Karnataka Start - Up Policy

Apart from the initiatives taken by the Government of India, State Governments have also been pro – active in creating a conducive environment for startups, to attract entrepreneurs to launch their business from their states.

For instance, the state of Karnataka had launched its startup policy (KSP) prior to the introduction of the Action Plan by Government of India. KSP provided for self - certification under labour laws even prior to the introduction of the Action Plan. The definition of startup under KSP is different from the definition under the Action Plan. KSP recognizes only technology based startups which satisfies the following conditions for benefits discussed under KSP:

i.                    The startup must not have been registered/incorporated for more than 4 (Four) years (Bio – technology companies have extended period of seven years).

ii.                  The company/entity should be registered in Karnataka under the Karnataka Shops and Commercial Establishment Act, 1961.

iii.               The company employs at least 50 (fifty) per cent of its total qualified workforce in Karnataka, which shall not include contract employees.

iv.               The turnover of the startup has not exceeded fifty crores.

Some of the key features of KSP are mentioned below:                         

i.                     The government will provide grants and financial assistance to all professional and post – graduate institutions for setting – up new age incubation network (NAIN) which would be networked and connected to a common portal.

ii.                   Setting up of Technology Based Incubators (TBIs) in institutions of higher learning with well-developed Research and development facilities to foster a strong link between R&D and commercialization of technologies so developed.

iii.                 Funding in the form of Grant-in-aid limited to a one time grant of upto Rs. 50 lakhs to encourage innovators who may need early stage funding to stimulate commercialization of research discoveries.

iv.                 Creating a fund of funds which will invest in venture funds that invest in startups in various sectors.

v.                   self-certifications under the following Acts and rules framed there under barring inspections arising out of specific complaints:

a.         The Factories Act 1948

b.        The Maternity Benefit Act 1961

c.         The Karnataka Shops & Commercial Establishments Act 1961

d.        The Contract Labour (Regulations & Abolition) Act 1970

e.         The Payment of Wages Act, 1936

f.          The Minimum Wages Act, 1948

g.        The Employment Exchanges (Compulsory Notification of Vacancies) Act 1959

Similarly, state governments in Andhra Pradesh and Odisha have also framed their respective state policies with a view to develop the ecosystem in their state and attract investment and create employment in the state.

Conclusion

The initiative taken by the state governments is commendable as the state governments compete with one another to provide infrastructure and also take measures to ease the compliance requirements under the state legislations.