The startup ecosystem in India is about to be shaken up soon, as Prime Minister Narendra Modi will unveil the Startup Action Plan on Saturday, at an invite only launch event of Startup India, Standup India. The event will take place on Saturday at Vigyan Bhawan, New Delhi.
Organised by Department of Industrial Policy and Promotion (DIPP), along with other key Indian startup ecosystem players, the Startup India, Standup India initiative aims to celebrate the country's entrepreneurial spirit, and create a strong ecosystem for fostering innovation and startups in India.
1) The A-Listers are attending
The event will be inaugurated by finance minister Arun Jaitley, and attended by the Minister of State for Commerce and Industry Nirmala Sitharaman, and the Minister of State for Finance Jayant Sinha. Around 40 top CEOs and startup founders and investors from Silicon Valley will be attending the event as special guests, and take part question and answer sessions at the event.
Some of the big names include Masayoshi Son, CEO, and Nikesh Arora, President and COO, SoftBank, Travis Kalanick, Founder, Uber, and Adam Nuemann, CEO, WeWork. Flipkart founder Sachin Bansal, Snapdeal's Kunal Bahl, Ola founder Bhavish Aggarwal, Paytm founder Vijay Shekhar Sharma, ShopClues founder Radhika Agarwal, and Oyo Rooms' Ritesh Agarwal will be in attendance.
2) Good luck getting an invite
Amitabh Kant, Secretary, DIPP,tweeted on WEdnesday January 13,2016 that over two lakh people have sought passes against a seating capacity of 1,350. Unless you have some really good connections, it's probably too late to even try getting in at this point. However, the event will be telecast live in India's top universities and youth groups in over 350 districts of India, so it should be easy to follow along if you're interested.
3) What's on the agenda
The event will start at 9.30AM with a welcome address by Amitabh Kant, Secretary, DIPP, and will have a total of 14 sessions through the day. Travis Kalanick, founder of Uber will be giving a presentation on eight lessons for entrepreneurs, followed by a question and answer session.
The agenda for the day includes panel discussions from the founders of India's biggest startups in fintech, e-commerce and healthcare, with discussions with policymakers on how the government can jump-start India's startup ecosystem. The event will conclude with PM Modi launching his Action Plan post, following his interactions with startups, VCs, and angel investors.
4) Tax on seed funding may be scrapped
The government has reportedly decided to scrap a tax on seed funding to startups by Indian angel investors in the upcoming Union Budget. The existing tax norms view the funding as income, which takes away nearly 30 percent of the value of investments, so this would improve cash flow a lot.
5) Defining a startup
According to Nasscom, the recommended definition for a startup would be an entity that is headquartered in India, and has been incorporated less than five years ago.
Aside from this, incentives, facilitation, and support for startups should not apply to companies that have an annual turnover of Rs. 25 crore, the IT industry body said.
6) Google will launch a startup into orbit
Google will be hosting a live contest with five pre-screened startups, who will present their business cases to a panel of top VCs and representatives from Google. The five shortlisted startups are Reap Benefit, Cardiac Design Labs, Guru-G, SlamdunQ, and Sbalabs.
The winner will receive $50,000 (roughly Rs. 33 lakh) in equity-funding. Google invited users to vote for their favorite startup on its Startup India page till Friday midnight January 15,2016. Based on the highest votes, the top three startups will receive an invite to join the next Google Launchpad Week, and one final winner will win $100,000 (approximately Rs. 66 lakh) in Google cloud credits, and be eligible for consideration to the Launchpad Accelerator Program in July 2016.
7) The Union Cabinet has already approved the stand up India scheme
The Stand Up India Scheme anchored by Department of Financial Services (DFS) to encourage greenfield enterprises by SC/ ST and women entrepreneurs will support 2.5 lakh borrowers with bank loans repayable up to seven years and between Rs. 10 lakh to Rs. 1 crore for greenfield enterprises in the non-farm sector.
Prime Minister Narendra Modi's 12 Big Announcements
1) A Rs. 10,000 crore fund for startups
The government will set up a fund with an initial corpus of Rs. 2,500 crore and a total corpus of Rs. 10,000 crore over a period of four years, which will be be managed by a board with private professionals drawn from industry bodies, academia, and successful startups. The fund will participate in the capital of SEBI registered venture funds, and invest in sectors such as manufacturing, agriculture, health, and education.
2) A single point of registration for startups
The government will launch a mobile app and a portal on April 1, which will enable startups to register their company in a day. The portal will also serve as a single point of contact for clearances, approvals and registrations, and for companies to apply for schemes under the Startup India Action Plan.
3) A simplified regulatory regime based on self-certification
To reduce the regulatory burden for startups, the government will allow startups to self-certify compliance on nine labour and environment laws through the startup mobile app. No inspections will be conducted in case of the labour laws for a period of three years
4) A fast-track mechanism filing patent applications
Launched on a pilot basis for a year, the Central Government shall bear the cost of patents, trademarks and designs for a startup, with an 80 percent rebate to encourage the creation and protection of its intellectual property.
5) A credit guarantee fund for startups
A credit guarantee mechanism willl help startups raise debt funding through the formal banking system through National Credit Guarantee Trust Company (NCGTC)/SIDBI, which has an annual corpus of Rs. 500 crore for the next four years.
6) Tax exemption for three years, and capital gains
Aimed at facilitating growth and help retain capital, startups will be exempted from income-tax for a period of three years. However, the exemption shall be available subject to non-distribution of dividend by the startup. To augment the funds available to various VCs and alternative investment funds, capital gains invested in SEBI registered venture funds will be exempt from tax as well.
7) A Startup India Hub for collaboration
The Startup India Hub will serve as a single point of contact for startup ecosystem players, and will function in a hub and spoke model with central and state governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions. The hub will assist startups in obtaining financing, and organise mentorship programs to encourage knowledge exchange.
8) Relaxed norms of public-procurement
The Central Government, State Government and PSUs will exempt startups in the manufacturing sector from the criteria of "prior experience/ turnover" as long as they have their own manufacturing facility in India, and have the requisite capabilities and are able to fulfil the project requirements.
9) Faster exits for startups
Startups may be wound up within a period of 90 days from making of an application for winding up on a fast track basis, as per the recently tabled Insolvency and Bankruptcy Bill 2015, which has provisions for voluntary closure of businesses. This process will respect the concept of limited liability.
10) Atal Innovation Mission to encourage entrepreneurship and innovation
The Atal Innovation Mission will establish sector specific incubators and 500 'Tinkering Labs' to promote entrepreneurship, provide pre-incubation training and a seed fund for high-growth startups. Three innovation awards will be given per state and union territory, along with three national awards, as well as a Grand Innovation Challenge Award for finding ultra-low cost solutions for India.
11) Innovation focused programs for students
An innovation core program targeted at school kids aims to source 10 lakh innovations from five lakh schools, out of which the the best 100 would be shortlisted and showcased at an Annual Festival of Innovations, to be held in Rashtrapati Bhavan. A Grand Challenge program called NIDHI (National Initiative for Developing and Harnessing Innovations) shall be instituted through Innovation and Entrepreneurship Development Centres (IEDCs) to support and award INR 10 lakhs to 20 student innovations. Uchhattar Avishkar Yojana, a joint MHRD-DST scheme has earmarked Rs. 250 crore annually to foster "very high quality" research amongst IIT students.
12) An annual incubator grand challenge
The government will identify and select ten incubators, evaluated on pre-defined Key Performance Indicators (KPIs) as having the the potential to become world class, and give them Rs.10 crore each as financial assistance to ramp up their infrastructure.
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