Definition of “start-up” under the start-up India initiative

Ministry of Commerce and Industry through a notification clarified the definition of start-ups under the start-up India initiative. An entity as per this notification shall be considered as a Startup if it fulfills all of the following:

1. Upto a period of seven years from the date of incorporation/registration, if it is incorporated as a private limited company or registered as a partnership firm or a limited liability partnership in India. In the case of Startups in the biotechnology sector, the period shall be up to ten years from the date of its incorporation/ registration.
2. The turnover of the entity for any of the financial years since its incorporation/ registration has not exceeded Rs. 25 crore.
3. The entity is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

The notification clarified that an entity formed by splitting up or reconstruction of an existing business shall not be considered as a startup.

The process of recognition of an eligible entity as startup has also been provided which is as follows:

1. A Startup has to make an online application over the mobile application or portal set up by the Department of Industrial Policy and Promotion.
2. The application shall be accompanied by—

1. 1. 1. a copy of Certificate of Incorporation or Registration, as the case may be, and
      2. a write-up about the nature of business highlighting how it is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.

The Department of Industrial Policy and Promotion may, after calling for such documents or information and making such enquires, as it may deem fit, recognise or refuse the eligible entity as a Startup.