Understanding Start-up Funding in India - SSRANA

FAQ

Start-up Funding in India

Start Up Funding

There has been a tremendous rise in the number of Angel Investors and Venture Capital firms investing into and funding start-ups in India. Adequate roles have also been divided among the Central and State governments respectively for the establishment of new technology business incubators and research parks with regard to the percentage of funding they will respectively provide to incubators, i.e. 40% by the Central government (subject to maximum of INR 10 Crores / 100 Million), 40% by the State governments and 20% by the private sector.

The Human Resource Development Ministry and the Department of Science and Technology have agreed to partner in an initiative to set up over 75 such startup support hubs in the National Institutes of Technology (NITs), the Indian Institutes of Information Technology (IIITs), the Indian Institutes of Science Education and Research (IISERs) and NIPERs or National Institutes of Pharmaceutical Education and Research.

Another crucial piece of information in this regard would be that setting up of these incubators shall be provided for by ‘NITI AYOG’ as a part of the ‘Atal Innovation Mission’.

Incentives for Start-Ups in India

In tune with the Start-Up India Campaign launched in India recently, the Government of India has also launched the Scheme of Facilitating Start-Ups Intellectual Property Protection (SIPP) on January 18, 2016 to facilitate the protection of Patents, Trade Marks and Designs of innovative and interested Start Ups.

The idea is to promote the Intellectual Property Rights of Start-Ups and thus encourage innovation and creativity amongst them.

For this purpose, a start-up has been defined as an entity, incorporated or registered in India not prior to five (5) years, with an annual turnover not more than INR 25 Crores (250 Million) in any preceding financial year, working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. The start-up must also be certified by the Start-Up Certification Board as having an innovative business.

The scheme is inclined to assist Start-Ups in protecting and commercializing their intellectual property by providing them access to high-quality IP services and resources.

The Startup India aims to encourage more people to start a new business having innovative ideas and for that many incentives are being provided to Startups for their easy smooth functioning, such as:

  • Tax exemptions for three (3) years and on Capital Gains on Investments above the fair Market Value
  • Faster Exit or wind-up procedures for Start-ups
  • Single platform through Mobile Apps and Portals for startups to interact with the Government
  • Compliance Regime based on Self-Certification
  • Relaxed norms of Public Procurement
  • Legal Support and Fast-tracking Patent Examination at lower costs

Besides this, Facilitators are also being appointed to be empaneled by the Controller General of Patent, Designs and Trade Marks (CGPDTM) for the effective implementation of the SIPP.

Subsidized Fee Structures have also been made applicable to start-ups under the said scheme, for any number of patents, trademarks or designs that may be applied for by a Start-Up.

Stage of Payment Patent Trademark Designs
At the time of filling of Application 10,000 5,000 2,000
At the time of final disposal of Application Without Opposition 10,000 2,000 2,000
With Opposition 15,000 5,000 4,000

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Challenges for Start-ups in India

Despite having raised good investments, many start-ups struggle to survive the tough competition in the market and are eventually forced to shut down their businesses.

The Start-up India Action Plan, which is the layout that the Indian Government plans for Start-ups, is designed to ease the burden for start-ups and provide them many benefits besides a business conducive environment. However, the plan is vulnerable to many challenges such as –

  • Raising of funds which the Government plans to provide for Start-ups. 
  • Co-operation from the State Governments, as the Central Government alone cannot execute the plan and hence, will require co-operation from the State Governments.
  • Co-operation from banks and other lenders for providing debt funding to the Start-ups.
  • Lack of manpower and infrastructure in the office of Controller General of Patents Designs and Trade Mark.

For more information on start up funding in India, please write to us at info@ssrana.com or submit a query.

To know more about Start Up Laws in India, Read below

Start Up Laws in India

For more information please contact us at : info@ssrana.com