In India, small entrepreneurs create more jobs, which is evident from the fact that only 1.37% of a total of 5.85 crore establishments employed 10 or more workers. However, most of the start-ups fail to survive more than two years due to various disadvantages, including lack of hand-holding, knowledge and funding support.
Yet, a few successful start-ups can make up for the failings of the majority. Some of these start-ups can become the next Twitter, Google, Amazon or Facebook, the leaders in their respective market space.
In this backdrop, the central government launched Startup India – a flagship initiative intended to build a strong eco-system for nurturing innovation and start-ups in the country that will drive sustainable economic growth and generate jobs. To achieve this objective, the government announced an action plan in January 2016 with broadly three aspects – simplification of regulations and hand-holding, funding support and incentives and industry-academia partnership and incubation
So far 4,820 start-up applications have been recognised as start-ups by the Department of Industrial Policy and Promotion, the nodal agency. So far, 75 of these units have got funding support.
Unveiling the action plan, prime minister Narendra Modi had announced a dedicated Start-up fund worth Rs 10,000 crore for funding of start-ups. Start-ups were exempted from paying income tax on their profit for the 3 years out of a block of 7 years. The Centre has also reduced Income Tax rate for companies with an annual turnover of up to Rs 50 crore to 25% from 30%. Start-ups are defined as units working towards innovation and improvement of processes, with an annual turnover not exceeding Rs 25 crore in any preceding financial year.
Among other measures, the government has made it easier for startups to exit business in 90 days, fast-tracked patent applications, exempted 80% patent fee for start-up businesses, and made a self-certification based compliance system for start-ups under labour and environment laws. A Credit Guarantee Scheme with Rs 2,000 crore corpus is also set up to enable easy debt funding for startups.
Are these steps enough for start-ups? It is an evolving sector and India has to go miles to catch up with tiny Israel, the global leader in terms of number of start-ups in any country.
Aiming to turn the youth of India from job-seekers to job-creators, Modi recently held brainstorming sessions with the start-up entrepreneurs. He has urged them to come forward with their ideas and technology to partner the government in providing improved services to citizens such as in the fields of education, health, skill development and digital solutions.
Startup India Hub, a platform for entrepreneurs to connect with other entrepreneurs and angel investors, has been able to handle more than 69,000 queries and facilitate more than 450 start-ups by providing advisory on business plans, pitching support, etc. A 4-week free online learning & development programme covering six modules has been launched. Various courses and programmes have been launched in universities and colleges including IITs to promote start-up culture among students.