The Indian Start-up ecosystem has clearly taken the nation by storm. Backed by factors like massive funding, consolidation activities, driven workforce and a massive domestic market, the fever of entrepreneurial spirit has mushroomed across various cities with such ferocious speed that the country is now being recognized as the biggest start-up hub in the world.
Recognizing the potential and talent of this young entrepreneurial rage, Government has also launched various schemes and plans to promote it. One such move is the Start-up India initiative. Launched on 16th January 2016, the scheme aims to promote Start-ups in India. The government has also published a notification on the eligibility of a Start-up for this scheme. The following eligibility criteria are –
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Private company, Partnership or LLP
It must be an entity registered or incorporated as Private Limited Company under Indian Companies Act, 2013 or a Limited Liability Partnership under Indian Limited Liability Partnership Act, 2008 or a Partnership firm, registered under the Indian Partnership Act, 1932.
5 years must not have elapsed since creation
All Start-ups which have been incorporated or registered within past five years from the effective date of this are eligible to participate in this scheme.
Not formed by splitting or restructuring
If a Start-up was formed by splitting an organization into two or more organizations, it would not be eligible under this scheme. Similarly, an organization formed by reconstructing an organization shall also be ineligible.
Annual Turnover not over 25 crores
Annual Turnover of a start-up must not have exceeded rupees twenty-five crores in any of the past years since its incorporation or registration. Turnover means the aggregate value of the amount realized from the supply of goods or provision of services during a particular financial year.
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Approval from DIPP that your business is innovative
Every Start-up has to obtain approval from the Inter-Ministerial Board set up by the Department of Industrial Policy and Promotion (DIPP). To obtain approval, you will have to submit an application to corroborate the innovative nature of your business along with supporting documents. Such as:
Recommendation from an incubator established in Post-Graduate College in India
Recommendation from an incubator funded by the Government of India in relation to a scheme to promote innovation
Recommendation from an incubator recognized by Government of India
Letter of at least 20% Equity Funding from an Incubation Fund or Angel Fund or Private Equity Fund or Accelerator or Angel Network, registered with Securities Exchange Board of India (SEBI). Such fund must not be listed in the negative list of funds as may be issued by DIPP in future.
Letter of funding from Central Government or State Government as a part of any scheme to promote innovation
The patent, filed and published in the Journal of Indian Patent Office, in areas affiliated with the nature of the business being promoted.