What is Startup India and Stand up India?

Start-up India and Stand-up India are the Indian government initiatives introduced to nurture innovation. Both the programs are designed to create a strong eco-system for the Startups and give wings to the budding entrepreneurs in the country.

Startup India and Stand up India

Start-up India and Stand-up India are the Indian government initiatives introduced to nurture innovation. Both the programs are designed to create a strong eco-system for the Startups and give wings to the budding entrepreneurs in the country. Through these initiatives the government aims to generate opportunities for large scale employment, while achieving sustainable economic growth and empowering Startups.

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Difference between Start-Up and Stand-Up India

Start Up India scheme promotes new initiatives and ventures. Whereas Stand Up India Scheme is designed for promoting entrepreneurship among aspiring Women and SC/ST entrepreneurs. Stand up India is one of the core parts of Start-up India scheme in order to encourage the individuals to bring their ideas to life.

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Start-up India Scheme

This scheme allows the start-up owners to leverage the exemptions, learning program, knowledge and various tools to gear up their startup journey.

Features of Start-Up India-

  • Single Window Clearance using a mobile application
  • Deduction in patent registration fee up to 80%
  • Funds valuing up to INR 10,000 crore
  •  Atal Innovation Mission Innovation hub for easy working  
  • Self-certification compliance

Who can benefit from start-up India scheme?

The scheme is designed for the entities registered/incorporated in India holding the following features-

  1. Less than 7 years old (from the date of registration/incorporation).
  2. It should be registered as a private limited company or as a limited liability partnership/ partnership firm.
  3. The annual turnover should be less than Rs. 25 crore ( this takes into consideration all the financial years since its incorporation/registration).
  4. The firm should be working towards improvement, innovation, or development of services/products/processes.
  5. It should have a scalable business model that can potentially generate employment possibilities and lead towards wealth creation.

The above definition is accorded by the DIPP (Department of Industrial Policy & Promotion).

Highlights of Start-up India Scheme

  • Self-Certification Compliance – This scheme facilitates the Startups with self-certification compliance with the 9 environment and labour laws. However, it can be achieved only through the official mobile app. Start-ups will be free from inspection for 3 years in case of the labour laws, whereas in case of environment laws random checks would be conducted.
  • Startup ecosystem for nurturing talents- Startup India Hub has created a Startup ecosystem for the aspirants to exchange their knowledge with others. It also offers the benefit of easy access to funding.
  • Interaction through Mobile App – The official startup app serves as an easy mode for interacting with Regulatory Institutions and the Government for business related queries. It allows the stakeholders to exchange necessary information.
  • Low cost Patent Examination – The Start-up India scheme, facilitates the start-ups to file any number of designs, trademarks or patents and the cost shall be borne by the Central Government. However, Startups shall bear the statutory fees. Moreover, there is 80% rebate for the Startups to file the patents.
  • Friendly norms for start-ups to execute their ideas/project- Government shall exempt the manufacturing sector Startups from the criteria of turnover/prior experience without letting them compromise with technical parameters or quality standards.

Incentives and Funding Benefits

  • Providing INR 10,000 crore ( as initial corpus) funding support - Government has set up funds amounting to total corpus of INR 10,000 crore, which shall be invested into the start-ups over a period 4 years. The investment will not be done directly but through SEBI registered Venture Funds.
  • Tax Exemption on government recognized Capital Gains – Start-up India scheme shall facilitate the start-ups with exemption on the capital gains of the financial year. But this is applicable only on the capital gains earned through the funds recognized by the Indian Government.
  • Tax Exemption for 3 years - The profits earned by the Startups shall be exempted from income-tax up to 3 years since the year of its commencement of business. However, the start-ups aren’t allowed to distribute dividend for the given period.

Stand up India Scheme

This scheme aims at boosting entrepreneurship ideas of the scheduled castes/tribes and women. The Stand-up India Scheme is managed by Government of India, Ministry of Finance, and Department of Financial Services (DFS).

Features of Stand-up India Scheme

1.  Stand-Up India Scheme facilitates bank loans between Rs 10 lakh and Rs 100 lakh to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise.

2. For setting up a new enterprise in manufacturing, trading or services sector by SC/ST/Women entrepreneur. 

3. SA credit guarantee system would also be implemented under the scheme through the National Credit Guarantee Trustee Company (NCGTC), which will act as the operating agency for financial aids.

Who can benefit from Stand-up India Scheme?

  • Woman and/or SC/ST entrepreneurs, aging 18 years or above.
  • This scheme grants loans only for green field projects (i.e. the beneficiary’s first time venture in the trading/manufacturing/services sector).
  • Non-individual enterprises with 51% of the controlling stake and shareholding held by either Women Entrepreneur or SC/ST.
  • Applicant shouldn’t be a defaulter in any financial institution/bank.

Details of loan provided under Stand-up India Scheme

1. Loan size – The amount of loan shall cover 75% of the project’s cost. However, this condition wouldn’t apply if the contribution of the borrower and convergence support from other schemes amounts to 25% of the project’s total cost.
2. Security - The loan’s security is guaranteed by the Credit Guarantee Fund Scheme or by collateral security rules laid up for Stand-Up India Loans.
3. Working Capital - Working capital amounting to INR 10 lakh shall be sanctioned through overdraft. Any amount ranging over 10 lakh will be sanctioned through Cash Credit limit.
4. Repayment - Borrower needs to repay the loan within 7 years since the grant date. Maximum moratorium period - 18 months.
5. Margin Money – The borrower needs to bring in at least 10% of the project’s total cost, while the Scheme will envisage 25% margin money which will be in convergence with eligible State / Central schemes.
6. Rate of Interest – The interest rate depends on the project’s category. It will account to the lowest applicable rate and shall not exceed the sum of 3% tenor premium and base rate (MCLR).

How to apply for loans under Stand-up India Scheme?

Borrowers can reach out to any branch of the Scheduled Commercial Banks to fund their start-up through Stand-up India scheme. They can either visit the branch directly or through Lead District Manager ((LDM) or Stand-Up India portal.

Documents required for Stand- Up India loan Application

  1. Identity proof- PAN Card/Voter’s ID Card / Driving License / Passport
  2. Address proof of business
  3. Address Proof of residence- Passport/ Recent electricity bill / telephone bills / voter ID Card of Proprietor or Director’s partner/ property tax receipt
  4. Company’s Partnership Deed of partners/ Articles of association and Memorandum of association.
  5. MSME/ SSI registration if necessary.
  6. Photocopies of title deeds/lease deeds of all the properties that are offered as collateral and primary securities.
  7. Proof for establishing whether the borrower belongs to the eligible Category (SC/ST/Woman).
  8. Certificate of incorporation issues by the ROC for establishing whether the majority stake of the holding company is in the name of a person belonging to Women/ SC/ST category.