Lok Sabha Question No. 2151 (UNSTARRED), answered on 2023-08-02
Subject: Private Investment in Startup India Scheme
Ministry: COMMERCE AND INDUSTRY
Asked by: Sumalatha Ambareesh

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

## LOK SABHA

UNSTARRED QUESTION NO. 2151. TO BE ANSWERED ON WEDNESDAY, THE 02 ND  AUGUST, 2023.

## PRIVATE INVESTMENT IN STARTUP INDIA SCHEME

## 2151.  SHRIMATI SUMALATHA AMBAREESH:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state: वाणिज्य एवं उद्योग मंत्री

- (a) whether it is a fact that the Union Government with an intent to build a strong ecosystem for encouraging private investments in the country launched Startup India Scheme and if so, the details thereof;
- (b) the total number of recognized startups in India established as on date; and
- (c) whether the Government has achieved the said target under the said scheme and if so, the details thereof?

## 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) to (c): In  order  to  build  a  strong  ecosystem  for  nurturing  innovation,  startups and encouraging private investments in the startup ecosystem of the country,  the Government launched  Startup  India  initiative  on  16 th  January 2016.

Under  the  Startup  India  initiative,  the  Government  constantly  undertakes various efforts for the development and growth of the startup ecosystem in the country.

The flagship schemes namely, Fund of Funds for Startups (FFS), Startup India  Seed  Fund  Scheme  (SISFS)  and  Credit  Guarantee  Scheme  for Startups (CGSS) support startups at various stages of their business cycle to  enable  startups  to  graduate  to  a  level  where  they  are  able  to  raise investments from angel investors or venture capitalists or seek loans from commercial banks or financial institutions. The Government also implements annual exercises and programs including States' Startup Ranking, National Startup Awards and Innovation Week which play an important role in the holistic  development  of  the  startup  ecosystem.  The  Government  also facilitates participation and engagement of Indian startups on international platforms. Details of such programs implemented under the Startup India initiative by the Government are placed as Annexure-I .

As per eligibility conditions prescribed under G.S.R. notification 127 (E) dated 19th February 2019, entities are recognized as 'startups' under Startup India initiative  by  the  Department  for  Promotion  of  Industry  and  Internal  Trade (DPIIT). Since the launch of the Startup India initiative in 2016, DPIIT has recognised 98,119 entities as startups as on 30 th  April 2023.

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## ANNEXURE REFERRED TO IN REPLY TO PARTS (a) to (c) OF THE LOK SABHA UNSTARRED QUESTION NO. 2151 FOR ANSWER ON 02.08.2023

## The details of measures undertaken by the Government to promote startups and generate more employment opportunities in the country:

1. Startup India Action Plan: An Action Plan for Startup India was unveiled on 16th 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 17 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 19th 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 16th 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,  Government 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.,  16th  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. The Startup India Investor Connect Portal has been co-developed under the Startup India Initiative with SIDBI, serving as an intermediary platform that links startups  and  investors  in  order  to  help  entrepreneurs  from  various  industries, functions, stages, regions, and backgrounds in mobilizing capital. The portal has been  built  with  the  aim  to  enable  in  particular;  early-stage  startups  located anywhere in the country to showcase themselves to leading investors/ venture capital funds.  Currently, 82 Alternative Investment Funds (AIFs) and more than 1,900 startups have already registered on the platform.
22. National  Mentorship  Portal  (MAARG) :  In  order  to  facilitate  accessibility  to mentorship  for  startups  in  every  part  of  the  country,  the  Mentorship,  Advisory, Assistance, Resilience, and Growth (MAARG) program has been developed and launched under the Startup India Initiative.
23. ASCEND: Under ASCEND (Accelerating Startup Caliber & Entrepreneurial Drive), sensitization workshops on startups and entrepreneurship were conducted for all eight North Eastern States with the objective to capacitate and augment knowledge on key aspects of entrepreneurship and continue efforts towards creating a robust startup ecosystem in these States.
24. Startup20 Engagement Group: As a result of India's belief in startup ecosystem, a  Startup20  Engagement  Group  under  India's  G20  Presidency  has  been institutionalised which is working towards harmonisation and cross collaboration amongst the largest global economies. The engagement group acts as the voice of  the  global  startup  ecosystem  bringing  together  varied  stakeholders  on  a common  platform.  The  group  aims  to  support  startups  by  enabling  synergies between  startups,  corporates,  investors,  innovation  agencies  and  other  key ecosystem stakeholders internationally and to create global synergies.

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