In A Big Boost For Startups In India, PM Modi Announces Historic ‘Startup India’ Policy

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4:53 pm 17 Jan, 2016

The Narendra Modi-led NDA government has unveiled a slew of measures – ranging from a Rs 10,000-crore corpus for innovation-driven enterprises, income tax waiver for three years, ending inspector raj and and exemption from capital gains tax for start-ups — to help boost the start-up eco-system in India.

The ‘Start Up India‘ initiative is Prime Minister Narendra Modi’s dream scheme to replace India from a job seeker nation to a job creator one.


PM Narendra Modi unveils #StartupIndia action plan. narendramodi

The 19-point action plan promises that the government will only play the role of a facilitator and not burden entrepreneurs with complicated compliance requirements.

The programme intends to build a strong ecosystem for nurturing innovation with a view to driving sustainable economic growth.

Addressing an audience of some of the biggest names in Indian and global start-ups in Delhi, who gathered in Delhi, the prime minister said, “People who have achieved success are not just entrepreneurs but also adventurous. Success of entrepreneurs depends on their ability to take risk.”

PM Modi unveiling the highlights of the Start-up Action Plan. narendramodi

PM Modi unveiling the highlights of the Start-up Action Plan. narendramodi

“That’s how [taxi aggregator] Uber became [god of wealth] Kuber,” Modi said.

India is home to the third-largest number of technology start-ups after the United States and Britain, and they attract billions of dollars in funding every year, despite crippling government regulation and red tape – a hurdle Modi referred to in his speech.

Here are some highlights of the initiative:

Self-certification based compliance

To reduce government interference, PM Modi announced self-certification based compliance for startups. Under this, a startup will not face government inspections.

FICCI President, Harshvardhan Neotia hailed the programme and said that it’s a landmark moment and a major shift from an unshackled regime.



Tax exemption for startups

The profits earned by start-ups will be exempt from payment of income tax during the first three years of business.

To boost financing, a 20 per cent tax on capital gains made on investments by entrepreneurs after selling own assets as well as government-recognised venture capitalists will also be exempt.



Tax exemption will be given on investments above the fair market value. Under the Income Tax Act, if a start-up receives equity funding which exceeds the firm’s fair market value, then such excess consideration is taxable in the hands of recipients.

Fund for startups

To provide funding support to start-ups, 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 four years.


PM Modi and Finance Minister Arun Jaitley at the event. indianexpress

The fund would be managed by private professionals drawn from the industry while LIC will be a co-investor in the fund.

Startup India Hub

It will be a single point of contact for interactions with the government.

Credit guarantee

A National Credit Guarantee Trust Company is being envisaged with a budgetary allocation of Rs 500 crore per year for the next four years.

PM Modi said government working towards fast-tracking of sart-up patent applications. narendramodi

PM Modi speaking at the event. narendramodi

The credit guarantee fund for start-ups would help flow of venture debt from the banking system to start-ups by standing guarantee against risks.

Faster patents

The government has eased the process of filing patents, which earlier took too long. Patent fee has been slashed by 80 per cent and the cost of legal facilitators for startups will be borne by the government.



Mobile app

To simplify the process of registeration, a mobile app will be launched. It will contain a small application form which can be filled up for registering a startup in one day.

Easier exit option

In case of failure, the government is trying to make faster exits. A bill will be introduced in the Parliament to facilitate exits in 90 days.

PM Modi visited a virtual exhibition and interacted with Start-up entrepreneurs. narendramodi

PM Modi visited a virtual exhibition and interacted with Start-up entrepreneurs. narendramodi

Public procurement

India will also support the ventures by removing the criteria of experience and turnover for bagging government procurement contracts.



Atal Innovation Mission

The mission aims at promoting research and development. It includes 500 tinkering labs, 35 public-private sector incubators, 31 innovation centres at national institutes, 7 new research parks, 5 new bio-clusters.

Core innovation programmes

These will be organized in 5 lakh schools to encourage innovation. Startup festivals will be organized to increase visibility.

Women participation

The government will try to increase participation of women in startups.

Here is the series of tweets by Prime Minister’s Office:



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