4 ways startups will benefit from Budget 2021-22, DPIIT Secy explains


Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Guruprasad Mohapatra on Friday said several measures that were announced during the Budget this year will strengthen the start up ecosystem.

Mahapatra pointed out the 4 things announced at the Budget that can strengthen the start-up culture in the country

Firstly, the budget incentivized the incorporation of One Person Companies (OPCs) by amending the Companies Rules to allow such companies to grow without any restrictions on paid-up capital and turnover.

Secondly, the provisions permit the conversion of One Person Company into a Public Company or a Private company anytime, removing the compulsory wait period of two years. It will substantially help startups to grow and enhance their ease of doing business.

Thirdly, NRIs will also be able to incorporate OPCs in India, which was not allowed earlier. The amendments also reduce the residency period to 120 days from 182 days for NRIs, for being considered as a resident in India. This would help a number of overseas Indians establish businesses in India.

These amendments will be effective from 01 April 2021.

Fourthly, the establishment of the Credit Guarantee Fund for providing portfolio guarantees under CGSS is expected to provide an incentive to financial intermediaries to lend to Startups. This will result in increased availability of funding for Startups further strengthening innovation and entrepreneurship culture in the country.

The Seed Fund to an eligible startup by the incubator shall be disbursed as follows

Up to 20 Lakhs as a grant for validation of Proof of Concept, or prototype development, or product trials.

The grant shall be disbursed in milestone-based installments.

These milestones can be related to the development of a prototype, product testing, building a product ready for market launch, etc.

Up to Rs. 50 Lakhs of investment for market entry, commercialization, or scaling up through convertible debentures or debt or debt-linked instruments.

(With inputs from agencies)

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