One among the many sectors that have stood out in these times of the Corona crisis is India’s vibrant start-ups. They quickly facilitated India with many Aatmanirbhar solutions like Indian version of video conferencing solution responding to Aatmanirbhar app challenge. Some start-ups facilitated farmers to sell their produce online to foreign countries.
While the buzzing talents in the start-up sphere deserve all the accolades for these accomplishments, the support from the government and its policy measures have also played a major role in creating a start-up ecosystem in India.
Now, the Centre has announced the second edition of the States’ Start-up Ranking Exercise, with Gujarat, Karnataka and Kerala leading the rankings.
State’s Start Up Ranking – What Do They Indicate?
The rankings of the state do indicate the efforts they have taken to facilitate the start-up system.
The States’ Start-up Ranking Framework 2019 has 7 broad reform areas, consisting of 30 action points ranging from Institutional Support, Easing Compliances, Relaxation in Public Procurement norms, Incubation support, Seed Funding Support, Venture Funding Support, and Awareness and Outreach.
States and UTs have been divided into two groups. While UTs except Delhi and all States in North East India except Assam are placed in Category ‘Y’. All other States and UT of Delhi are in Category ‘X’.
The Overall Picture of Start Up Boom in India
Officials claimed that the country has become third largest ecosystem in the world and the start-up ecosystem in the country has led to creation of over 4 lakh jobs.
Apart from ranking the states for the year 2019, the overall journey of start-ups in recent years was also reflected in the States’ Start Up Ranking 2019.
Unicorn Start Up
Start-ups with valuation of $1 billion and above along with all those whose combined valuation totals to $100 billion and above are called Unicorn start-ups. India has seen a remarkable progress in this regard in recent years.
In 2014, there were only five Unicorns in India. The number has increased significantly to 32 as of 2019, thereby making India the third largest ecosystem of unicorns in the world after USA and China.
(All the following snapshots are taken from the report)
Series of Reforms
Behind the buzzing scene of India’s start-up ecosystem lies consistent support from the government. Many states have picked up these reforms to achieve what we now see in the States’ Start-Up ranking 2019.
Legal Support: Self certification and compliance of 9 environment and labour laws through start-up India web portal/mobile app.
Easing Intellectual Property Right Process: Fast track start-up patent applications, Panel of facilitators to assist in filing IP applications; government to bear facilitation costs; 80% rebate in filing of patents.
Simplifying Exist Process: As per the guidelines of the Insolvency and Bankruptcy Code, start-ups with simple debt structures may be wound up within a period of 90 days.
Fund of Funds: SIDBI Fund of Funds for investment into start-ups, set up by the Government with an initial corpus of ₹2,500 crore and a total corpus of ₹10,000 crore over a period of four years.
Credit Mechanism: Credit guarantee mechanism through national credit guarantee trust company (NCGTC)/ SIDBI is being envisaged with a budgetary corpus of ₹500 crore per year for the next four years.
Tax Exemptions: IT exemptions for 3 years, Capital gains exemption to people investing such gains in the government recognised fund of funds; Tax exemptions on investments above fair market value.
Industry and Academic Support: 31 innovation centers, 13 startup centers, 19 technology business incubators, 7 research parks and 500 Atal Tinkering Labs; 35 new incubators in existing institutions; 35 new private sector incubators with funding support from the government.
Incentives to Be Part of the System: NIDHI –₹10 lakh to 20 student innovations from Innovation and Entrepreneurship Development Centers; Ucchatar Avishkar Yojana – ₹250 crore per annum to foster very high-quality research among IIT students; Annual incubator Grand Challenge; Organising start-up fests for showcasing innovation and providing a platform for collaboration.
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