scheme (FFS) with corpus of Rs. 10,000 crores, 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  crores  is envisaged to be provided over the 14th and 15th Finance Commission cycles based  on  progress  of  the  scheme  and  availability  of  funds. As  of  27 th

October, 2021 SIDBI has committed Rs. 5,894 crores committed to 75 AIFs. Out of which Rs. 7,381 crores have been invested in 517 startups.

- g) Further,  to  provide  financial  assistance  to  startups,  Startup  India  Seed  Fund Scheme (SISFS) has been implemented from 1st April 2021. The Scheme has corpus of Rs. 945 Crore that will be divided over the next 4 years for providing seed funding to eligible startups through eligible incubators across India. It will support an estimated 3,600 entrepreneurs through 300 incubators in the next 4 years. The 'Call for Application' for Incubators under the Startup India Seed Fund Scheme  was  launched  on  19th  April  2021.  As  on  16th  November  2021,  34 incubators have been selected and a sum of Rs. 135 crores have been approved as grant under the scheme.  The 'Call for Application' for Startups was launched on 19th July 2021. As on date, application has been received from 1446 startups under  the  scheme.  95  Startups  have  been  selected  for  funding  as  on  16th November 2021 with a total grant of Rs 9.70 crores..
- h) DPIIT launched Startup India Showcase, an online platform for startups to exhibit their products and services virtually, on 6th October 2020. As on 25 th  November 2021, 151 startups have been onboarded for the Startup India Showcase.
- i) To help connect the Indian startups with the global startup ecosystem, Startup India  has  launched  bridges  with  over  13  countries  (Brazil,  Sweden,  Russia, Portugal,  UK,  Finland,  Netherlands,  Singapore,  Israel,  Japan,  South  Korea, U.S.A,  Germany)  that  provides  a  soft-landing  platform  for  startups  from  the partner  nations  and  aid  in  promoting  cross  collaboration.  Some  of  these  key programs include India-Japan Pitching, Indo-Sweden Mentor Connect, among many others.
- j) To enhance the State participation in building their respective startup ecosystem, the States' Startup Ranking Framework was launched in April 2017. It is a firstof-its-kind initiative to harness strength of competitive federalism and create a flourishing  startup  ecosystem  in  the  country.  The  third  edition  of  the  States' Startup Ranking Framework was launched in December 2020 and contains 7 broad reform areas with 26 Action Points. The evaluation exercise for the third edition is underway.
- k) Startup India launched Startup India Yatra in 2017 to promote entrepreneurship in  rural  and  non-metro  regions  across  States.  Under  this  program,  grassroot Startup aspirants were provided incubation, mentorship, and funding support in tier-2  and  tier-3  districts  of  the  state  where  participants  attended  ideation workshops and pitched their ideas. The Yatra has been conducted across 23 States in 220 districts impacting 78,346 aspiring entrepreneurs. A total of 1,424 incubation offers worth Rs. 105.73 Lakhs have been given to the startups.
- l) DPIIT conceived the National Startup Awards 2020 (NSA 2020) to recognize and reward outstanding startups and ecosystem enablers. With the success of the first edition, NSA 2021 was launched which saw applications from 2,177 startups, 53 incubators and 6 accelerators.
- m) Support is being provided to the finalists of NSA 2020 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.
- n) DPIIT in partnership with Doordarshan curated a focused program to highlight the innovations in the country. Startup Champions program on Doordarshan was launched on 16th January 2021. It is being telecasted in both Hindi and English across Doordarshan network channels. It is a one-hour weekly program spread over  12  weeks.  12  episodes  have  been  telecasted  over  past  3  months.  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.
- o) For enabling international access and exposure for Indian startup ecosystem, the Government of India has been hosting various international events. Our foreign missions are also playing very active role in creating international bridges and bringing  host  of  opportunities  of  international  market  access  for  our  Indians startups.
- p) 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 InterMinisterial Board (IMB). 406 startups have been granted income tax exemptions till 10th November 2021 under provisions of Section 80-IAC of the Income Tax Act.
- q) 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 9th November 2021, 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 4898 entities.

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## ANNEXURE REFERRED TO IN REPLY TO PART (a) OF THE LOK SABHA STARRED QUESTION NO. 56 FOR ANSWER ON 1 ST  DECEMBER, 2021.

## Encouraging Women Entrepreneurship under Startup India Initiative

1. Women-owned business enterprises are playing a prominent role in the society inspiring others and generating more employment opportunities in the country. To promote flow of both equity and debt to women led startups, interactions of such women entrepreneurs with venture funds supported by SIDBI and lending institutions including banks are being organized by inviting applications on the 'Startup India Hub' and inviting selected women entrepreneurs, after a process of screening by experts, to interact with these institutions for both equity/debt funding. Specific  and  suitable  entrepreneurship  development programmes  for  women  led  startups  throughout  the  country  are  being  designed  by ascertaining the training/skilling needs of the target groups. To meet the advisory needs of the start-ups led by women, legal, tax, financial and other service providers are being sought to get them connected with each other through the Startup India Hub.
2. The following  steps  have  been  taken  under  Startup  India  Initiative  to  promote  women entrepreneurship all over India which are also available for the women entrepreneurs in the State of Maharashtra:-
- i. 10% of the fund (Rs 1000 crore) in the Fund of Funds operated by SIDBI has been reserved for women led startups, which will have a multiplier effect as Rs 1000 crore would mean overall corpus of Rs 7000 crore. All the AIFs where SIDBI takes equity have been mandated to contribute 20% in businesses which are women led, women influenced and women employment or women consumption centric.
- ii. Women  Capacity Development Programme (WING) is a unique Capacity Development Program for women-led startups, to identify and support both aspiring and established women entrepreneurs in their startup journeys. The workshops are open to variety of business sectors including Tech, Construction, Product, Machine, Food, Agriculture, Education, etc. The workshops served as a platform for emerging women entrepreneurs and other stakeholders to discuss the key challenges facing women entrepreneurs. WING workshops have created a conducive environment to share best practices and experiences in overcoming challenges and to gain insights learned  from  the  business  models  adopted  in  the  Indian  context.  A  total  of  24 workshops  were  conducted  across  9  States,  benefitting  more  than  1,300  women entrepreneurs.
- iii. Virtual Incubation Program for Women Entrepreneurs were conducted in collaboration with Zone Startups to support 20 women-led tech startups with pro-bono acceleration support for 3 months.
- iv. A webpage dedicated to women entrepreneurs has been designed on the Startup India portal.  The  page  mentions  in  a  collated  format  all  the  incentives  for  women entrepreneurs as per the State Startup Policies and has new blogs.

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