PROCEDURE FOR RECOGNITION OF START - UP UNDER THE START UP POLICY

In my previous post I had explained the conditions to be satisfied by an entity to qualify as a start - up under the start - up policy. 

In this post, the process for recognition of start - ups is explained:

Startups seeking recognition are required to submit one of the following documents along with their application:

a) a recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator established in a postgraduate college in India; or

b) a letter of support by any incubator which is funded (in relation to the project) from Government of India or any State Government as part of any specified scheme to promote innovation; or

c) a recommendation (with regard to innovative nature of business), in a format specified by Department of Industrial Policy and Promotion, from any Incubator recognized by Government of India; or

d) a letter of funding of not less than 20 per cent in equity by any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network duly registered with Securities and Exchange Board of India that endorses innovative nature of the business. Department of Industrial Policy and Promotion may include any such fund in a negative list for such reasons as it may deem fit; or

e) a letter of funding by Government of India or any State Government as part of any specified scheme to promote innovation; or

f) a patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of business being promoted.

Recognition through mobile app: The Notification issued by GOI also provides for recognition through a mobile app/portal[3] of the Department of Industrial Policy and Promotion.

Once such application with relevant document is uploaded, a real-time recognition number will be issued to the startup.

Penalty for uploading forged documents:

If on subsequent verification, such recognition is found to be obtained without uploading the document or uploading any other document or a forged document, the concerned applicant shall be liable to a fine which shall be fifty per cent of paid up capital of the startup but shall not be less than Rupees 25,000.

Conclusion:

It is understood that DIPP has thus far recognized 798 Startups and 10 Startups have been approved for availing tax benefit by IMB[1].

While the number of startups recognized under the scheme does not tally with the efforts taken by the government, the requirement in the nature of recommendation or a letter of support from an incubation center or an investor for seeking recognition has ensured that only those startups which have the potential for growth are recognized under the Action Plan.

(Contact the author @ muthukumaran.adv@gmail.com for any queries or comments)

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[1] Start – up status report published by DIPP in http://startupindia.gov.in/status.php

[3] http://startupindia.gov.in/ is the official website launched by Government of India for the purpose of recognition of startups.