Lok Sabha Question No. 286 (STARRED), answered on 2023-08-09
Subject: Growth of Startups
Ministry: COMMERCE AND INDUSTRY
Asked by: Ravneet Singh

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY

## DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

## STARRED QUESTION NO. 286. TO BE ANSWERED ON WEDNESDAY, THE 09 TH  AUGUST, 2023.

## GROWTH OF STARTUPS

- *286.  SHRI RAVNEET SINGH BITTU:

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

## वाणिज्य एवं उद्योग मंत्री

- (a) whether it is a fact that there has been a slowdown in the growth of startups in the country;
- (b) if so, the details thereof for the last five years, year-wise;
- (c) the reasons for the decreased rate of growth of startups and the challenges being faced in this regard;
- (d) whether the Government is taking any measures to encourage and incentivize to further bolster the growth of the startup ecosystem in the country; and
- (e) if so, the details thereof and if not, the reasons therefor?

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

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

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## STATEMENT REFERRED TO IN REPLY TO PARTS (a) TO (e) OF THE LOK SABHA STARRED QUESTION NO. 286 FOR ANSWER ON 9 TH  AUGUST, 2023.

- (a) to (c): No Sir; there has not been a slowdown in the growth of startups in the  country.

The Government has been implementing various initiatives under the Startup India initiative  which  was  launched  on  16th  January  2016  in  order  to  build  a  strong ecosystem for nurturing innovation, startups and encouraging investments in the startup ecosystem of the country.

Sustained efforts by the Government under the Startup India initiative have led to                an  increase  in  the  number  of  recognised  startups  from  428  in  2016  to 98,119 in 2023 as on 30 th  April 2023.

The Compounded Annual Growth Rate (CAGR) of the number of recognised startups  during  the  period  between  2016-2022  is  142%,  highlighting  the continued robust growth of the Indian startup ecosystem.

The  resilient  year-on-year  growth  witnessed  in  the  number  of  recognised startups  is as under:

|   Year | Number of Recognised Startups During the Year   | Cumulative Number of Recognised Startups   |
|--------|-------------------------------------------------|--------------------------------------------|
|   2016 | 428                                             | 428                                        |
|   2017 | 5,052                                           | 5,480                                      |
|   2018 | 8,576                                           | 14,056                                     |
|   2019 | 11,216                                          | 25,272                                     |
|   2020 | 14,454                                          | 39,726                                     |
|   2021 | 19,989                                          | 59,715                                     |
|   2022 | 26,522                                          | 86,237                                     |

The Government has taken a comprehensive approach under the Startup India initiative to foster a conducive environment for the development of innovation and startups  in  the  country.  As  a  result,  there  are  recognised  startups  in every  State  and  Union  Territory  (UT)  spread  across  more  than  80%  of  the districts of the country. The recognised startups have reportedly created more than  10.34  lakh  direct  jobs  as on  30 th   April  2023,  driving  holistic  economic growth.

- (d) & (e): Under  the  Startup  India  initiative,  the  Government  constantly  undertakes various  efforts  for  the  development  and  growth  of  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 .

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## ANNEXURE REFERRED TO IN REPLY TO PARTS (d) & (e) OF THE LOK SABHA STARRED QUESTION NO. 286 FOR ANSWER ON 09.08.2023.

## 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 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,  NonBanking 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 fast-tracked 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 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, EnterpriseTech, 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 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.
25. TIDE  2.0  Scheme: Technology  Incubation  and  Development  of  Entrepreneurs (TIDE 2.0) Scheme was initiated 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 .
26. MeitY  Start-up  Hub  (MSH): A  nodal  entity  to  interconnect  deep  tech  startup infrastructure pan India a 'MeitY Start-up Hub' (MSH) has been set up under Ministry of Electronics & Information Technology (MeitY). MSH is assisting incubators and startups improving their scalability, market outreach, etc. and has also established partnerships  with  various  stakeholders  paving  the  way  for  an  economy  built  on innovation and technological advancement.
27. SAMRIDH Scheme: MeitY has also launched the 'Start-up Accelerator Programme of MeitY for Product Innovation, Development and Growth (SAMRIDH)' in August 2021 with an aim to support existing and upcoming Accelerators to further select and accelerate potential software product based start-ups to scale.
28. 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.
29. Support for International Patent Protection in E&IT (SIP-EIT) Scheme: MeitY had initiated a  scheme titled  'Support for International Patent Protection in E&IT (SIP-EIT) that encourages international patent filing by Indian MSMEs and startups so as to encourage innovation and recognize the value and capabilities of global IP. Reimbursement provided under the scheme is up to a maximum of Rs. 15 lakhs per invention or 50% of the total expenses incurred in filing and processing of patent application up to grant whichever is lesser.
30. North-East Region Entrepreneurship & Startup Summit (NERES): Ministry  of Skill  Development and Entrepreneurship organised NERES, an entrepreneurship and startup summit aimed at offering a platform to promising startups and aspiring entrepreneurs across North-East Region (NER). The objective of NERES was aimed at  stirring  up  entrepreneurial minds across the NER states and promotes startup entrepreneurs by offering them a platform to pitch their business ideas and also addressing various challenges faced by the startups. The programme provided a platform for aspiring and existing entrepreneurs/startups to participate and showcase their business ideas and plan. It also helped them to learn more about the good practices and network with fellow startups. The programme has paved the way for startups and entrepreneur to seek support from mentors and an ecosystem that support their business growth.

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