PM Modi’s Startup India initiative has certainly made the terms ‘entrepreneurship’ and ‘startups’ well known across India. Now, as per a report by Money Control, the Department of Industrial Policy & Promotion (DIPP) has invited feedback and suggestions from various industries in India to alter the definition of startups.
In an event in the capital today, Ramesh Abhishek, Secretary, DIPP invited feedback from various sectors and said that the current definition mandated by the regulatory body needed alteration. He added, “We would be happy to make it even more broad-based. We are not hung up on the definition. For example, startups working in biotech, nothing happens before eight years. Maybe we can have different periods for different kinds of startups…to be much more inclusive on the ground reality.”
The secretary highlighted that the definition of enterprises vary as per the sector and one definition can accommodate all the ventures. He told Moneycontrol, “From the biotech sector, we have got a specific feedback. Some people have said it should be at least eight years (gestation period). Nothing is cast in stone but there has to be a logical reason (for defining).”
The Role Of The DIPP
As per the current definition of startups by DIPP, an entity will be identified as a startup:
a) Up to five years from the date of its incorporation/registration.
b) If its turnover for any of the financial years has not exceeded $ 3.6 Mn (INR 25 Cr).
c) If it is working towards innovation, development, deployment, or commercialisation of new products, processes or services driven by technology or intellectual property.
The guidelines further state that an entity shall be considered a startup only if it aims to develop and commercialise a new product/service or a process or significantly improves on a product or service or process, which will add significant value for customers or workflow.
The DIPP has been playing a key role in executing the Modi Government’s ‘Startup India, Stand Up India’ mission. In the last one year, the department has taken several initiatives to encourage the startups.
In August 2016, it bid for a startup reality show along the lines of Shark Tank – an American reality television series where aspiring entrepreneurs from around the world, pitch their business models. It also hosted a startup festival, in September 2016, in Hyderabad. In the same month, it also identified about 200 fake ecommerce companies. In October 2016, it also proposed to set up a Credit Guarantee Fund with a corpus of $300 Mn (INR 2,000 Cr).
Then, in January this year, the DIPP proposed a new set of tax concessions on employee stock options, unlisted securities and convertible instruments. Following that, reports surfaced that it was planning to expand its $1.46 Bn (INR 10,000 Cr) startup funding scheme.