Centre revises eligibility criteria for start-ups
What’s in the news?
- The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, has notified a revised framework and eligibility criteria for recognising entities as startups.
- Under the new norms, a startup will now be defined as an entity up to 10 years from incorporation with turnover not exceeding ₹200 crore in any financial year.
- For firms recognised as ‘deep tech’ startups, the eligibility window has been extended to 20 years, with the turnover cap raised to ₹300 crore.
- The notification also prohibits a defined startup from investing in activities that are not directly connected to its core mandate of working and creating new knowledge — for instance investing in real estate or “speculative assets,” or shares and securities — unless they are core to the company’s knowledge production.
Criteria for ‘Deep Tech’ Startups
- The government has also given an official definition for what constitutes a ‘deep tech’ startup in India.
- A ‘deep tech’ startup is one that is primarily concerned with producing a solution based on new knowledge/advancements in a scientific or engineering discipline.
- It must spend most of its money on research and development (R&D) activities; owns or is in the process of creating significant novel intellectual property (IP) and taking steps to commercialise the same; faces extended development timelines, long gestation periods, high capital and infrastructure requirements, and carries large technical or scientific uncertainty.
- To be counted as a deep tech startup, companies must apply to the DPIIT for a certificate.
- The DPIIT is the final authority that determines whether a company qualifies as a startup or a deep tech startup.
Inclusion of cooperative societies as eligible entities
- In another key policy change, startup recognition eligibility has now been extended to certain cooperative enterprises to support innovation-led growth at the grassroots level.
- Accordingly, Multi-State Cooperative Societies registered under the Multi-State Cooperative Societies Act, 2002, as well as Cooperative Societies registered under State and Union Territory Cooperative Acts, are now eligible for startup recognition, subject to fulfilment of other applicable criteria.