Historic Startup Action Plan....
Prime Minister Narendra Modi launched a number of initiatives on Saturday to support the country's start-ups, including a 100 billion rupee ($1.5 billion) fund and a string of tax breaks for both the companies and their investors.
India, which already has a handful of new generation success stories, is seeking to encourage more cutting edge technology and other start-ups - supporting new businesses in a country which badly needs to accelerate a still sluggish economic recovery and create millions of jobs as the workforce expands.
Modi's high-profile event in New Delhi - attended by hundreds of investors and entrepreneurs, including the founder of taxi-hailing app Uber, Travis Kalanick - promised a shot in the arm for the sector, with exemptions from tax and compliance inspections for three years.
"I urge all entrepreneurs to create companies that solve India's problems and create jobs," he told a packed auditorium in New Delhi, speaking in Hindi.
"Start-up does not mean a billion dollar company where thousands of people work. It is about employing even 5 people, and developing India."
Online companies such as e-commerce marketplaces Flipkart and Snapdeal, along with ride-sharing company Ola, have highlighted the potential for home-grown technology successes in a country best known for capitalising on cheap engineering talent as the world's back office.
However, the push by Modi's government is the first time Indian policymakers have announced a set of policies directly aimed at promoting start-ups and entrepreneurship.
Modi said on Saturday start-up companies would benefit from cheaper and faster patent applications, enjoying 80 percent rebates on the cost of patents. A mobile app would allow companies to be set up within a day, he promised.
Moreover, they will be exempt from income tax for the first three years in which they make a profit. Their investors could also benefit: recognised funds of funds could see exemptions from capital gains tax, Modi said.
The announcements, at a government-organised conference on start-ups in New Delhi, comes months after Modi made a whirlwind tour of Silicon Valley, meeting the chief executives of Facebook Inc, Google Inc and Apple Inc.
India, with a rapidly expanding population of Internet users, is seen as one of the world's fastest growing start-up hotspots. Venture capital funds including Sequoia and Tiger Global have raised multi-billion dollar funds for their Indian investments in recent years.
Here are top points in startup action plan
1) No Income Tax for 3 years
Start-ups will be exempted from paying income tax on their income for the first 3 years.
2) No Capital Gains Tax
Capital gain tax exemptions will be provided to startups.
3)Faster patent registration
PM announced simplifying IPR (Intellectual Property Regime) for start-ups and 80% reduction in patent fees. There will be a panel of legal facilitators for startups to file IP (patents, designs, trademarks), and all the costs will be borne by the government.
4) Easier government procurement policy
5) Clear Exit policy
Startups will be able to exit within 90 days as per the provisions already tabled in the Parliament via the new bankruptcy bill.
6) New Rs 10,000 cr dedicated fund
It will start with 2,500 crore and a dedicated fund of Rs 10,000 crore will be created for funding of start-ups.
7) Credit guarantee scheme
Credit guarantee scheme will be introduced for start-ups in the next 4 years, funds of around 500 crores will be given every year
8) No inspection of startups for 3 years
No inspection for 3 years of start-up businesses in respect of labour, environment law compliance post self-certification. Thereafter, they will get exemption on the basis of their experience and turnover.
9) Compliance regime based on self-certification and One-page registration form
One page registration form can be available on smartphone via an app. Mobile app will be launched on April 1. Registration of startup company can be done in one day!
10) New innovation centres will come up
Atal Innovation mission will give encouragement to state-of-the-art innovation centres. 31 innovation centres at national institutes, 7 new research parks like IIT-M and 5 new bio-clusters will come up.
11) New women entrepreneur-centric policies
New women entrepreneur centric policies will be announced to promote more and more women in setting up businesses.
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