Unit-5: GOVERNMENT INITIATIVES 4Hours
Start-up India Schemes- Central Government initiative for start-up; Start-up Karnataka.
Make in India Schemes- Ease of doing Business-Industrial Corridors: Sectors-IT, Tourism, Food processing.
Start-up India Schemes[1]
Startup India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower Startups to grow through innovation and design.
In order to meet the objectives of the initiative, Government of India is announcing this Action Plan that addresses all aspects of the Startup ecosystem. With this Action Plan the Government hopes to accelerate spreading of the Startup movement:
• From digital/ technology sector to a wide array of sectors including agriculture, manufacturing, social sector, healthcare, education, etc.; and
• From existing tier 1 cities to tier 2 and tier 3 citites including semi-urban and rural areas.
The Action Plan is divided across the following areas:
• Simplification and Handholding
• Funding Support and Incentives
• Industry-Academia Partnership and Incubation
1 Compliance Regime based on Self-Certification
Objective
To reduce the regulatory burden on Startups thereby allowing them to focus on their core business and keep compliance cost low Details Regulatory formalities requiring compliance with various labour and environment laws are time consuming and difficult in nature. Often, new and small firms are unaware of nuances of the issues and can be subjected to intrusive action by regulatory agencies. In order to make compliance for Startups friendly and flexible, simplifications are required in the regulatory regime.
Accordingly, the process of conducting inspections shall be made more meaningful and simple. Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and environment laws (refer below). In case of the labour laws, no inspections will be conducted for a period of 3 years. Startups may be inspected on receipt of credible and verifiable complaint of violation, filed in writing and approved by at least one level senior to the inspecting officer.
In case of environment laws, Startups which fall under the ‘white category’ (as defined by the Central Pollution Control Board (CPCB)) would be able to self-certify compliance and only random checks would be carried out in such cases.
Labour Laws:
• The Building and Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
• The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
• The Payment of Gratuity Act, 1972
• The Contract Labour (Regulation and Abolition) Act, 1970
• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
• The Employees’ State Insurance Act, 1948
Environment Laws:
• The Water (Prevention & Control of Pollution) Act, 1974
• The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003
• The Air (Prevention & Control of Pollution) Act, 1981
2 Startup India Hub
Objective
To create a single point of contact for the entire Startup ecosystem and enable knowledge exchange and access to funding
Details
Young Indians today have the conviction to venture out on their own and a conducive ecosystem lets them watch their ideas come to life. In today’s environment we have more Startups and entrepreneurs than ever before and the movement is at the cusp of a revolution. However, many Startups do not reach their full potential due to limited guidance and access.
The Government of India has taken various measures to improve the ease of doing business and is also building an exciting and enabling environment for these Startups, with the launch of the “Startup India” movement
The “Startup India Hub” will be a key stakeholder in this vibrant ecosystem and will:
• Work in a hub and spoke model and collaborate with Central & State governments, Indian and foreign VCs, angel networks, banks, incubators, legal partners, consultants, universities and R&D institutions
• Assist Startups through their lifecycle with specific focus on important aspects like obtaining financing, feasibility testing, business structuring advisory, enhancement of marketing skills, technology commercialization and management evaluation
• Organize mentorship programs in collaboration with government organizations, incubation centers, educational institutions and private organizations who aspire to foster innovation. To all young Indians who have the courage to enter an environment of risk, the Startup India Hub will be their friend, mentor and guide to hold their hand and walk with them through this journey
3 Rolling-out of Mobile App and Portal
Objective
To serve as the single platform for Startups for interacting with Government and Regulatory Institutions for all business needs and information exchange among various stakeholders
Details In order to commence operations, Startups require registration with relevant regulatory authorities. Delays or lack of clarity in registration process may lead to delays in establishment and operations of Startups, thereby reducing the ability of the business to get bank loans, employ workers and generate incomes. Enabling registration process in an easy and timely manner can reduce this burden significantly.
Besides, Startups often suffer from the uncertainty regarding the exact regulatory requirements to set up its operations. In order to ensure that such information is readily available, it is intended that a checklist of required licenses covering labour licensing, environmental clearances etc. be made available. Currently, the Startup ecosystem in India also lacks formal platform(s) for Startups to connect and collaborate with other ecosystem partners.
Towards these efforts, the Government shall introduce a Mobile App to provide on-the-go accessibility for:
• Registering Startups with relevant agencies of the Government. A simple form shall be made available for the same. The Mobile App shall have backend integration with Ministry of Corporate Affairs and Registrar of Firms for seamless information exchange and processing of the registration application
• Tracking the status of the registration application and anytime downloading of the registration certificate. A digital version of the final registration certificate shall be made available for downloading through the Mobile App
• Filing for compliances and obtaining information on various clearances/ approvals/ registrations required
• Collaborating with various Startup ecosystem partners. The App shall provide a collaborative platform with a national network of stakeholders (including venture funds, incubators, academia, mentors etc.) of the Startup ecosystem to have discussions towards enhancing and bolstering the ecosystem
• Applying for various schemes being undertaken under the Startup India Action Plan
The App shall be made available from April 01, 2016 on all leading mobile/ smart devices’ platforms. The Startup portal shall have similar functionalities (being offered through the mobile app) using a richer web-based User Interface
4 Legal Support
Objective
To promote awareness and adoption of IPRs by Startups and facilitate them in protecting and commercializing the IPRs by providing access to high quality Intellectual Property services and resources, including fast-track examination of patent applications and rebate in fees.
Details
Intellectual Property Rights (IPR) are emerging as a strategic business tool for any business organization to enhance industrial competitiveness. Startups with limited resources and manpower, can sustain in this highly competitive world only through continuous growth and development-oriented innovations; for this, it is equally crucial that they protect their IPRs. The scheme for Startup Intellectual Property Protection (SIPP) shall facilitate filing of Patents, Trademarks and Designs by innovative Startups. Various measures being taken in this regard include:
• Fast-tracking of Startup patent applications: The valuation of any innovation goes up immensely, once it gets the protective cover of a patent. To this end, the patent application of Startups shall be fast-tracked for examination and disposal, so that they can realize the value of their IPRs at the earliest possible.
• Panel of facilitators to assist in filing of IP applications: For effective implementation of the scheme, a panel of “facilitators” shall be empanelled by the Controller General of Patents, Designs and Trademarks (CGPDTM), who shall also regulate their conduct and functions. Facilitators will be responsible for providing general advisory on different IPRs as also information on protecting and promoting IPRs in other countries. They shall also provide assistance in filing and disposal of the IP applications related to patents, trademarks and designs under relevant Acts, including appearing on behalf of Startups at hearings and contesting opposition, if any, by other parties, till final disposal of the IPR application.
• Government to bear facilitation cost: Under this scheme, the Central Government shall bear the entire fees of the facilitators for any number of patents, trademarks or designs that a Startup may file, and the Startups shall bear the cost of only the statutory fees payable.
• Rebate on filing of application: Startups shall be provided an 80% rebate in filing of patents vis-a-vis other companies. This will help them pare costs in the crucial formative years. The scheme is being launched initially on a pilot basis for 1 year; based on the experience gained, further steps shall be taken
5 Relaxed Norms of Public Procurement for Startups
Objective
To provide an equal platform to Startups (in the manufacturing sector) vis-à-vis the experienced entrepreneurs/ companies in public procurement Details
Typically, whenever a tender is floated by a Government entity or by a PSU, very often the eligibility condition specifies either “prior experience” or “prior turnover”. Such a stipulation prohibits/ impedes Startups from participating in such tenders.
At present, effective April 1, 2015 Central Government, State Government and PSUs have to mandatorily procure at least 20% from the Micro Small and Medium Enterprise (MSME).
In order to promote Startups, Government shall exempt Startups (in the manufacturing sector) from the criteria of “prior experience/ turnover” without any relaxation in quality standards or technical parameters. The Startups will also have to demonstrate requisite capability to execute the project as per the requirements and should have their own manufacturing facility in India
6 Faster Exit for Startups
Objective
To make it easier for Startups to wind up operations
Details
Given the innovative nature of Startups, a significant percentage fail to succeed. In the event of a business failure, it is critical to reallocate capital and resources to more productive avenues and accordingly a swift and simple process has been proposed for Startups to wind-up operations. This will promote entrepreneurs to experiment with new and innovative ideas, without having the fear of facing a complex and long-drawn exit process where their capital remain interminably stuck.
The Insolvency and Bankruptcy Bill 2015 (“IBB”), tabled in the Lok Sabha in December 2015 has provisions for the fast track and / or voluntary closure of businesses.
In terms of the IBB, Startups with simple debt structures or those meeting such criteria as may be specified may be wound up within a period of 90 days from making of an application for winding up on a fast track basis. In such instances, an insolvency professional shall be appointed for the Startup, who shall be in charge of the company (the promoters and management shall no longer run the company) for liquidating its assets and paying its creditors within six months of such appointment. On appointment of the insolvency professional, the liquidator shall be responsible for the swift closure of the business, sale of assets and repayment of creditors in accordance with the distribution waterfall set out in the IBB. This process will respect the concept of limited liability.
7 Providing Funding Support through a Fund of Funds with a Corpus of INR 10,000 crore
Start-up Karnataka.[1]
The State of Karnataka, especially its multicultural and multilingual capital, is the Nations’ leading startup hub and the world’s second fastest growing start-up ecosystem. Statistics suggest that Bangalore is now home for around 3,100 to 4,900 active tech startups. It ranks fifteen among the best 21st-century start-up ecosystems across the Globe. Given these facts, it is no wonder that the State was the first to come up with a dedicated Startup Cell. The Startup Karnataka initiative was founded by the Karnataka Government with the object of boosting the scope of startups in the State through strategic investment and policy interventions by leveraging the robust innovation climate in Bangalore. This article is a detailed account of the Nation’s first-ever comprehensive startup policy.
Objective
Through the Startup Karnataka initiative, the State Government seeks to ensure that Bengaluru continues to be the most important startup hub in the country, while other cities of the state are developed as startup destinations on par with thirty international startup hubs. Apart from this, it seeks to:
- Stimulate the growth of 20,000 technology-based startups including 6,000 product startups by the year 2020.
- Generate six lakhs of direct and twelve lakhs of indirect employment opportunities in the sector.
- Mobilize a sum of Rs. 2,000 crores of funding for investment in startups solely through Government intervention, by leveraging the Fund of Funds proposed to be constituted by the State Government.
- Facilitate the generation of at least 25 Innovative Technology solutions which could impact sectors like Health Care, Food Security, Clean environment and Education for all, etc.
- Connect entrepreneurs to Government Departments to help them in implementing their Pilots.
- Provide a One-Stop-Shop platform for information on the regulatory environment, incentives, events and the likes of it.
- Partner with industry bodies, TBIs, Academic Institutions, Incubators, etc from the Startup Ecosystem.
- Provide startups with the opportunity of widening its network by enabling participation in International Conferences organized by the program.
Vision
The program, as already stated, is envisioned to create a state-of-the-art startup ecosystem in the State through investment and policy interventions leveraging the robust innovation climate in Bangalore.
New Age Incubation Network
It is always never too late, indeed! But on the same note, it cannot be contested that the age of youth is the most appropriate time to instill the desired qualities. This is precisely the objective of the New Age Incubation Network (NAIN). The Network, which is already being implemented in engineering colleges will now be expanded to all professional and post-graduate institutions in two-tier cities in a phased manner. The academic institution selected for this purpose would be assisted in establishing an incubator in the given discipline, as well as in the promotion of student projects. These institutions would be graded as per Key Performance Indicators (KPI) and would be financially aided for a three-year period. Institutions that perform well would be rendered assistance for another two years.
Placing of Technology Business Incubators
The State Government seeks to play a helping hand in the placing of TBIs in institutions of higher learning with well-developed Research and development facilities. This move has been propagated with the idea of fostering a strong link between R&D institutions and the industry. The mechanism would be implemented in the below-mentioned thrust areas:
- Information and Communication Technology (ICT)/Internet of Things (IoT)/Software Products
- Manufacturing of all kinds
- Healthcare and Biopharma
- Agriculture and allied fields
- Clean-Tech
- Energy
- Water and its recycling
- Education
- Nanotechnology and Composites
The general norms mandate the host institutions to provide land and built-up space for TBI. Also, these institutes are obligated to share available facilities and expertise for the setting up of TBI. The funding for these institutions would be determined on a case-to-case basis.
Make in India Schemes
Launched in September 2014, the Make in India Program is a government initiative focused on encouraging companies to manufacture in India. This government initiative is intended to boost the domestic manufacturing sector and augment foreign investment in the country.
Make in India Program
The make in India program is one of the key projects of the government of India. Through the Make in India program, the government intends to:
- Revive the manufacturing sector of India to enhance the growth of the economy.
- Encourage foreign businesses to invest in India for their manufacturing needs.
- Improve India’s rank in ‘Ease of Doing Business index. Ease of doing business is a report published by The World Bank. It compares the Business Regulation in 190 Economies. In 2020, India’s rank in the Ease of Doing Business Index was 63.
- Develop India into a global manufacturing hub.
- And to boost employment opportunities in the country.
Sectors Covered Under Make in India Program
Through the Make in India program, the government is focused on creating jobs and launching skill development programmes in some of the key sectors. These sectors include:
Sectors Covered Under Make In India Program
Automobiles
Construction
Ports
Tourism and hospitality
Biotechnology
Aviation
Defence manufacturing
Leather
Railways.
Space
Chemicals
Electrical machinery
Media and entertainment
Automobile components
Thermal power
IT & BPM
Food processing
Wellness
Renewable energy
Pharmaceuticals
Textiles and garments
Mining
Mining
Objectives of Make in India Program
There are several targets aimed at by the Make in India Program. They are:
- Raising the growth in the manufacturing sector to 12-14% per year.
- Creation of 100 million additional jobs in the manufacturing sector by 2022.
- Increasing the share of the manufacturing sector in the GDP to 25% by 2022.
- Skill Development among the urban poor and the rural migrants to foster inclusive growth.
- Encouraging environmentally sustainable growth.
- Enhancing the global competitiveness of the Indian manufacturing sector.
Key Schemes Launched to Support Make In India Program
There are various key schemes launched by the government of India to support the Make in India campaign from time to time. These include:
- Skill India Mission: This mission aims to skill 10 million in India annually in various sectors. To support the effective implementation of the Make In India campaign, there is a need to upskill the large human resource available. Currently, the percentage of formally skilled workforce in India is only 2% of the population. The Skill India programme aims to widen this percentage through various skill development programmes across the country.
- Startup India: Startup India Program aims to build an ecosystem that fosters the growth of startups, driving sustainable economic growth, and creating large-scale employment. Under this program, the government has introduced several key relaxations for entrepreneurs.
- Digital India:This aims to transform India into a knowledge-based and digitally empowered economy by making many services completely online.
- Pradhan Mantri Jan Dhan Yojana (PMJDY): The mission envisages financial inclusion to ensure access to financial services, namely banking savings & deposit accounts, remittances, credit, insurance, pension in an affordable manner.
- Smart Cities: This mission aims to transform and rejuvenate Indian cities. The goal is to create 100 smart cities in India through several sub-initiatives.
- AMRUT: AMRUT is the Atal Mission for Rejuvenation and Urban Transformation. It aims to build basic public amenities and make 500 cities in India more livable and inclusive.
- Swachh Bharat Abhiyan: This mission aims to make India cleaner and promote basic sanitation and hygiene.
- Sagarmala: This scheme aims at developing ports and promoting port-led development in the country. Several ports are being constructed and renovated under this project.
- International Solar Alliance (ISA): The ISA is an alliance of countries most of which lie in the temperate zone. This is India’s initiative aimed at promoting research and development in solar technologies and formulating policies in that regard. The headquarters of ISA is in Gurugram.
- AGNII: AGNII or Accelerating Growth of New India’s Innovation was launched to push the innovation ecosystem in the country by connecting people and assisting in commercializing innovations.
– Ease of doing Business-Industrial Corridors: Sectors-IT, Tourism, Food processing.
[1] https://www.indiafilings.com/learn/startup-karnataka/
[1] https://www.startupindia.gov.in/content/dam/invest-india/Templates/public/Action__Plan.pdf
Academician 