Startup Ecosystem and its Challenges

India ranks globally 3rd in Start-Up ecosystem and also in terms of number of Unicorns. As per the latest data, there are currently 105 unicorns, out of which 44 were born in 2021 and 19 in 2022.

Challenges before the Startup Sector in India

• Lack of funds and credit
• Much regulatory compliance and burden
• Protection of intellectual property
• Tax incentives and exception
• Access to market
• Entry and exit of startup

Government Initiatives

Government introduced Startup India Action Plan to create a vibrant startup ecosystem in the country. Under the plan following schemes are introduced:

• Fund of Funds for Startups (FFS) Scheme: The Government has established FFS with corpus of Rs. 10,000 crore, to meet the funding needs of startups.
• Credit Guarantee Scheme for Startups (CGSS): The Government has established the Credit Guarantee Scheme for Startups for providing credit guarantees to loans extended to DPIIT recognized startups.
• Regulatory Reforms: Over 50 regulatory reforms have been undertaken by the Government to enhance ease of doing business, ease of raising capital and reduce compliance burden.
• Ease of Procurement: To enable ease of procurement, Central Ministries/ Departments are directed to relax conditions of prior turnover and prior experience in public procurement for all DPIIT recognised startups.
• Support for Intellectual Property Protection: Startups are eligible for fast-tracked patent application examination and disposal.
• Self-Certification under Labour and Environmental laws: Startups are allowed to self-certify their compliance under 9 Labour and 3 Environment laws for a period of 3 to 5 years from the date of incorporation.
• Income Tax Exemption for 3 years: Startups incorporated on or after 1st April 2016 can apply for income tax exemption.
• International Market Access to Indian Startups: One of the key objectives under the Startup India initiative is to help connect Indian startup ecosystem to global startup ecosystems
• Faster Exit for Startups: The Government has notified Startups as ‘fast track firms’ enabling them to wind up operations within 90 days.