“Startup” is a term we have all become extremely familiar with, in recent years. The sole reason behind this is the spike in entrepreneurial endeavors from within the Indian community. To enhance the entire experience of conducting trade, and to help businesses develop, the Indian government came up with the Startup India initiative. DPIIT recognition or startup India registration is at the center of the Startup India initiative for entrepreneurs. Through this blog, let’s dive into all the varied advantages of having startup India registration for Indian businesses.
Easy Access to Funding and Investments
The primary reason that people opt for DPIIT recognition is to get easy access to funding and investments. As we are aware, startups are new businesses trying to scale and grow. So capital is always scarce, and startup owners are always looking for more ways to gain access to funding and investments. If your business is a recognized startup, you don’t have to worry at all! There are many government-backed schemes for DPIIT-recognised startups that help in providing funding. Such as the Fund of Funds for Startups, and the Startup India Seed Fund Scheme. Amongst these, the Fund of Funds for Startups (FFS) is established by the government to provide financial support to startups through alternate funding and investment modes.
There is a pool of funds for DPIIT-recognised startups to get easy access to capital. Further, since the credibility of your business grows 100x with the help of DPIIT recognition, these registered startups can get access to funding by following options:
- Angel investors;
- Venture Capital firm;
- Financial institutions; and
- External third parties such as private equity firms.
Tax Benefits and Exemptions
Startup India scheme recognized businesses are not only prone to higher investment opportunities, but they also get the benefit of taxation. There are two tax exemptions, namely, angel tax exemption and tax holiday under section 80 IAC of the income tax act. However, it is important to note that not all DPIIT-recognised startups are eligible to claim these tax exemptions. The 80 iAC tax exemption provides a three-year exemption from payment of income tax. Further, the angel tax exemption helps startups in avoiding extra tax levied on angel investments at a higher rate. This encourages angel investors and other investors to invest in a certified startup.
This reduced burden of compliance on startups allows them to tap into their true potential by focusing on the actual needs of the business. This is the major reason for the government of India allowing these exemptions to only certain eligible startups.
Simplified Regulatory Compliance
When you first start a business, you want to keep your entire focus on its operations. However, all companies are subject to certain annual compliance requirements. To make it easier for startups, the government of India allows certain exemptions here as well. Dpiit-recognized startups are allowed to self-certify to certain compliance with labor and environmental laws through an online procedure. This reduces the waste of resources and certain overhead expenses of administration. When the government provides certain liberties, it helps in building a relationship of trust and faith between the government and the startup. As a result, the startups will also take active efforts to act responsibly towards their compliance requirements.
Intellectual Property Support
Startups and Intellectual Property (IP) both are concepts that are driven by innovation and invention. It is all about the creation of the mind! Considering the racing development in the field of intellectual property, it is becoming crucial day by day for startups to protect their IP rights. Even after being so important, the registration of Intellectual properties is an overhead expense for a startup. So, the government of India has taken active efforts to provide IP support to startups. This support is available in the following manners:
- 50% rebate in the filing of a trademark application through form TM-A;
- Half discount in filing a patent as a DPIIT-recognised startup;
- Fast – Track process for examination of a patent application;
- IP sup[port through various other channels; and
- A list of IP facilitators, for whom the government bears the cost, who provide service and guidance to startups at zero costs.
Such external support from the government and other stakeholders allows the startups to focus on research and development rather than spending their time learning about the IPRs.
Networking and Collaboration Opportunities
Since the last few years, the number of business networking events has grown to another level. Trade expositionsf5 fairs, etc. a day in day out thing for businesses. It allows you to grow and expand. The government also takes special measures to build a good networking experience for DPIIT-recognised startups. People connect and share ideas, and networks, get into business collaborations, and more. You even get to meet industry experts. With the growth of our business economy, startups are also participating in growth-boosting activities, such as startup challenges, hackathons, incubation programs, etc.
The entire process of startup India registration not only allows the business to grow at a 5x speed compared to a normal business. It also builds the credibility of a new business entering the market, with such an effective governmental registration. From improved access to funding and tax benefits to simplified regulatory compliance and intellectual property support, the initiative creates an ecosystem that nurtures and accelerates the journey of startups. By getting DPIIT recognition as a startup under the Startup India scheme, the young entrepreneurs of India allow themselves to embark upon a journey of growth and development.