This article was published on January 18, 2016

India’s startup scene is getting a $1.5b shot in the arm this year


India’s startup scene is getting a $1.5b shot in the arm this year

With over 4,200 startups, India is the third largest market for fledgling tech firms on the planet. The country saw these companies receive more than $9 billion in funding last year and active investors doubled to nearly 500.

Over the weekend, Indian prime minister Narendra Modi unveiled an action plan (PDF) to help boost startup growth in the country as part of the government’s ‘Startup India, Standup India‘ initiative.

It offers numerous benefits that should make it easier to launch, run and sell companies in the country. Here’s what entrepreneurs can look forward to India this year:

  • Over the next four years, the government will set up a $1.47 billion fund, managed by private professionals, to support startup development and growth of innovation-driven enterprises.
  • A credit guarantee mechanism with an annual budgetary corpus of $70 million will be rolled out and serve startups for the next four years.
  • Companies set up after April 1 this year will be exempted from income tax for three years. In addition, capital gains will also be exempted if they are invested in government-recognized funds.
  • Startups will be allowed to certify compliance with labor and environment laws and will not be subject to inspections for the first three years.
  • A mobile app and companion site set to launch on April 1 will help startups register their companies and partnerships in just a day; it usually takes between two to four weeks to do so at present.
  • Patent applications from startups will be fast-tracked to allow them to realize the value of their intellectual properties at the earliest. These companies will also receive an 80 percent rebate on the cost of filing patents.
  • Legal facilitators will offer assistance in filing patents, trademarks and designs at no charge to startups.
  • The government will set up numerous Incubators, innovation programs in half a million schools and seven research parks worth nearly $14 million each to foster entrepreneurship in the country.
  • Businesses will be able to exit within 90 days of filing their applications — handy in case you plan to sell your assets or close up shop to move on to the next big challenge quickly.

While there’s plenty on paper to celebrate, it remains to be seen how effectively and transparently this plan is implemented. There’s also the matter of properly educating would-be entrepreneurs of the benefits they can take advantage of as they launch their companies this year.

If everything goes according to plan, India’s startup ecosystem could take off to rival others across Asia, starting in just a matter of months.

➤ Startup India Action Plan (PDF) [National Informatics Center]

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