Start-Up India: Civil Services Mentor Magazine - March - 2016

Start-Up India

A startup company is a generally new business, which can be a company, a partnership or temporary organization. There are lot of positives which are attached to the start-up’s. They infuse new energy into the market, they design innovative way of solving any problem, they are source of employment and also change the population from job seeker to job creator. Startup concept was first started after the great depression. However it acquired widespread international character after the advent of internet, which is also called as dot com phase. This leads to many people believe that startup is related only to the technological companies. This is a false notion startup can be present in any field its definition is related with the concepts of ambition, innovation, scalability, and growth.

Concept of startups in India is relatively new and it is still in nurturing phase. There are various problems which startups in India face. Important among them are given below:

  • Culture - First and most important issue with startups in India is culture of security. It is only in the last decade and half that people in the country have moved from being job seekers to job creators. Startup is a risky affair, with lot more failures than success. However Indian culture is generally based upon security. A startup failing has to be OK as failures often teach an entrepreneur, what to do and what not to do.
  • Funding - Capital and access to capital has been a perennial problem for startups. Angel investors, venture capital and private equity are too little too few in India. Startups still largely depend on the institutional financing for their funds.
  • iMentoring - A brilliant idea does not necessarily convert into success into business. In order to convert a brilliant idea into a brilliant business, mentoring is necessary. However, there is no formal mechanism to mentor startups in the country. Every mentoring that happens is on an ad-hoc basis.
  • Policies - This is a very important part of the startup culture, if not the most important part. Stratups are very risky adventure and require support from government in order to develop. India’s doing business index ranking is very low, it takes about 30 days to comply compared to just 9 days in OECD countries. The government’s role has so far been limited to giving out grants and loans, but without an effective, enabling environment, implementation is far off the target.
  • Skilled manpower- Starup requires lot of dedicated and skilled workforce. In India skilling need is very high National Skill Development Corporation (NSDC) has been mandated to skill 150 million Indians by 2022. It is difficult for startups to give similar salaries as provided by the big corporation, which makes it extremelly difficult for them to attract quality workforce.

Although solving all the problems will take time, but government has made the begining by starting the Start-up India plan. The “Start up India Stand up India” initiative was announced by the Prime Minister in his address to the nation on 15th August, 2015. First startup fund was announced for it in the budget 2015. Start-up India plan provides lot of benefits to the startup’s. Most important provisions of the new Startup India plan are given below:

  • Single Window Clearance even with the help of a mobile application
  • Refinance window through Small Industries Development Bank of India (SIDBI) with an initial amount of Rs. 10,000 crore.
  • The overall intent of the approval is to leverage the institutional credit structure to reach out to these under-served sectors of the population by facilitating bank loans repayable up to 7 years and between Rs. 10 lakh to Rs. 100 lakh for Greenfield enterprises in the non farm sector set up by such SC, ST and Women borrowers.

  • The loan under the scheme would be appropriately secured and backed by a credit guarantee through a credit guarantee scheme for which Department of Financial Services would be the settler and National Credit Guarantee Trustee Company Ltd. (NCGTC) would be the operating agency.
  • patent registration fee would be reduced by 80 percent
  • Modified and friendlier Bankruptcy Code to ensure 90-day exit window.
  • Handholding support for borrowers both at the pre loan stage and during operations.
  • Freedom from mystifying inspections for 3 years
  • No capital gain tax would be charged for first three years.

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