Historically, Indian startups faced challenges such as funding and regulatory obstacles. However, the Indian government recognised a startup’s capacity for job creation, economic expansion and innovation, resulting in increased investment to support the startup ecosystem. This led them to create a flagship initiative to catalyse international business opportunities in India and startup culture- Startup India.
The Startup India initiative is a government-led program in India aimed at fostering entrepreneurship and supporting startups. It offers several benefits to businesses, including tax exemptions, simplified regulatory compliance, fast-track patent examination, access to funding etc. This initiative not only streamlines market entry but also enhances competitiveness by reducing operational complexities.
The impact of this initiative is summarised in these key highlights from the 2023 Inc42 report on the state of the Indian startup ecosystem:
In this blog post, we will discuss how you can avail the benefits of this scheme and start a startup in India.
How To Register A Startup In India
The first step to registering a startup in India is business incorporation. We recommend reading our detailed guide on ‘how to start a business in India’ before moving ahead.
Here’s a summary for quick reference:
- Choose the right structure: Based on your needs and growth projections, choose between private limited company, public limited company, joint venture company, wholly-owned subsidiary and branch office.
- Gather documentation: Collect the required documents, including Digital Signature Certificate (DSC), Form SPICe+ (for comprehensive form-filling), Director Identification Number (DIN) and drafted Memorandum and Articles of Association.
- Apply for name approval: Use the Ministry Of Corporate Affairs (MCA) reserve unique name (RUN) facility to obtain approval for a unique company name.
- File for company incorporation: Complete the SPICe+ forms on the MCA portal by attaching all necessary documents, paying fees and submitting the application for company registration.
- Obtain PAN and TAN: Upon receiving the certificate of incorporation, you will also receive a permanent account number (PAN) and a tax deduction and collection account number (TAN) for taxation purposes.
- Secure necessary licences: Depending on your business nature, acquire relevant licences and registrations, such as Import Export Code, MSME registration and Software Licence Agreements.
- Open a bank account: Set up a dedicated bank account for financial transactions, providing essential documents like the certificate of incorporation, PAN, TAN, passport and visa details of authorised individuals.
- Register for taxes: Obtain goods and services tax (GST) registration through Form GSTR-5 for compliance with Indian tax laws.
After successfully incorporating your business, proceed to check your eligibility for the Startup India program.
If your business is eligible, move on to the Startup India website. If not, you can benefit from other government schemes or look for alternatives to expanding your business in India with solutions like an employer of record (EOR).
An EOR not only manages compliance and HR operations but also relieves you from the burdensome task of business registration. Rapid, for instance, bridges India’s talent pool for international businesses. This lets you focus on business growth while delegating HR and compliance responsibilities.
Step 1: Register on Startup India
Start by filling out basic details, such as name, email ID, mobile number and a unique password for your profile.
You will receive an OTP via email. You enter that with other details, including type of user, name and stage of the startup, user ID, etc., to create a Startup India profile.
Step 2: Fill DPIIT Recognition Form
After creating a profile, log in with the user ID and password to the same website. You will find the Department for Promotion of Industry and Internal Trade (DPIIT) startup recognition form on the dashboard. You can fill it out here.
- Entity details: In this section, you will enter basic information such as the nature of the business, industry, sector, incorporation number, name of entity, incorporation/registration date and permanent account number (PAN) number.
- Full address (Office): This section demands the full address of the office as per the certificate of incorporation.
- Authorised representative details: Here, you will fill out the details of the director/person filling out the application, including name, designation and contact information.
- Director(s)/Partner(s) details: In this section, you will enter information regarding the partners and directors (up to 15), including their name, gender, DIN/DPIN, contact information and address.
- Information required: This section includes a 360° overview of the business, including the number of employees, startup stage and operational activities. It also includes straightforward questions regarding patent needs and received funding. A significant part involves detailing how your business contributes to employment and wealth generation.
- Startup activities: This is where you will pitch your business and talk in-depth about the problem you solve, your solution, your unique selling proposition and your revenue generation model.
- Self-certification: This last section requires you to self-certify that your startup meets the eligibility criteria and complies with the Startup India program's regulations and guidelines. Here, you will upload the registration certificate and authorisation letter in a defined format.
Once all details are completed, you have to agree to the terms and conditions and make a declaration regarding mergers and acquisitions.
Tip: Be cautious during document uploads; any incorrect, missing, or forged document upon subsequent verification will result in penalties. The fine can amount to 50% of your startup's paid-up capital, with a minimum of ₹25,000.
Step 3: Get The Recognition Number And Certificate
Within 4-5 days, your application will be approved, rejected or returned with remarks.
If it is rejected, analyse the reasons for rejection and reapply. Once approved, you will receive an email alert, recognition number and certificate. Now, you can avail the benefits of the Startup India scheme, which include
- Tax benefits: DPIIT-recognised startups get a three-year income tax exemption during their first decade of operation.
- Self-certification compliance: Startups can self-certify their compliance with environmental and labour laws, reducing the compliance hurdles.
- Fast-track patent examination: DPIIT-recognised startups can expedite patent examinations and enjoy an 80% rebate on patent expenses.
- Funding opportunities: Startups get access to various funding schemes, such as the Fund of Funds for Startups (FFS), which supports funding requirements.
- Government procurement preference: Startups get preference in government procurement, leading to a stable revenue source and credibility in the market.
- Easy winding up: Recognised startups can wrap up operations within 90 days of insolvency application, promoting resource reallocation and encouraging experimentation.
Setting Up A Company In India Becomes Easy With Rapid
‘India added over 1,300 tech startups in 2022 alone and has over 99,000 startups (as of August 2023).’
Even though these statistics reflect a positive startup environment, scaling a startup in India is challenging. Why?
- Navigating through intricate state-specific laws demands legal expertise
- Securing investments requires the potential for rapid scalability
- Acquiring and retaining top talent is competitive, especially in the technology and innovation sectors
But what if you could outsource all compliance regulations and focus solely on expansion?
Rapid take the hassle out of expanding to India, allowing you to focus on what you do best - growing your business. From taxes to employee benefits, it serves as your expansion partner for seamless operations in India. What can it do for you?
- Rapid setup of Indian teams, bypassing legal complexities within weeks.
- Cost reduction through tax-efficient structures, lightening tax burdens.
- Robust asset protection, ensuring complete control and ownership.
- Management of local laws, compliance and employee liabilities, freeing you to focus on core business activities.
Want to know how you can rapidly grow without navigating complex Indian rules and regulations?
Connect with us to understand how Rapid can help you set up your India team.