In January last year, when Prime Minister Narendra Modi announced by ‘Startup India’ initiative, startups and entrepreneurs across the country were filled with joy and hope in expectations that doing new business will get easier. And, thus huge number of startups applied to get registered under the initiative launched for Startups first time ever in India.
However, as per the worth-to-read report by TOI, more than two-thirds i.e about 66% of the companies/startups that applied for the scheme have been rejected by the nodal body — the Department of Industrial Policy and Promotion (DIPP). A bulk of the rejections were because the companies couldn’t secure certifications declaring them to be innovative businesses, said the government data.
In last 12 months since the Startup India initiative was announced, only 522 out of about 1,425 companies that sought certification under Startup India scheme have been approved, according to research firm Tracxn.
Notably, the benefits of getting registered under the scheme are huge such as – income tax exemptions for three years, faster registration of patents and 80% reduction in patent registration fee, better chances of getting access to public sector projects with easier procurement norms, and exemption from environment and labour inspections.
However, its hard for startups to get registered under the scheme because of tough eligibility norms.
The most overarching concern for companies to be eligible for the scheme is to qualify as innovative, for which they must furnish letters of recommendation from government approved startup incubators or furnish patents granted by the Indian Patent and Trademark Office.
Satyam Kumar, owner of a fintech startup applied for the scheme explained, “We could not find an incubator that specializes in financial technology to certify our company as innovative,”. Satyam is chief executive of Loan Tap, a fintech startup established in May 2016.
The real problem, say entrepreneurs, is not the process of application itself but the documentation.
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