Make in India and Startup India
Context:
The Government of India is making continuous efforts under Investment Facilitation for implementation of Make in India action plans to identify potential investors. Support is being provided to Indian Missions abroad and State Governments for organizing events, summits, road-shows and other promotional activities to attract investment in the country under the Make in India banner. Investment Outreach activities are being carried out for enhancing International co-operation for promoting FDI and improve Ease of Doing Business in the country.
About:
Make in India is an initiative which was launched on September 25, 2014, to facilitate investment, foster innovation, building best in class infrastructure, and making India a hub for manufacturing, design, and innovation. The development of a robust manufacturing sector continues to be a key priority of the Indian Government. It was one of the first ‘Vocal for Local’ initiatives that exposed India’s manufacturing domain to the world. The sector has the potential to not only take economic growth to a higher trajectory but also to provide employment to a large pool of our young labour force.
India has registered its highest ever annual FDI Inflow of US $74.39 billion (provisional figure) during the last financial year 2019-20 as compared to US $ 45.15 billion in 2014-2015. In the last six financial years (2014-20), India has received FDI inflow worth US$ 358.30 billion which is 53 percent of the FDI reported in the last 20 years (US$ 681.87 billion).
Steps taken to improve Ease of Doing Business include simplification and rationalization of existing processes. As a result of the measures taken to improve the country’s investment climate, India jumped to 63rd place in World Bank’s Ease of Doing Business ranking as per World Bank’s Doing Business Report (DBR) 2020. This is driven by reforms in the areas of Starting a Business, Paying Taxes, Trading Across Borders, and Resolving Insolvency.
Recently, Government has taken various steps in addition to ongoing schemes to boost domestic and foreign investments in India. These include the National Infrastructure Pipeline, Reduction in Corporate Tax, easing liquidity problems of NBFCs and Banks, policy measures to boost domestic manufacturing. Government of India has also promoted domestic manufacturing of goods through public procurement orders, Phased Manufacturing Programme (PMP), Schemes for Production Linked Incentives of various Ministries.
Further, with a view to support, facilitate and provide investor friendly ecosystem to investors investing in India, the Union Cabinet on 03rd June, 2020 has approved constitution of an Empowered Group of Secretaries (EGoS), and also Project Development Cells (PDCs) in all concerned Ministries/ Departments to fast-track investments in coordination between the Central Government and State Governments, and thereby grow the pipeline of investible projects in India to increase domestic investments and FDI inflow.
Startup India:
Startup India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. Salient features of the Startup India Initiative
Details of achievements under Startup India Initiative
Intellectual Property Rights (IPR) benefits:
- Startups are eligible for 80% rebate in patent filing fees and 50% on trademark filing fees. Additionally, Startups are also provided the facility of expedited examination of patent applications to reduce the time taken in granting patents.
- 510 patent facilitators and 392 trademark facilitators have been empanelled, as of November 2020, under this scheme to provide free-of-charge services to Startups.
- As of November 2020,
- 5020 patent applications have been filed.
- Expedited examination for patent applications filed by Startups – 1170; of these 459 Patents granted.
- Total number of Trademark applications filed – 12,264.
Easing Public Procurement
The requirement of prior turnover and prior experience has been relaxed to encourage startups to participate in tenders. Further, startups have been exempted from the requirement of earnest money deposit.
‘GeMStartup Runway’ has been launched for startups to sell products and services to Government. As of 4th January 2021, 7,929 DPIIT recognized startups have registered on Government e-Marketplace (GeM).
As of 4th January 2021, 53,226 orders from public entities have been placed to startups with the value of orders worth Rs. 2,279 crores.
Additionally, Startups can now register and participate in all public orders on Central Public Procurement Portal and get exemptions on prior experience, prior turnover and earnest money deposit requirements.
GeM has relaxed the requirement of approved Trademark certificate for DPIIT Recognized Startups . An application for trademark will be sufficient.
Self-Certification under Labour and Environmental laws
- Startups recognised under Startup India initiative can self-certify their compliance against the 6 labour laws and 3 environmental laws.
- 27 states and UTs have implemented the process of self- certification to startups under 6 labour laws. 9 States (Haryana, Madhya Pradesh, Maharashtra, Rajasthan, Gujarat, Uttar Pradesh, Punjab, Uttarakhand, and Delhi) have integrated their portals with ShramSuvidha Portal. Overall, 169 DPIIT recognized Startups have availed the benefits of self-certification.
Tax Exemption to Startups for 3 years
- The provisions of section 80-IAC of the Income Tax Act provide for a deduction of an amount equal to 100% of the profits and gains derived from an eligible business by an eligible start-up for 3 consecutive assessment years out of 7 years, at the option of the assessee, subject to certain conditions. The Finance Act, 2020 provides for an amendment to section 80-IAC of the Income Tax Act so as to provide that the deduction under the said section 80-IAC shall be available to an eligible start-up for a period of 3 consecutive assessment years out of 10 years beginning from the year in which it is incorporated. This amendment will take effect from 1st April 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years.
- To avail these benefits, a Startup must get a Certificate of Eligibility from the Inter-Ministerial Board (IMB). 329 startups have been granted income tax exemptions till December 2020.
Tax Exemption on Investments above Fair Market Value
- DPIIT recognized startups are exempt from tax under Section 56(2)(viib) of the Income Tax Act when such a Startup receives any consideration for issue of shares which exceeds the Fair Market Value of such shares. The startup has to file a duly signed declaration in Form 2 to DPIIT {as per notification G.S.R. 127 (E)} to claim the exemption from the provisions of Section 56(2) (viib) of the Income Tax Act. As of 3rd February 2021, with regard to declarations received from entities, furnished in Form 2, intimation regarding receipt of declaration in Form 2 has been mailed in the cases of 3612 entities.
Faster Exit for Startups
Ministry of Corporate Affairs has notified Startups as “Fast track firms” enabling them to wind up operations within 90 days vis-a-vis 180 days for other companies.
Fund of Funds for Startups
- Fund of Funds for Startups (FFS) with a total corpus of Rs 10,000 crore was established with contribution spread over the 14th and 15th Finance Commission cycle based on progress of implementation. Startup Fund of Funds is operational and is managed by SIDBI.
- As on date, an amount Rs.1461.29 crore stands released to SIDBI, out of which Rs.500crore was released in 2015-16; Rs.100 crore was released in 2016-17; Rs.431.30 crore released in 2019-20 and Rs.429.99 crore was released in 2020-21.
- As of 31st January 2021, SIDBI has committed Rs. 4376.95 crore to 62 SEBI registered Alternative Investment Funds (AIFs). These funds have raised a corpus fund of Rs. 31,598 crore and Rs. 5089.55 crore have been invested into 391 startups.