Startup India

PM Report

By
Pradhan Meena
Anil goyal
Kunal choudhary(IPG2011054)
Durgniwash

ABV- INDIAN INSTITUTE OF INFORMATION

TECHNOLOGY AND MANAGEMENT
GWALIOR-474 015

Abstract:

India is the second largest populous country in the world with 1.2 billion population
strength. To cover up this large population there exist large potentiality of job market in
India. But According to the latest Asia Pacific Human Development Report, India is facing
severe scarcity of job market; growth in unemployment among young graduates and it will
last for next 35 years. According to Labor Ministry data, around 1 million people enter the
workforce in India every month. To eradicate this scarcity of job market, ours Honorable
Prime Minister Dr. Narendra Modi , announced on 15 th August 2015, Start Up India, Stand
Up India to promote Bank Financing for start ups and offer incentives to boast
entrepreneurship and job creation. This research paper has made a Literature Survey
analysis regarding its Challenges, Prospects and its financing resources. Secondary data
collected from various websites, journals, newspaper articles etc.
Key Words: Unemployment, Start up India, Work Force, Bank Financing, Entrepreneurship.

Introduction:
Start ups have played and continue to play significant roles in the growth, development and
industrialization of many economics all over the world. Startup is flagship initiatiative of the
Government of India, intended to build a strong eco-system for nurturing innovation. Startup will
drive sustainable economics growth and generate large scale employment opportunities and
minimize unemployment.
What is Startup Company indicates?
Startup means an entity incorporated or registered in India not prior to 5 years with an annual
turnover not exceeding Rs 25 core in any preceding financial year , working towards innovation,
development, deployment, or commercialization of new products process or services driven by
technology or intellectual property
Provided that such entity is not formed by splitting up or reconstruction of a business already in
existence.
Provided also that an entity shall cease to be a startup if its turnover for the previous financial
year has exceeded Rs 25 core or it has completed 5 years from the date of incorporation /
Registration.
This definition is applicable only for Government enlisted startup schemes.
In General scene, A Startup Company is a young company that is just beginning to develop.
Startups are usually small and initially financed and operated by a handful of founders or
indivuals.
Paul Graham says that A Startup is a company designed to grow fast

Startup India Hub:

This is created as a single point of contact for the entire startup ecosystem and enables
knowledge exchange and access to funding. It will act as key stake holder in this dynamic world.
The major functions of these Hubs are:
Collaborate with the Central & State Government, Indian & Foreign investors, angel networks,
banks and other financial institutions.
Through their lifecycle with specifics focus on important aspects like obtaining financing,
feasibility testing, business structuring advisory, enhancement of marketing skill and
management evaluation.
Organize mentorship programmes in collaboration with Government Organizations.
Startup India Hub will act as a guide, hold the hands of the young entrepreneurs and walk with
them throughout this journey.

Literature Review:
Thomas Astebro and Irwin Bernhardt (2003) investigate the relation between the survival of new
small business and bank loans. They stated that there is a negative correlation between bank loan
and business survival and positive relation between non banking loan and business survival. This
study is based on the data referring to a set of small business launched in 1987 in U.S.
Thomas Hillmann and Manju Puri (2000) examine the empirical evidences on the impact that
the venture capitalists can have on the development path of new firms. Their study suggests that
there is soft facet to venture capitalists in terms of supporting companies to build up their human
resources within the organization.
Christopher A Pissarides (2001) in his paper studied that the role of company starts up costs for
employment performance. This paper is highly theoretical one. The conclusion is the factors that
can explain the differences in Labor Market performance are structural and should be sought in
the institutional structures of the countries.
Omid Sharifi, Bentolhoda Karbalaei Hossain (2015) in their paper stated that the various
financial challenges faced by the Startups in India. It also depicts the difficulties faced by the
startups at the intial stage. The major findings are major leap in technology have led investors to
raise the bar in terms of how much leg work entrepreneurs are expected to do before even
pitching their companies.

Objective of the study:

a)

Identifying the various challenges faced by the startup Companies

b)

To study about the growth and prospects of Start up India.

c)

To study how far it its growth affecting the Young Entrepreneurs in India.

Research Methodology:

This study is mainly based on the secondary data. These data are collected from various
websites, journals, and newspaper articles. The study is descriptive & conceptual in nature.

Life cycle view of Young Companies:

If every business starts with an idea, young companies can range the spectrum. Some are
unformed, at least in a commercial sense, where the owner of the business has an idea that he or
she thinks can fill an unfilled need among consumers. Others have inched a little further up the
scale and have converted the idea into a commercial product, albeit with little to show in terms of
revenues or earnings. Still others have moved even further down the road to commercial success,
and have a market for their product or service, with revenues and the potential, at least, for some
profits.

Salient Features of Start Up India:

The Government Union Budget allocation of Rs. 1000 core towards self employment and Talent
utilisation (SETU) scheme is amajor boast towards promoting start-ups in the country.
1.

Encourage entreprenuershipamong the youth of India. Each of the 1.25 lakh Bank
branches should encourage at least one Dalit or Tribal Entreprenuer and at least one woman
entreprenuer.

2.

Loans would also be given to help people.

3. Give a new dimension to entreprenuership and help set up a network of startups in the
country.

4.

Interview based selection for low skiiled Government Jobs

5.

Recruitment will be done only on merit basis, must be transparent and through online
process.
6. As a part of Skill India & Digital India Initiative , incentive packages will be given to
manufacturing unit for generation of jobs.

7.

Recruitment will be done only on merit basis, must be transparent and through online
process.
8. As a part of Skill India & Digital India Initiative , incentive packages will be given to
manufacturing unit for generation of jobs.

Growth of Start-ups In India:

India has declared 2010-20 as the Decade of Innovation. The Government has stressed the need
to vocalize a policy to synergies science, technology & innovation and has also established the
National Innovation Council(NIC). India is the 4th largest eco-system in the world for startups
after US, UK & Israel driven by an extremely young diverse and inclusive entreprenuership.
India will reach the 2nd spot after the US as the growth rate of Startups is at high alamring rate.
According to NASSCOM around 11,500 start-ups will come in the country by 2020, creating
over 2.5 lakhs jobs approx. As a result the rate of Unemployment will also decrease. Angel
investors and venture capital funding in India has hit its highest marks.
At Present there are 50 most innovative companies.
The TATA are the only Indian company to find place in the top 50 ranking.
State owned bank have been asked to ensure that each of the 125000 odd branches gives atleast
one loan to a start up. Venture proposal by a dabit or a Inbal enterprise.
Move in India forms shift to small Enterprises.
85nof Indias GDP is accounted for by small enterprises.
45% of Indias total manufacturing output comes from these companies.
Action Plan for Startup India:
Prime Minister Narendra Modi announces Action Plan for encouraging Startups on 16 Jan 2016.
Funding support through Fund-of Funds with corpous of Rs. 10000 core.
Entreprenuers should register a company in one day , against 15-20 days as row.
No tax on Profit, inspection for 3 years
Capital Gain Tax exemption.
Credit Gurantee Scheme.
Easy & Faster Exit Policy.

No tax on Profit, inspection for 3 years

Capital Gain Tax exemption.
Credit

Gurantee

Scheme.

Easy & Faster Exit Policy.

No Capital Gain if money is invested in another start up.
Self certification based compilance for Labour & Environment laws. Set
up of start up India hub for clearance
Mobile apps, portal for registration.
Holding with Govt acting as a friend and colleague.
New intellectual property rights protection. 80% reduction in patent free and fast tracking
patent examination.
Encourage start ups in Government purchase.
Special Scheme for women entreprenuers.
Support bio-technology startups
Programme to encourage innovation amoung students in 5 lakhs Schools.
Building innovation centers at National Institues.
Setting up Research park.
Prospects & Challenges in Start up India:
Government starts disbursing Rs. 25000 core earmarked every where.
Government plans to implement it by 1st April 2016. Challenges include integration of DIN,
TAN, DSC etc.

The action plan envisages exit within 90 days in case of start up in a simple debt structure.
Challenges is getting pass the New Insolvency & Bankruptcy ACT2015.
Cordination with Make in India and Digital India.
Life Insurance Corporation of India(LIC) shall be a co investor in the Funds of Funds.
Encourage seed capital investment in start up . A Start up is faced with no of issues that have
to be dealt with it in order to grow into a successful organization. Apart from planning the
most effective business strategy for this Startup Company is to look at the regulatury
environment and verious legal issues and laws of the country where Startup proposed to be
set up. A Startup business should be protected from spacific risk faced by the sector in which
it operates. Empowered with unique demografic advantages and guided efforts, analysts are
predicting that India will be poised to a position by itself among developed economics with
in the next 10 to 15 years. It provides a huge opertunity to create a dominant position in the
Global Market.
Startup Initiative in India:
E-BIZ Portal: To boost young entreprenuers and too make it easy to start your
business. Budget 2015 has pitched for the white spreed usage of the recently
launched e-biz portal. The portal integrates the regulatory permission at one
source. The use of this portal helps entreprenuers for faster clearance for setting
up of business.
Mudra Bank: Several entreprenuers in the MSME Sector have often complained
about lack of difficulty in getting finances to run their business. So this bank have
been set up for providing finance for Microfinance to the required indivuals.
Atal Innovation Mission: Finance Minister in the Budget 2015 have launched
the Atal Innovation Fund. (AIM). AIM will be an innovators promotion platform
involving academics, entreprenuers, and researches.

Conclusions:
Entrepreneurs provide the energy for the economics growth but it is also true that vibrant
economics have large number of young ideas, business striving to get a foothold in the
market. Startup needs support and encouragement from various perspectives in initial
phase and subsequently the growth phase till establishment on firm footing. Technology
based startup have a significant importance in India. In whole it can be said that Startup
India is a collaborative approach for Young Entrepreneurs & Youth Empowerment. The
limitation of this study is that it is a detailed conceptual analysis about startup India based
on secondary data. More Research can be done about its prospects and benefits of startup
to entrepreneurs by using primary data and other statistical tools. Startup provides a
platform for the entrepreneurs, Financers, Mentors and other stake holder to share ideas,
best practices, develop solution and partnership that benefits India.

References:
DamodaranAswath (2009), Stern School of Business, New York University,Valuaing

Young Startup & Growth Companies: Estimation issues & Valuation

Challenges. Startup India Action Plan, January 2016.
Desai Associates Nishith, Legal Tax Councelling Worldwide, April 2016, Start-Ups:

What you need to know

CMAI Roles in startup India.
Graham Paul, September 2012, Start up Equals Growth, in Grahams essays in
Entrepreneurship.
Au, K, Kwan, HK (2009) Startup capital & Chinese Entrepreneurs. The role of family

Entrepreneurship theory & practices, 33(4), 889-908.

Omid Sharifi, Bentolhoda Karbalaei Hossein, November 2015, Understanding the

Financial Challenges Faced by Startups in India.