Government Schemes

How is the “Startup India Scheme” aiding Sustainable Startups?

Startup is a term used to refer to a company which is in the first stage of its operations. Startups are young companies that have just begun to develop. Startups are small and initially financed and managed by a handful of founders or one individual. The Startup India program, launched by the Indian government in 2016, aims to support the Indian startup ecosystem across various business segments. The program intends to assist startups by reducing the regulatory burden. In addition to providing funding financial incentives, the Startup India Scheme tries to provide easier compliance, fast tracking of patent applications, legal support and an easier exit process for failed startups. In order to meet the objectives of the Startup India initiative, the government announced an Action Plan, too, in 2016 that addresses all aspects of India’s startup ecosystem. This action plan was developed to provide funding support and industry-academia partnership for the startups. Continued assistance, along with simplification and a handholding approach from the government’s end, allow startups to focus on their core business and keep their compliance costs low. In this article, we will explore the program’s key features and how it is driving the growth of sustainable businesses in India.

Since 2016,the initiative has rolled out several programs in order to build a robust startup ecosystem by supporting entrepreneurs and ultimately transform India into a country of job creators instead of job seekers. The related programs are managed by Startup India Team, under the Department for Industrial Policy and Promotion (DPIIT).Apart from its intended core objectives, this ecosystem encourages startups to focus on sustainability and incorporate environmentally friendly practices from the early stages of the ventures. By encouraging the development of sustainable technologies, such as clean energy, waste management, and water conservation, the Startup India Scheme^[1] fosters the growth of startups that tackle pressing environmental challenges.

Support and Incentives under the Startup India Scheme

By fostering innovation, job creation, and economic growth beyond economic prosperity, the program has also proven to be highly successful in promoting sustainability in startups. To stimulate an all-round growth of startups and provide them a competitive platform, certain support and incentives are being provided to environmentally friendly activities in a startup. The following objectives have been integrated under the Startup India Scheme.

Enabling Ecosystem and Support Mechanisms

The Startup India program helped create a conducive ecosystem for startups by providing a range of support mechanisms, including establishing incubators, funding opportunities, and simplifying regulatory procedures.

Focus on Innovation and Technology

Innovation and technology play an important role in building sustainable businesses today. The Startup India program, therefore, emphasises the importance of disruptive ideas and provides a platform for startups to showcase eco-friendly solutions.

Access to Funding and Capital

One of the significant challenge faced by startups is access to easy funding. The Startup India Scheme addresses this through exemptions on the Capital Gains Tax and the Income Tax for eligible startups. By infusing more capital into the startup ecosystem and a credit guarantee scheme, the financial support also enables sustainable businesses to scale their operations, invest in research and development, and implement eco-friendly practices.

Incubation and Mentorship

Incubators and mentorship programs are integral components of the Startup India program. These platforms provide startups with guidance, mentorship, and networking opportunities. This leads to the creation of incubators and innovation labs, competitions and grants. Sustainable businesses can benefit immensely from the expertise and experience of mentors who can guide them in adopting sustainable business models, identifying market opportunities, and navigating regulatory frameworks.

Collaboration and Partnerships

The Startup India Scheme encourages collaboration between startups, corporates, and academic institutions. Such partnerships facilitate knowledge sharing, technology transfer, and research collaborations, enabling startups to leverage resources and expertise. Collaborations with established companies can help sustainable startups gain market access, distribution networks, and exposure to a wider customer base.

Sustainable Practices

The Startup India program places a strong emphasis on promoting sustainable practices among startups. It encourages entrepreneurs to adopt environmentally responsible approaches, such as energy efficiency, waste reduction, and carbon footprint reduction. Startups are also encouraged to integrate social impact and inclusivity into their business models, fostering sustainable development and addressing societal challenges.

Job Creation and Inclusive Growth

Sustainable businesses have the potential to generate employment opportunities and contribute to inclusive growth. The Startup India Scheme recognises this potential and supports startups that prioritise job creation and social impact. By promoting sustainable businesses, the program plays a crucial role in building an inclusive economy, empowering marginalised communities, and bridging socioeconomic gaps.

Recognition of a Company as a Startup

Startup Recognition by DPIIT for all eligible entities (Companies, LLPs, and Registered Partnerships) is available through National Single Window System. Under the Startup India Action Plan, “startups” under the definition, are eligible to apply for recognition. The application have to submitted alongside supporting documents as mentioned later in this article.

Eligibility Criteria for Startup Recognition

Company Type: The Startup should be incorporated as a private limited company or registered as a Limited Liability Partnership or a partnership firm.

Annual Turnover: Turnover should be less than 100 Crores rupees in any of the previous financial years

Company Age: An entity is considered startup untill 10 years from the date of incorporation.

Innovation and Scalability: The Startup should be working towards the creation/ improvement of existing services, products and processes and must have the potential to generate employment and wealth creation.

Original Entity: An entity formed by splitting up or reconstruction of an existing business should not be considered a “Startup.”

Licences and Documents Needed for a Startup

• Business Registration for startup
• Startup India Registration
• MSME registration
• GST Registration
• Udyog Aadhar Registration
• Shop And Establishment License for Startup Registration
• Import Export Code Registration
• Pollution NOC
• Environmental Clearance (if required)

Documentation for Startup India Registration

• Incorporation Certificate in case of Private Limited Company
• Agreement letter in case of an LLP
• Recommendation Letter from Government Recognised Incubator
• Company Details such as category, industry, sector, office address etc.
• Details of Directors/Partners ( Name, contact details, photos, gender)
• Authorised Representative detail such as Name, contact details, and designation).
• Description stating product uniqueness
• Revenue model.
• Brief info regarding business operations and products.
• Overview of a business plan
• Website info

Benefits of registering your company as a startup

Provision for Self Certification:Startups are allowed to self-certify compliance with 6 Labour Laws and 3 Environmental Laws through a simple online procedure. These include

• Labour Laws

1. Building and Other Constructions Workers’ (Regulation of
2. Payment of Gratuity Act, 1972
3. Contract Labour Act, 1970
4. Employment & Conditions of Service) Act, 1996
5. Inter-State Migrant Workmen Act, 1979
6. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952  
7. Employees’ State Insurance Act, 1948

• Environment Laws

1. Water Act, 1974
2. Water Cess (Amendment) Act, 2003
3. Air Act, 1981

Exemption from Inspection by Agencies: In the case of labour laws, the startup will be exempted from inspections for 5 years. and may be inspected only in case of verifiable complaints of violation.

Provision for White Category Industry: In the case the startups fall under the ‘white category’ they would be able to self-certify the compliance.

Tax Exemption: After getting a DPIIT Certificate, Startups can Apply for 80 IAC Tax Exemption and Exemption under Section 56 of the Income Tax Act (Angel Tax)

 Other Schemes introduced by the government to help Indian startups

• Multiplier Grant Scheme
• Dairy Entrepreneurship Development Scheme
• Credit Guarantee Fund Trust for Micro and Small Enterprises
• Single Point Registration Scheme
• Zero Defect Zero Effect Scheme
• Startup India Seed Fund Scheme
• Software Technology Parks
• Mudra Banks
• eBiz Portal
• Atal Innovation Mission

Conclusion

The Startup India Scheme has emerged as a catalyst for sustainable businesses, fostering innovation, job creation, and economic growth. By encouraging startups to adopt sustainable practices, the Startup India program is paving the way for a greener and more inclusive future. Through its comprehensive support mechanisms, focus on technology and innovation, access to funding, and emphasis on sustainable practices. The program has created an ecosystem where startups can thrive while contributing to a greener and more inclusive future. As the Startup India Scheme continues to evolve and expand, it is expected to further accelerate the growth of sustainable businesses in India, addressing critical environmental and societal challenges and paving the way for a brighter and more sustainable future.

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