Lok Sabha Question No. 2567 (UNSTARRED), answered on 2021-03-10
Subject: Make in India and Startup India
Ministry: COMMERCE AND INDUSTRY
Asked by: Kunwar Danish Ali

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

## LOK SABHA

## UNSTARRED QUESTION NO. 2567. TO BE ANSWERED ON WEDNESDAY, THE 10 TH  MARCH, 2021.

## MAKE IN INDIA AND STARTUP INDIA

## 2567.  KUNWAR DANISH ALI:

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

## वाणिज्य एवं उद्योग मंत्री

- (a) the status of initiatives of Make in India and Startup India during the last five years; and
- (b) the  details  of  the  funds  allocated  and  utilized  and  the  targets  set/achieved thereunder so far, State-wise?

## ANSWER

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

- (a) & (b): 'Make in India' is an initiative which was launched on September 25, 2014, to facilitate investment, foster innovation, building best in class infrastructure,  and  making  India  a  hub  for  manufacturing,  design,  and innovation. The development of a robust manufacturing sector continues to be a key priority of the Indian Government. It was one of the first 'Vocal for Local'  initiatives  that  exposed  India's  manufacturing  domain  to  the  world. The sector has the potential to not only take economic growth to a higher trajectory but also to provide employment to a large pool of our young labour force.

Make  in  India  initiative  has  made  significant  achievements  and  presently focuses on 27 sectors under Make in India 2.0. Department for Promotion of Industry  and  Internal  Trade  is  coordinating  action  plans  for  manufacturing sectors, while Department of Commerce is coordinating service sectors.

The  Government  of  India  is  making  continuous  efforts  under  Investment Facilitation  for  implementation  of  Make  in  India  action  plans  to  identify potential investors. Support is being provided to Indian Missions abroad and State  Governments  for  organising  events,  summits,  road-shows  and  other promotional activities to attract investment in the country under the Make in India banner.  Investment  Outreach  activities are being  carried out for enhancing International co-operation for promoting FDI and improve Ease of Doing Business in the country.

India has registered its highest ever annual FDI Inflow of US  $74.39 billion (provisional figure) during the last financial year 2019-20 as compared to US $  45.15  billion  in  2014-2015.  In  the  last  six  financial  years  (2014-20),  India has received FDI inflow worth US$ 358.30 billion which is 53 percent of the FDI reported in the last 20 years (US$ 681.87 billion).

Steps  taken  to  improve  Ease  of  Doing  Business  include  simplification  and rationalisation  of  existing  processes.  As  a  result  of  the  measures  taken  to improve the country's investment climate, India jumped to 63 rd place in World Bank's Ease of Doing Business ranking as per World Bank's Doing Business Report  (DBR)  2020.  This  is  driven  by  reforms  in  the  areas  of  Starting  a Business, Paying Taxes, Trading Across Borders, and Resolving Insolvency.

Recently,  Government  has  taken  various  steps  in  addition  to  ongoing schemes to boost domestic and foreign investments in India. These include the  National  Infrastructure  Pipeline,  Reduction  in  Corporate  Tax,  easing liquidity problems of NBFCs and Banks, policy measures to boost domestic manufacturing. Government of India has also promoted domestic manufacturing of goods through public procurement orders, Phased Manufacturing Programme (PMP), Schemes for Production Linked Incentives of various Ministries.

Further,  with  a  view  to  support,  facilitate  and  provide  investor  friendly ecosystem to investors investing in India,  the  Union  Cabinet  on  03rd  June, 2020  has  approved  constitution  of  an  Empowered  Group  of  Secretaries (EGoS),  and  also  Project  Development  Cells  (PDCs)  in  all  concerned Ministries/ Departments to fast-track investments in coordination between the Central Government and State Governments, and thereby grow the pipeline of  investible  projects  in  India  to  increase  domestic  investments  and  FDI inflow.

The  activities  under  the  Make  in  India  initiative  are  being  undertaken  by several  Central  Government  Ministries/  Departments  and  various  State Governments. Further, Ministries formulate action plans, programmes, schemes and policies for the sectors being dealt by them. This Department does not maintain information on such formulations by the line ministries.

## Startup India:

Startup  India  is  a  flagship  initiative  of  the  Government  of  India,  intended  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. Salient features of the Startup India Initiative are at Annexure-I.

There  is  no  direct  fund  allocation  from  DPIIT  to  States/UTs  under  Startup India  initiative.  However, Government  of  India  has  established  a  Fund  of Funds  for  Startups  (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. The  achievements  under  Startup  India initiative are at Annexure-II.

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## ANNEXURE REFER TO IN REPLY TO PARTS (a) & (b) THE LOK SABHA UNSTARRED QUESTION NO. 2567 FOR ANSWER ON 10.03.2021.

1. Under  the  Startup  India  Action  Plan,  startups  that  meet  the  definition  as  prescribed under G.S.R. notification 127 (E) dated 19.02.2019 are eligible to apply for recognition under  the  program.  The  Startups  have  to  provide  support  documents,  at  the  time  of application. Eligibility Criteria for Startup Recognition are as under:-
- i. The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership.
- ii. Turnover should be less than INR 100 Crores in any of the previous financial years.
- iii. An  entity  shall  be  considered  as  a  startup  up  to  10  years  from  the  date  of  its incorporation.
- iv. The Startup should be working towards innovation/ improvement of existing products, services  and  processes  and  should  have  the  potential  to  generate  employment/ create  wealth.  An  entity  formed  by  splitting  up  or  reconstruction  of  an  existing business shall not be considered a "Startup".
2. Startups  can  apply  and  get  recognized  by  Department  of  Promotion  of  Industry  and Internal Trade and avail the benefits mentioned below:-
7. (i) Fast tracking and  rebate on applications for Intellectual Property: The  patent application  of  startups  is  fast-tracked  for  examination  and  disposal.  Facilitators  are responsible  for  providing  general  advisory  on  different  IPRs,  and  information  on protecting and promoting IPRs in other countries. Central 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. (ii)  Access  to  Rs.  10,000  Crore  Fund  of  Funds : To  provide  equity  funding  support  for development  and  growth  of  innovation  driven  enterprises,  the  government  has  set aside a corpus fund of INR 10,000 Cr managed by SIDBI. The fund is in the nature of Fund of Funds, which means that the government participates in the capital of SEBI registered Venture Funds, who invest twice the amount in startups. The flow of funds is Government > SIDBI > Venture Capitals > Startups.
9. (iii) Self-Certification under Labour and Environmental laws : Startups are allowed to selfcertify their compliance under 6 Labour and 3 Environment laws for a period of 3 to 5 years from the date of incorporation.
10. (iv) 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  InterMinisterial Board  Certificate are exempted  from  income-tax  for a period of 3 consecutive years out of 10 years since incorporation.
11. (v)  Exemption for the Purpose Of Clause-(Viib) of Subsection-(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.
12. (vi)  Government  Public  Procurement  eligibility : Government  of  India  has  authorised  its ministries,  departments  and  public  sector  undertakings  to  relax  norms  in  all  public procurements.  Startups  are  entitled  to avail exemption  on  prior  turnover,  prior experience and earnest money deposit. DPIIT recognised startups can now get listed as sellers on the Government of India's largest e-procurement portal - Government eMarketplace (GeM).
13. (vii) 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.

## ANNEXURE  REFER  TO  IN  REPLY  TO  PARTS  (a)  &  (b)  OF  THE  LOK  SABHA UNSTARRED QUESTION NO. 2567 FOR ANSWER ON 10.03.2021.

## Details of achievements under Startup India Initiative

## 1) Intellectual Property Rights (IPR) benefits:

- I. 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.
- II. 510 patent facilitators  and  392  trademark facilitators  have  been  empanelled,  as  of November 2020, under this scheme to provide free-of-charge services to Startups.
- III. As of November 2020,
- i. 5020 patent applications have been filed.
- ii. Expedited examination for patent applications filed by Startups - 1170; of these 459 Patents granted.
- iii. Total number of Trademark applications filed - 12,264.

## 2)  Easing Public Procurement

- I. 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.
- II. 'GeM  Startup  Runway'  has  been  launched  for  startups  to  sell  products  and services to Government. As of 4 th January 2021, 7,929 DPIIT recognized startups have registered on Government e-Marketplace (GeM).
- III. As of 4 th January  2021,  53,226  orders from  public  entities  have  been  placed  to startups with the value of orders worth Rs. 2,279 crores.
- IV. 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.
- V. GeM  has  relaxed  the  requirement  of  approved  Trademark  certificate  for  DPIIT Recognized Startups . An application for trademark will be sufficient.

## 3) Self-Certification under Labour and Environmental laws

- I. Startups recognised under Startup India initiative can self-certify their compliance against the 6 labour laws and 3 environmental laws.
- II. 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.

## 4) Tax Exemption to Startups for 3 years

- I. 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.

- II. To  avail  these  benefits,  a  Startup  must  get  a  Certificate  of  Eligibility  from  the Inter-Ministerial  Board  (IMB).  329  startups  have  been  granted  income  tax exemptions till December 2020.

## 5)  Tax Exemption on Investments above Fair Market Value

- I. 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 3 rd February 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 3612 entities.

## 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.

## 7) Fund of Funds for Startups

- I. 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.
- II. As on date, an amount Rs.1461.29 crore stands released to SIDBI, out of which Rs.500crore  was  released  in  2015-16;  Rs.100  crore  was  released  in  2016-17; Rs.431.30 crore released in 2019-20 and Rs.429.99 crore was released in 202021.
- III.  As  of  31st  January  2021,  SIDBI  has  committed  Rs.  4376.95  crore  to  62  SEBI registered  Alternative  Investment  Funds  (AIFs).  These  funds  have  raised  a corpus fund of Rs. 31,598 crore and Rs. 5089.55 crore have been invested into 391 startups.
- 8) 39  regulatory  reforms  have  been  undertaken  since  January  2016  for  enabling  small businesses or Startups across the country.

## 9) National Startup Awards

- I. The  Department  for  Promotion  of  Industry  and  Internal  Trade  (DPIIT)  conceived the National Startup Awards 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 was not only financial gains for investors, but also contribution to social good. The first edition of the Awards invited applications across 12 sectors, which were further sub-classified into a total  of  35  categories.  These  12  sectors  were  Agriculture,  Education,  Enterprise Technology,  Energy,  Finance,  Food,  Health,  Industry  4.0,  Space,  Security,  Tourism, categories  and  Urban  Services.  In  addition  to  these  categories,  those  startups  were recognised that are creating an impact in rural areas, are women-led, or founded in an academic campus.
- II. 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  applications were received from Startups across 23 States and 4 Union Territories.  41 ecosystem enablers (incubators and accelerators) also participated in the Awards.

## 10) Awards for Winners

- I. Startups
2.  INR 5 lakh to the winning startup in each of the 38 Categories
3.  Opportunity  to  pitch  in  front  of  relevant  line-ministry/  department/  corporates to  all finalist startups (that qualified to Phase 4 of evaluation)
4.  Priority for participation in national and international events to all finalist startups
- II. Ecosystem Enablers
6.  INR 15 Lakh to one winning incubator and one accelerator each
- III.  The Results of the National Startup Awards 2020 were released by Hon'ble Minister of Railways and Commerce & Industry, Shri Piyush Goyal, on 6 th of October 2020 at the National  Media  Centre,  New  Delhi.  The  virtual  felicitation  ceremony  was  held in  the august  presence  of  Hon'ble  Minister  of  State  for  Commerce  &  Industry, Shri  Som Parkash.
- IV.  Handholding Support : DPIIT has now embarked on a new journey with all of the 192 NSA  finalists  (including  the  winners),  handholding  them  reach  their  next  stage  of growth.  As  committed  during  NSA  felicitation  ceremony,  DPIIT  is  supporting  the startups  across  8  key  tracks  viz.  Investor  Connect,  Mentorship,  Corporate  Connect, Government Connect, International Market Access, Regulatory Support, Benefits under Startup India initiative, and Startup India Showcase.

## 11) Startup India Showcase

Startup India Showcase is an online discovery platform for the most promising startups of the country chosen through various DPIIT and Startup India programs exhibited in a form of virtual profiles. The startups showcased on the platform have distinctly emerged as the best in their fields. These innovations have been handpicked by experts and have gone through  multiple  rounds  of  screening  and  evaluation.    These  innovations  span  across various cutting-edge sectors such as Fintech, Entreprise Tech, 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.

## 12) 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 236 districts impacting 78346 aspiring entrepreneurs. A  total  of  1,424  incubation  offers  have  been  given  to  the  startups  as  a  result  of  this initiative.

## 13) Recognition

There has been an increase in the number of DPIIT recognized startups in the recent years. The increasing trend can be seen from the below breakup:

|   Calendar Year |   Recognized Startups |
|-----------------|-----------------------|
|            2016 |                   504 |
|            2017 |                  5420 |
|            2018 |                  8946 |

| 2019   |   11683 |
|--------|---------|
| 2020   |   14778 |
| 2021*  |    1402 |

## (*data till 27 th January 2021)

## 14) Startup India Portal

- I.  Startup India provides free resources to startups to help them scale faster, better, and stronger. The portal acts as one stop platform for the stakeholders of startup ecosystem with aspiring entrepreneurs, startups, corporates, accelerators, incubators, government departments having profile on the platform.
- II.  4,49,978 users have registered on the website, as on 31 st December 2020.
- III.  More than 446 Innovation Hunts and programs have been hosted on the Startup India portal by various government departments and corporates.

## 15) Learning & Development Program

- (i) To guide budding entrepreneurs through the journey of their startup venture, a free 4week program is offered on the key areas of starting up by more than 40 top founders of  India.  Upon  completion  of  the  course,  an  acknowledgement  certificate  for  the learnings in the program is also provided.
- (ii)  The Learning and Development course has been accessed by 2,80,000 users.

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