Here is a brief list of instructions for those aiming to become part of India’s entrepreneurial hub
India has the 3rd largest startup ecosystem in the world, with consistent annual growth of 12-15%. The startup ecosystem in India has been booming lately, with the number of tech startups significantly increasing. Namely, there are 2-3 tech startups born every day. Although 2020 forced 15% of young enterprises out of business, that difficult year also brought the country 11 unicorns (compared to 9 the year before).
Moreover, the government continues to facilitate startup growth with a set of favorable policies. Capital gains exemption for investment in startups, liberalization in relation to one-person companies (OPCs), Startup India Seed Fund Scheme, and other proposed initiatives help the startup landscape strive and prosper within the country’s borders.
To begin with, you should officially register your business as a legal entity. You must choose a suitable incorporation type such as a Private Limited Company, One Person Company, a Partnership firm, or a Limited Liability Partnership. Please bear in mind that not every kind of newly-established business is considered a startup in terms of government tax exemption schemes.
There are 4 main steps to acquire a company registration certificate:
- Acquire Digital Signature Certificate (DSC)
- Acquire Director Identification Number (DIN)
- Fill an eForm or New user registration
- Incorporate the company
You can find detailed information on the website of the Ministry of Corporate Affairs.
Incorporating a company through Simplified Proforma for Incorporating Company electronically (SPICe-INC-32), with eMoA (INC-33), eAOA (INC-34), is the default option and most companies are required to be incorporated through SPICe only. A foreign company can establish a business in India by filing eForm FC-1 as well.
2. Online registration
Almost six years have passed since the Startup India initiative was announced by the government. The result is the largest online entrepreneurship platform where startup founders can avail legal benefits and grants, network with other participants, connect with incubators and accelerators, and access various free tools and resources. Any entity that has at least one registered office in India can register itself on the hub.
Therefore, after registering a form of ownership, you should register your business as a startup on the Startup India platform.
You will be asked to fill out a basic form with your name and contact details. Then general information about your company is required. Next, enter the OTP which is sent to your e-mail, and proceed with other business details such as startup as the type of user, name, and stage of the startup, etc. Some documents such as the certificate of incorporation or a brief business description will need to be uploaded too. After entering all those details, the Startup India profile is created.
3. DPIIT recognition
Eligible companies can get recognised as startups by the Department for Promotion of Industry and Internal Trade (DPIIT), in order to access a range of tax benefits, easier compliance, IPR fast-tracking, and other related services. 82% of all active startups in India are registered by DPIIT.
Under the Startup India Action Plan, startups
- should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership
- should exist up to 10 years from the date of its incorporation
- should have a turnover of less than INR 100 Crores in any of the previous financial years
- should be working towards innovation/ improvement of existing products, services, and processes, and should have the potential to generate employment/ create wealth
- should be newly-formed, but not formed by splitting up or reconstruction of an existing business
To apply for recognition, click on the “Get recognized” button.
In a Startup Recognition Form, the following details are required: entity details, office address, personal details of the authorized representatives, partners and directors, information about startup activities and self-certification. You may also need proof of the concept like a pitch deck/website link/video (in case of a validation/ early traction/scaling stage startup), patent and trademark details, or PAN Number issued by the Income Tax Department which is mandatory for high-value financial transactions.
Upon applying you will immediately get a recognition number for your startup. The certificate of recognition will be issued after the examination of all your documents which is usually done in 2 days after submitting the details online.
If false information is provided, or the required document is not uploaded, the discrepancies can incur a fine from Rs 25,000 up to 50% of your paid-up capital. Your certificate can be revoked without prior notice.