India: Only one application out of a possible 250 accepted for the Startup India scheme

June 6, 2016

‘Start- up India’ initiative was first announced by Prime Minister, Mr. Narendra Modi, in his Independence Day speech. This scheme was launched by the Department of Industrial Policy and Promotion (hereinafter referred to as the ‘DIPP’), and it aims at fostering entrepreneurship and promoting innovation by creating an ecosystem that is conducive for growth of Start-ups. The primary objective is for India to become a nation of job creators instead of being a nation of job seekers. For this particular purpose, Government has declared a provisional budget of Rs. 2,500 which will be allotted every year for next four years.

Recently, over 250 applications were filed to the Department for seeking benefits under the scheme. As reported by major Indian dailies, out of these 250 applications only 1 got approved while others have been rejected by the department. Among the rejected applications, 170 were rejected due to non- completion of the process of registration and 25 were rejected as they did not give the process detail of their business. The only Company which got the approval, by the department, for registration under this policy is Hyderabad based Cygny Energy Pvt. Ltd, which provides Inverter- less home renewal energy controller.

Experts have raised doubts over the registration process as being too technical and stated that the entire process associated with finding an incubator is very rigid. In many an instance, entrepreneurs are having innovative ideas but simply due to the lack of a background from a reputed college are unable to find the Incubator.

Shailendra Singh, Joint Secretary, DIPP stated that many of the ideas which were applied for registration under the policy were not able to meet the criterial of innovation which is required for registration under this policy. Explanation No. 4 of the policy which deals with the innovation aspect of the Start- up, states that-

“An entity is considered to be working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property if it aims to develop and commercialize:

  • A new product or service or process, or
  • A significantly improved existing product or service or process that will create or add value for customers or workflow.

Provided that the mere act of developing:

  • products or services or processes which do not have potential for commercialization, or
  • undifferentiated products or services or processes, or
  • products or services or processes with no or limited incremental value for customers or workflow Would not be covered under this definition.”

The Joint Secretary also pointed out that it is not the case that Indian Start- ups are lacking innovation in their product or business model, but the chief reason for such a low clearance rate is due to the fact that many Start- ups do not apply for registration under this policy as they are getting funds from other sources.

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