Start ups are being welcomed by state governments

START-UPS ARE BEING WELCOMED

BY STATE GOVERNMENTS

Introduction 

One of the key initiatives of the NDA government at the center is the Start-up India action plan.

This program is supposed to fuel entrepreneurship, economic growth and generate employment.

Some states like Karnataka, Andhra Pradesh and Maharashtra have always had an edge when it comes to entrepreneurship given that their state capitals are recognized as hubs of industrial and financial activity.

Bangalore was anyway the start-up hub of the country while Mumbai, Gurgaon and Noida in the national capital region also boast a vibrant start-up community. But the respective state governments had no role to play in their success.

While all the states are making a lot of media noise, only a handful few have a well-designed and complete start-up policy.

Let us take a closer look at which states are in the “action” mode.

Gujarat  Gujarat: The Gujarat government has announced the following benefits  Plan to establish 50 incubators to help as many as 2,000 start-ups over the next five years and attract Rs 7,000

crores.  Interest subsidy of 9% each year within the limit of Rs 2 lakh and marketing assistance of Rs 1 lakh.  Other incentives include a corpus of Rs 1 lakh for product development and lease rental subsidy of Rs 15 per

square feet each month.  Government will also give Rs 2 lakh for domestic patent and Rs 5 lakh for international patent registration.  Allot 10 lakh sq. ft. of land and 50% capital investment assistance with a cap of Rs 50 lakh for the incubators.  Incubators will be entitled to Rs 5 lakh each year as mentoring assistance and Rs 1 crore to procure software.  100% reimbursement of stamp duties and registration fees.

West Bengal  West Bengal: The West Bengal government has announced the following benefits

The state has a website, http://startupbengal.in/, for all stakeholders in the start-up ecosystem.  It came out with a start-up policy early this year, defining various incentives and procedures effective from 2016 to

2021.  The state promises to set up incubators and an Entrepreneurship Development Centre Network (EDCN) in association

with educational institutions and universities.  The state government will facilitate creation of a network of kick starter funds for monthly sustenance or early-stage

funding to start-ups and will reimburse the cost of patent application.  The state has a venture capital fund, in which around 20% of the capital is earmarked for start-ups.  Investment banks facilitating investments by venture capital and private equity funds in West Bengal-based start-ups

will get a special fiscal incentive of 1% of the invested amount.  The government has also promised a special fiscal incentive to incubators, amounting to 2% of the investment received.

Telangana  Telangana: The Telangana government has announced the following benefits

The Telangana government will hold an event in August, similar to Prime Minister Modi's Start-up India programme in January this year.  The state's T-hub, a technology incubation center, houses 800 start-ups and may set up an outpost in Silicon Valley soon.  Second and a third phases of the T-Hub are also planned.  The government plans to develop a million square feet of workspace for start-ups over the next five years.  It also plans to bring on board 20 global accelerators and incubators to build plug-and-play workspaces in the public-private

partnership mode.  Altogether, it plans to support around 5,000 start-ups, including 1,000 tech start-ups, 400 clean-tech ventures and 300

electronics start-ups.  The state has an academy for entrepreneurial training and an Rs 2,000 crore innovation fund for startups. There is a

separate provision of Rs 250 crore for seed funding.  Start-ups, with annual turnover of up to Rs 50 lakh, and incubated with government support, will be reimbursed service tax.

Uttar Pradesh 

Uttar Pradesh: The UP government has announced the following benefits The government has set up an incubator named 'IT UPVAN'.

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Since a majority of the state's population is in rural areas, it has set up rural incubators and training centres, known as E-skill Entrepreneurship Training Units.

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The government is creating an initial corpus (seed fund) of Rs 100 crore to promote incubators and mobilize startups.

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According to the 'Incubators-Fund of Funds-Start-up Entrepreneurs' model adopted by the state, the government will give funds to incubators and venture capitalists to invest in start-ups.

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The start-up policy divides the state in three tiers; tier I includes Noida and Greater Noida, tier II includes Lucknow, Agra, Kanpur, and other cities with a population of over 2 million, and tier III includes cities with less than 2 million population.

Karnataka 

Karnataka: The Karnataka government has announced the following benefits The state government seeks to make incubators a part of selected colleges.

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It has also set up a Karnataka Start-up cell.

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Under the state government's rules, a start-up should be technology-based, registered in Karnataka and should employ 50% of its total qualified workforce in Karnataka.

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The start-up must not have been registered for more than four years and seven years in the case of biotechnology companies.

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The start-ups in government-supported incubators with annual turnover less than Rs 50 lakh for the first three years will be eligible for reimbursement of service tax, value-added tax and central sales tax.

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The state also reimburses 30% of the cost incurred on international marketing.

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Besides, it has the Karnataka Information Technology Fund to support startups and it has said that it will match the funds raised by the incubators from the central government.

Kerala 

Kerala: The Kerala government has announced the following benefits It was in Kerala that India's first telecom incubator, Start-up Village, was set up in 2012.

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The state government's start-up policy—Kerala IT Mission—was announced in 2014. As per the policy, 1% of the state's annual budget will go to 'youth entrepreneurship activities' till 2019.

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While encouraging banks and financial institutions to lend to start-ups, the state government has said it may participate in approved venture capital funds.

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Moreover, the state will match the central government's funding to incubators.

Tamil Nadu, Andhra Pradesh, and Rajasthan 

The Tamil Nadu government recently signed an agreement with IT industry body Nasscom to set up the first start-up warehouse in the state to house up to 50 start-ups.

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In Andhra Pradesh, a single-window clearance unit is being set up to grant approvals and another for tax and registration.  The state has an Rs 100 crore Initial Innovation Fund for entrepreneurs. It is also setting up a joint incubation center and smart city innovation hub in the coastal city of Kakinada in association with Chinese firm ZTESoft.

Rajasthan aims to help incubate at least 2,000 technology start-ups. The incubation center of RIICO at Jaipur called, 'Start-up Oasis' is the focal point of its start-up policy.  Several other states are reworking their existing start-up policies. Tax sops, concessions in labor regulations and promise of a single-window clearance to start-ups are the mainstay of these programmes.

Some states have set up venture capital funds and incubation centers.

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