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Eligibility Criteria for Startup India Scheme

The article talks about a company's eligibility for a startup registration in India. The business has to be incorporated as a company, LLP or a Partnership and should not be older than 5 years. The article discusses in detail the eligibility criteria for the Start-up Scheme in India.
Written by:
Shivi Gupta
Published on
31-Jul-19

The Startup India initiative was commenced by Prime Minister Modi on January 16, 2017. The scheme was started to promote startups in India as new startups were blooming in almost all business sectors. The scheme brought a new optimism in new entrepreneurs who saw it as governmental backing to their young businesses.

On February 17, 2016, the government published a notification that laid down startup India eligibility criteria to enjoy the benefits of the Start-up scheme. However, even today the majority of businesses remain unaware of the criteria and whether they are qualified under the scheme or not. 

For sound legal help regarding the eligibility criteria for startups in India, connect to us for an expert legal consultation.

To make it easier for young businesses, MyAdvo have compiled a complete guide on eligibility under the scheme:

1. The start-up must be registered as a Private Company, LLP or Partnership Firm: 

To be eligible under this scheme, a start-up must be incorporated as a Private Limited Company under Indian Companies Act, 2013, a Limited Liability Partnership (LLP) under Indian Limited Liability Partnership Act, 2008 or a partnership firm under the Indian Partnership Act, 1932. 

2. The start-up must not be a product of restructuring: 

The start-up should not be formed out of splitting or reconstructing of a subsisting business. A business formed out of splitting an organisation into two or more businesses, won’t be eligible under this scheme.

3. The Startup must not be older than 5 years: 

All business startup in India that have been incorporated in the past five years from the effective date of the policy will be eligible under this scheme. Simply, all businesses incorporated or registered after February 15, 2011, are eligible to participate in this government startup scheme.

4. Annual turnover of the start-up must not be more Rs. 25 crores: 

To be eligible under this scheme, the start-up's annual turnover should not exceed Rs. 25 crores in any of the past 5 years since its incorporation. 

5. The business must be involved in a new product or service:

Only start-ups developing a new product or service or process are eligible under this scheme. This criterion has three conditions: 

a) The start-up must be working towards innovation, development, deployment or commercialisation of a new product, process or service driven by technology or intellectual property. 

b) The start-up must aim to develop and commercialize a new product or service or a significantly improved existing product or service that will create or add value to customers or workflow. 

c) The start-up must not be merely engaged in developing products or services which do not have the potential for commercialization, undifferentiated product or service with no or limited incremental value for customers or workflow.

6. The start-up must have obtained approval from DIPP that the business is innovative:

Every start-up has to obtain approval from the Inter-Ministerial Board set up by the Department of Industrial Policy and Promotion (DIPP)(2). To obtain approval from Inter-Ministerial Board of DIPP, a start-up should submit an application to validate the innovative nature of business along with supporting documents which are as follows: 

  • Recommendation from an Incubator established in Post-Graduate College in India

  • Recommendation from an Incubator funded by Government of India in relation to a scheme to promote innovation

  • Recommendation from an Incubator recognized by Government of India

  • Letter of at least 20% Equity Funding from an Incubation Fund or Angel Fund or Private Equity Fund or Accelerator or Angel Network, registered with Securities Exchange Board of India (SEBI). Such fund must not be listed in the negative list of funds as may be issued by DIPP in future

  • Letter of funding from Central Government or State Government as a part of any scheme to promote innovation

  • The patent filed and published in the Journal of Indian Patent Office in areas affiliated with the nature of business being promoted

 

MyAdvo has empanelled the best startup lawyers across India. Get legal advice to resolve your query.

Email us at info@myadvo.in or call us at +919811782573.

 

External Links:

[1] Startup India scheme: A detailed view of the Startup India scheme

[2] Department of Industrial Policy and Promotion (DIPP): A sitemap to The Department of Industrial Policy and Promotion (DIPP)