The Government Gives A Proper Definition To The Word ‘Start-up’

The Logical Indian

February 26th, 2016

Following the much welcomed “STARTUP INDIA” campaign, the government has come up with the definition of what a “Startup” is. Governments stressing on “innovation” is highly appreciated. According to the government notification, an entity will be identified as a startup.

  1. Till up to five years from the date of incorporation.
  2. If its turnover does not exceed 25 crores in the last five financial years.
  3. It is working towards innovation, development, deployment, and commercialization of new products, processes, or services driven by technology or intellectual property.

If you are planning to structure a part of your business into a separate entity, it won’t be called a startup as it already forms a part of a registered entity.

In order to obtain tax benefits, one has to obtain a certificate from the Inter-Ministerial Board of certification. The board consists of the following:

  1. Joint Secretary, Department of Industrial Policy and Promotion.
  2. Representative of Department of Science and Technology.
  3. Representative of Department of Biotechnology.

Defining startups is a very important step,  it segregates who can and cannot be considered as startups. The segregation ensures only deserving candidates gets the benefits of the same. Defining startups has always been a challenge,  there have been many definitions internationally and there is still consensus on  the same. Lack of definition could crowd the space with new entities created out of mergers and acquisitions among many other reasons.

For example
Stanford professor Steve Blank describes it as a “repeatable and scalable business model”

Jan Koum, the co-founder of WhatsApp says startup is a “feeling” while Adora Cheung says “It is a state of mind where people join your company and are still making the explicit decision to forgo stability in exchange for the promise of tremendous growth and excitement of making an immediate impact.”

The Logical Indian welcomes the step taken, however, given the ambiguity in the definitions of startup, we should be open to a further amendment to the definition of ‘startup’. We request the government to implement ‘Startup India’ in its true spirit and ensure the benefits reaches aspiring entrepreneurs. We wish the government good luck on the implementation of the scheme.

Read more at Yourstory.

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