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Government Relaxes Norms Under Public Procurement For Start-Up MSMEs

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The start ups in India have been witnessing a favourable environment as the Union Government stresses on creating a nation of more job providers than job seekers.

  • Giving a boost to several initiatives including the ‘Stand Up India, Start Up India” and empowering the small entrepreneurs, it has decided to relax procurement norms related to experience and turnover for micro, small and medium start-ups with a view to enabling these ventures to be part of its public procurement.Startups India
  • “If the MSMEs can deliver the goods and services as per prescribed technical & quality specifications, the norms on prior experience and prior turnover will be relaxed for them”, said the MSME press release.
  • This development will enable start-up MSMEs to be a part of the mandatory 20 per cent public procurement.

In order to ensure better implementation of quality management standards/quality technology tools scheme under the National Manufacturing Competitiveness Programme, MSME Ministry has decided to conduct two international study missions in collaboration with CII and Consultancy Development Corporation

Key points: Stand up India-Start up India

  1. Compliance regime based on self certification: The objective of compliance regime based on self certification is to reduce the regulatory burden on startups. This self-certification will apply to laws like payment of gratuity, contract labour, employees provident fund, water and air pollution acts.
  1. Startup India hub: A startup India hub will be created as a single point of contact for the entire startup ecosystem to enable knowledge exchange and access to funding.
  1. Simplifying the startup process: A startup will be to able to set up by just filling up a short form through a mobile app and online portal.  A mobile app will be launched on April 1 through which startups can be registered in a day. There will also be a portal for clearances, approvals and registrations
  1. Patent protection: The government is also working on a legal support for fast-tracking patent examination at lower costs. It will promote awareness and adoption of Intellectual Property Rights (IPRs) by startups and help them protect and commercialise IPRs.
  1. Funds of funds with a corpus of Rs 10,000 crore: In order to provide funding support to startups, the government will set up a fund with an initial corpus of Rs 2,500 crore and a total corpus of Rs 10,000 crore over four years. The fund would be managed by private professionals drawn from the industry while LIC will be a co-investor in the fund. The credit guarantee fund for start-ups would help flow of venture debt from the banking system to start-ups by standing guarantee against risks.
  1. Credit Guarantee Fund: A National Credit Guarantee Trust Company is being envisaged with a budgetary allocation of Rs 500 crore per year for the next four years.
  1. Exemption from Capital Gains Tax: Currently, investments by venture capital funds in startups are exempt from this law. Now, the same is being extended to investments made by incubators in startups.
  1. Tax exemption for startups: Income tax exemption to startups announced for three years
  1. Tax exemption on investments above Fair Market Value
  2. Startup fests : Innovation core programs for students in 5 lakh schools. There will also be an annual incubator grand challenge to create world class incubators
  1. Launch of Atal Innovation Mission: Atal Innovation Mission started to give an impetus to innovation and encourage the talent among the people
  1. Setting up of 35 new incubators in institutions: PPP model being considered for 35 new incubators, 31 innovation centres at national institutes
  1. Setting up of 7 new research parks: Government shall set up seven new research parks – six in IITs, one in IISc with an initial investment of Rs 100 crore each.
  1. Promote entrepreneurship in biotechnology: Five new bio clusters, 50 new bio incubators, 150 technology transfer offices and 20 bio connect offices will be established.
  1. Innovation focused programmes for students:There will be innovation core programs for students in 5 lakh schools.
  1. Panel of facilitators to provide legal support and assist in filing of patent application
  2. 80 per cent rebate on filing patent applications by startups
  3. Relaxed norms of public procurement for startups
  4. Faster exits for startups