Government Assistance towards Project Management for Startups

An understanding of the possible money streams into a particular project and the possible expenditure streams out of the same is essential to structure the finance. Such understanding would be based on an analysis of the legal framework governing the project, all of the project’s documentation including all government approvals with regard to the implementation and financing of the project and the finance documentations.

Project finance is quite often channelled through a project company known as special purpose vehicle or project development vehicle. Internationally, in addition to a private limited company, a limited company, a partnership and an unincorporated entity structure are all recognized as suitable project development vehicle. However, in India, a private limited company is regarded to be an appropriate project development vehicle as it ensures limited liability for the developers of the project, enables the shareholders to incorporate the various terms and conditions agreed to between them in the articles of association of the project company, thereby binding not only the shareholders themselves but also the company to such agreed terms. Besides, a private limited company also has greater avenues open for equity and loan financing.

An agreement between the project company and a public-sector entity (the contracting authority) is called a concession deed. The concession agreement concedes the use of a government asset (such as a plot of land or river crossing) to the project company for a specified period. A concession deed would be found in most projects which involve government such as in infrastructure projects. The concession agreement may be signed by a national/regional government, a municipality, or a special purpose entity set up by the state to grant the concession. Examples of concession agreements include contracts for the following:

• A transportation system (e.g., a railway / metro) for which the public pays fares to a private company).
• A toll-road or tunnel for which the concession agreement giving a right to collect tolls/fares from the public or where payments are made by the contracting authority based on usage by the public.
• Ports and airports where payments are usually made by airlines or shipping companies.
• Utility projects where payments are made by a municipality or by end-users.
• Other public sector projects such as schools, hospitals, government buildings, where payments are made by the contracting authority.

Govt. Assistant

Simple process

The government of India has launched a mobile app and a website for easy registration for startups. Anyone interested in setting up a startup can fill up a simple form on the website and upload certain documents. The entire process is completely online.

Reduction in cost

The government also provides lists of facilitators of patents and trademarks. They will provide high-quality Intellectual Property Right Services including fast examination of patents at lower fees. The government will bear all facilitator fees and the startup will bear only the statutory fees. They will enjoy 80% reduction in the cost of filing patents.

Easy access to Funds

A 10,000 crore rupees fund is set-up by government to provide funds to the startups as venture capital.  The government is also giving guarantee to the lenders to encourage banks and other financial institutions for providing venture capital.

Tax holiday for 3 Years

Startups will be exempted from income tax for 3 years provided they get a certification from Inter-Ministerial Board (IMB).

Apply for tenders

Startups can apply for government tenders. They are exempted from the “prior experience/turnover” criteria applicable for normal companies answering to government tenders.

R & D facilities

Seven new Research Parks will be set up to provide facilities to startups in the R&D sector

No time-consuming compliances

Various compliances have been simplified for startups to save time and money. Startups shall be allowed to self-certify compliance (through the Startup mobile app) with 9 labour and 3 environment laws.

Tax saving for investors

People investing their capital gains in the venture funds setup by the government will get exemption from capital gains. This will help startups to attract more investors.

Choose your investor

After this plan, the startups will have an option to choose between the VCs, giving them the liberty to choose their investors.

Easy exit

In case of exit A startup can close its business within 90 days from the date of application of winding up.

Meet other entrepreneurs

The government has proposed to hold 2 startup fests annually both nationally and internationally to enable the various stakeholders of a startup to meet. This will provide huge networking opportunities.  

Startups are being highly encouraged by the government. The benefits enjoyed by them are immense, which is why more people are setting up startups.

Different Schemes:

Mudra Bank:

The Micro Units Development Refinance Agency (MUDRA) Bank is a credit facility launched to support rural start-ups. Many small-scale foods and beverage start-ups have succeeded due to support from the MUDRA scheme.

The bank falls under the head of the Pradhan Mantri Mudra Yojana, where it provides loans of Rs 10 lakh to small ventures without any collateral security.

Aspire Bank:

India always aims to improve the rural region by launching plans to support the poor. ASPIRE is one such plan which falls under the MSME, which targets the enthusiasm for innovation and development, mainly in the Agro-industry.

The funds allocated for this plan are being used at the district levels, to allow renewed employment and value generation in rural areas.

Ministry of Skill Development and Entrepreneurship

This Ministry and its wise allocation of resources show India’s dedication to promote entrepreneurship. A Ministry made to take care of and cater to the startup world, continuously plans skill development sessions, tutorials, events, and seminars while also looking after gap funding.

This helps many individuals to find their interests and launch appropriate ventures via creative ideas

Atal Innovation Mission

Setup by Niti Aayog, the idealogy of this Mission is to create cooperation between state, central, and local innovation schemes and execute entrepreneurship spirit right from schools to corporates.

Atal Tinkering Labs, Atal Incubators, and Atal New India Challenges are some of the initiatives under this mission, to boost startups in India and also mentor them.

Ebiz Portal

Launched in 2013, e-Biz is a one-of-a-kind portal that allows Government-to-Business interactions (G2B).

It is an integrated mission mode project which targets to collate and connect more than 200 different services on one online platform. With 24*7 online functioning, it acts as one single forum for all transactions, clearances, and activities from both parties.

DIDF

The Dairy Processing and Infrastructure Development Fund of DIDF is a fund structure under NABARD by GoI where the primary businesses of Milk producing companies, milk unions, etc. will find support.

Launched in December 2017, the objectives of this initiative are to provide technological improvements, efficiency, and consolidation to milk processing units and diary units.

Credit Guarantee Scheme for Startups

Commonly known as CGSS, this scheme also focuses on providing financial stability to micro and small industries.

It provides loans with zero collateral, with additional help in the form of subsidized interest rates. The scheme has been known to target manufacturing units, while also managing a corpus of Rs 100 lakhs.

Multiplier Grants Scheme

Launched under the Department of Electronics and Information technology, MGS focuses on increasing Research and Development to develop key products and packaging structures.

The scheme connects business houses and academicians, while also giving support to any developed product which can go commercial. Depending on the association tenure, grants of Rs 2-3 crores are given.