The document summarizes key features of India's startup policy, including: 1) Self-certification allowances for startups to reduce regulatory burden, a Rs. 10,000 crore credit guarantee fund, and a mobile app to simplify registration. 2) Tax exemptions for startups for 3 years in a block of 5 years, tax exemptions for incubation funds, and capital gains tax exemptions. 3) Plans to set up additional incubators, research parks, and bio clusters to promote innovation and entrepreneurship. 4) Karnataka's startup policy aims to create 6 lakh jobs, reimburse marketing costs up to 30% annually, and mobilize Rs. 2,000 crore

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KEY FEATURES – STARTUP POLICY
• Start-ups would be allowed self-certification of
compliances with certain labour laws and environment
laws so as to reduce the regulatory burden.
Self Certification
• The government will develop a fund with an initial
corpus of Rs 2,500 crore and a total corpus of Rs 10,000
crore over four years, to support upcoming start-up
enterprises.
Credit Guarantee Fund for
Startups
• One page registration form will be made available on
smartphone via an app and provide “on-the-go
accessibility” for registering startups with relevant
agencies of the Govt.
Simplifying the Startup process
by introducing Mobile App and
Portal:

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• Startups commencing their business after 01st April,
2016, shall be exempted from taxation for 3 years in the
block of 5 years.
Tax Exemption for Startups for 3
years
• To encourage seed capital availability, the Govt has
planned to exempt the investment by incubators .
Tax Exemptions on Incubation
Funds
• Startups have been further exempted from paying
capital gains tax during the year, if such gains are
invested in the Fund of Funds recognized by the Govt,
namely VCFs and AIFs
Tax Exemption on Capital Gains
KEY FEATURES – STARTUP POLICY

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• In order to facilitate this exit route for businesses, fast
track closure norms have been included in The
Insolvency and Bankruptcy Bill 2015”.
Faster Exit of Startups
• In order to enable startups to reduce costs in their
crucial formative years, startups shall be provided an
80% rebate in filing patents vis-a-vis other companies.
80% rebate on filing patent
applications by startups
• Under this scheme, startups shall be allowed to self-
certify their compliances (through Mobile App) with 9
Labor Laws and Environmental Laws
Labour Law relaxations to
startups
KEY FEATURES – STARTUP POLICY

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 With regard to the definition of a Startup, the limit of turnover has been fixed at a limit of
INR 25 Crore which is too high giving a scope for exploitation of loopholes.
 Certification from an inter-ministerial board will bring in more license raj and red tapism
 Startups should be working towards (i) innovation, (ii) development, (iii) deployment or (iv)
commercialisation of new products, processes or services driven by technology or
intellectual property, this itself is ambiguous
 Compliance regime based on self-certification is good but the fundamental issue of
compliance still persists. Startups still have to comply with the payment of gratuity, payment
of provident fund, contract labour regulations. Once this 3 year window is over, you could
still be prosecuted for non-compliance for the first 3 years of operations.
Just give Startups exemption from labour laws in the first 3 years itself.
All is not well with the Startup Policy

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All is not well with the Startup Policy
 The government is talking about Insolvency and Bankruptcy Bill, 2015 as a tool for
Faster exits for Startups. It should float special schemes where winding up should
not be (i) expensive and (ii) time consuming. It makes little sense for a company going
through bankruptcy to pay more money in a long-drawn winding-up process.
 Tax exemption for 3 years in the period of 5 years is fine, but real help would have
been exemption from Service tax laws for the initial years.
 Tax exemption on investments above fair market value should be applied to all
investments in Startups, whether by VCs, angels, HNIs, incubators or accelerators

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Stay away from Startups
Give exemption in compliances wrt Labour law, Funding route and Exit policies
Give capital gain exemption to investors at par with Singapore laws
Create right Infrastructure Support
Idea should be to encourage startups to relocate to India, and see India as the
only place to startup
3 Things Government should aim to do

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ADDITIONAL PLANs - START UPs
 Setting up of a Single Point of Contact and hand holding facilitator in the form of Startup Hub
 Relaxed Norms of public procurement of startups
 Organizing of Startup Fests and Grand Innovation Challenge
 Launching of Atal Innovation Mission for promotion of entrepreneurship and innovation
 Setting up of 35 new incubators, wherein upto 10 crores of funding support shall be
provided by the CG
 Setting up of 7 new research parks in the IITs modelled on the research park at IIT Madras.
 Promotion of entrepreneurship in biotechnology be setting up of 50 new bio incubators, 150
technology transfer offices, 5 new bio clusters.
 Targeted Innovation focused programs for students for showcasing innovation and providing
a collaboration platform

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With the vision to create a world-class startup ecosystem in the state through
strategic investment and policy interventions, Karnataka just released its startup
policy 2016, the focal point being:
To create six lakh direct jobs in the State.
To reimburse the marketing costs up to 30 percent under a yearly basis;
provided the startup is registered to a recognised incubator.
Stimulate growth of 20,000 technology startups.
Mobilise Rs 2,000 cr. fund of funds.
Facilitate generation of at least 25 innovative technology solutions with social
impact.
Startup Up – Karnataka – Key Pointers

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START UP DEFINITION – KARNATAKA POLICY
The startup should not be older than four years.
It should be registered in Karnataka.
50 percent of its workforce should be employed in Karnataka.
Benefits will cease after the company reaches revenue of Rs 50 crore.
Should be technology based.

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