Startups.v2 – DIPP Relaxes The Definition And Process For Recognition As A Startup

Introduction

In January 2016, the government rolled out the 'Startup India Action Plan' towards its ambitious 'Startup India-Stand Up India' manifesto. It laid out several incentives and benefits to encourage entrepreneurship within the country. Consequently, the Department of Industrial Promotion and Policy (DIPP) vide its notification dated 17 February 2016 (2016 Notification) defined 'startups' for the first time, laid down the eligibility criteria for an entity to qualify as a startup including for availing tax benefits, and the process for recognition or registration of startups to avail the incentives provided by the government.

However, in spite of several such initiatives, the startup ecosystem in India has not taken-off as expected. This was largely due to excessive regulatory and bureaucratic intervention, with innovation being the primary criteria for qualifying as a startup, the lack of clarity on whether the innovation criteria was to be tested on a