India is considering an expansion in the definition of start-ups to promote innovation in deep-tech sectors. Government sources have told CNBC-TV18 that an expanded definition of start-ups may include aspects of AI, deep-tech and cooperatives, with an allow start-ups to pivot to deep-tech for growth.
Sources explained that the expanded definition of start-ups aims to incentivise more companies to innovate. Being recognized as a start-up by the Department of Promotion of Industry and Internal Trade (DPIIT) makes companies eligible for benefits under several schemes.
Also Read: Stocks to Watch for Jan 29: L&T, Gland Pharma, SBI Card, M&M Fin, RVNL and more
As per the website of Startup India, a company must meet the following criteria to be considered eligible for DPIIT startup recognition:
Company Age: The period of existence and operations should not exceed 10 years from the date of incorporation.
Company Type: Incorporated as a Private Limited Company, a Registered Partnership Firm, or a Limited Liability Partnership
Annual Turnover: Should have an annual turnover not exceeding ₹100 crore for any of the financial years since its incorporation.
Original Entity: An entity should not have been formed by splitting up or reconstructing an already existing business.
Innovative & Scalable: Should work towards development or improvement of a product, process, or service and/or have a scalable business model with high potential for the creation of wealth and employment.
On occasion of the 10th anniversary of the launch of the Startup India initiative on 14th January, DPIIT Secretary Amardeep Singh Bhatia had said that start-ups got over 3.8 times funding from the private sector, compared to funds disbursed by existing government schemes.
He indicated that the number of start-ups has grown from around 400 in 2016 to over 2 lakh, attributing the growing in the ecosystem of Alternate Investment Funds (AIFs) to the fund of funds scheme for recognised startups along with incentives like income tax benefits under the Startup India initiative.
Stating that R&D in labs is percolating to incubators, he said that he was “wary” of using the word “unicorn” for successful start-ups, as the valuation of companies can change over time. Indicating that focus continues on deep-tech to increase manufacturing through access to domestic market, the DPIIT expects new manufacturing facilities with deepening of supply chains which may lead to new products being manufactured in the country. The Secretary pointed out that start-ups are being looked at to innovate as well as provide access to facilities to lower costs and build components for big companies.
Over the past few months, the DPIIT is learnt to have met several funds which are interested in providing long term patient capital to Indian start-ups, over and above the ₹1 lakh crores of direct funding for R&D, private funding, as well as funds from other schemes. With the DPIIT linking R&D labs with the startup ecosystem, measures have been announced to promote deep-tech startups engaged in deep research to develop commercial products.
Stating that $51 billion via the Foreign Direct Investment (FDI) route came into India in the past 6 months, the Secretary said that the DPIIT is facilitating 75 grand challenges this year, which will be sponsored by corporate houses.
