Exactly a year ago, on January 16, 2016, Prime Minister Narendra Modi unveiled the ‘Start-up India, Stand up India’ initiative. As the Vigyan Bhavan auditorium bustled with energy and excitement, thousands of new-age entrepreneurs looked forward to the historic announcement. After all, for the first time in India, a comprehensive policy for startups was being rolled out.
The Action Plan unveiled several initiatives and schemes to boost entrepreneurship and build a strong ecosystem for fostering innovation. Highlights included recognition as a ‘startup’ based on certain criteria, tax benefits and Rs 10,000-crore ‘Fund of Funds’.
A fresh start-up
For the first time, the word ‘startup’ was defined: an entity incorporated in India not prior to five years, with an annual turnover not exceeding Rs 25 crore in the last five financial years, and which is working towards modernization, development, deployment, and commercialization of new products, processes or services driven by technology or intellectual property.
Although hundreds of applications poured in, only eight early-stage firms were finally chosen for tax benefits last year. Out of total applications received, 111 applications were considered for tax benefits as only these startups had been incorporated after April 1, 2016. The Inter-Ministerial Board setup by DIPP approved only eight startups for tax benefits.
Entrepreneur felt it took slightly longer time because there were multiple designated units who can certify that these startups are eligible for tax benefits. Everybody was new to the scene and due diligence takes time. The process got streamlined, scaling up was required, which possibly happened soon.
Currently, the criteria are slightly broad. Many startups have not looked out for government benefits, because they are not generating revenues as yet. As parameters set by the government to recognize a startup. Hence, startups believe it’s a long and tedious process, so it’s better to focus on what they are already doing.
Incubators came into existence
Under Startup India, the government announced setting up of new incubators across the country on the public-private partnership mode. As many as 35 new incubators in existing institutions will be set up along with funding support of 40% from the central government. However, it looks like it would take a few more months for the first few of them to become operational.
As per the NITI Aayog site, 17 established incubation centres have been.

Faster exits
The government has announced plans to make it easier for startups to close their businesses if they are winding up operations.
As per an update, the Insolvency and Bankruptcy Code, 2016 has been published in the Gazette. Once the code is notified, startups shall be able to wind up their business within a period of 90 days from making an application.
Rs 10,000 crore Fund of Funds
Finally, the most important part: the mega startup fund. The ‘Fund of Funds’ of Rs 10,000 crore for startups, managed by the Small Industries Development Bank of India (SIDBI), was announced under the initiative. The fund will invest in SEBI-registered VC funds which, in turn, will invest in startups. This was indeed the biggest announcement for the startup industry made last year. However, it has been a non-starter.
As of July 2016, SIDBI had chosen eight venture funds to invest in startups as defined under the Startup India Action Plan and announced to support them with a corpus amount of Rs 428 crore. However, no money has reached any of them and it appears that many of them are struggling to raise money from the market in a constrained funding environment.
The actual fund allocation has not yet started because the government is working on right model let’s hope that 2017 will be the game-changing year in terms of funds getting disbursed.
All in all
The Startup India programme is a very good starting. The intentions were made clear. With many states coming up with their own startup policies and the countrywide momentum created, the signs were welcoming. Of course, there’s always scope for enhancement. Even today, not many issues have been resolved such as ESOPs, taxation etc. I believe many of these changes will get reflected during the Union Budget. Yes, 12 months have gone by, but we will see lot of momentum by this year end.”

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