Starting a business in India has become much easier over the years, thanks to the introduction of various policies and initiatives from the government. There are various steps that need to be followed in order to set up a business successfully in India, and this article will walk you through the whole process.
1. The first step towards setting up a business in India is to choose the right legal structure and register the business. Depending on the type of business, the best legal structure may vary. For instance, a sole proprietorship is suitable for small businesses, while a private limited company is better suited for larger businesses. Once the type of business is selected, you will have to register the company under the Registrar of Companies (ROC) with the Ministry of Corporate Affairs. You will need to provide certain documents, such as proof of identity, memorandum and articles of association (MOA and AOA), proof of address and PAN card.
2. Once the business is registered, the next step is to acquire the required licenses and permits from the various government agencies. This includes a trade license from the local municipal authority, GST registration and UdyogAadhaar certification for MSMEs.
3. After following the above steps, the business must set up the necessary infrastructure by renting or buying space, setting up office and purchasing any essential equipment and materials. Banks also need to be approached for setting up accounts and getting a line of credit for the business. Last but not the least, the business must appoint employees, depending on the type and size of the business. In India, businesses must mandatorily register with EPFO, Employees State Insurance Corporation (ESIC) and Professional Tax. This ensures that the employees receive their entitlements as per the Indian laws.
In India, a startup can initiate their business no matter which region or state they’re based in, but few states provide attractive incentives and schemes to facilitate the companies’ operations through various Startup State Incentive Schemes. Among them, the states of Uttar Pradesh, Karnataka, Maharashtra, Goa, and Telangana have some of the best offerings for startups.
Uttar Pradesh, the state government has launched a Startup Yatra, which is designed to offer incentives to startups in the state. The startup yatra provides subsidies, grants, incubation and other benefits. The government also organizes various startup fests, seminars and workshops to promote and support the innovative spirit of budding startups. There is also a dedicated ‘Startup Mission’ in place to support and guide the startup ecosystem in the state. The UPITDC (Uttar Pradesh Information Technology and Development Council) also offers support to startups by providing access to new technologies, market and investors. List of initiatives taken by the state to support startups are as under:
a) Interest-Free Loans: Uttar Pradesh offers interest-free loans for startups for a maximum period of 5 years. The amount is up to Rs. 25 lakhs.
b) Freedom from Stamp Duty: Under the UP Industrial Investment Promotion Policy 2017, startups in the state can avail of exemption from stamp duty for 3 years.
c) Tax Exemptions: Startups get sales tax and stamp duty waiver for a period of up to five years.
d) Technological Assistance: Startups can also avail technological assistance from the Centers of Excellence especially dedicated to them. Under this, they get help on different issues like Market Research, Intellectual Property Rights, HR Development, etc.
e) Market Linkages: Startups can choose to be a part of industry-government partnerships in the form of mentoring and market linkages. These are important for startups to grow and enter new markets.
f) Incubator and Co-working Spaces: Uttar Pradesh also provides facilities like co-working spaces and incubators to the startups in their areas. They also have access to expert advice and mentorship.
g) Government Support for Mergers and Acquisitions: Startups in the state can avail of assistance from the UP State Investment Promotion Board for mergers and acquisitions.
h) Research Programs: Startups can also avail of UP Government’s Research and Development program in order to develop and innovate their products.
i) Employment/Training Programs: Employing local people and providing employment and training opportunities to them is a major objective of Uttar Pradesh Government. The Government provides employment and training subsidies to startups that employ local people.
j) Reimbursement of Power Tariff: Startups can avail of a 50% power tariff rebate for up to 10 years for designated areas. This is provided for a better economic environment and to increase investment.
Karnataka, known as the Silicon Valley of India, has been focusing on encouraging startups and small businesses to drive economic as well as technological growth, to nurture entrepreneurship and create job opportunities. The state of Karnataka provides numerous incentived through its Start-up Karnataka scheme. This scheme provides financial aid by way of reimbursement of the Goods and Services Tax (GST) up to two lakhs. There are several other perks such as equity investments, seed grants, shared workspace, and access to mentors, subject to terms and conditions.
Maharashtra, known as the financial capital state of India, hosts some of the biggest industries. This state provides extended support to innovative startups and MSMEs through its Start-up Maharashtra initiative. This involves financial assistance through Subsidy on Interest and other special benefits to select projects. The purpose of this initiative is to enable the companies to fight back competitively in the growing market.
Goa is India’s favorite tourist getaway, but this state also provides an impetus for small businesses to kickstart their operations. Through their Startup Goa scheme, Goa provides innovative MSMEs and startups a risk-free environment to start their business with the help of a grant in aid, financial and tax rate exemptions, shared workspaces, and equity investments, to name a few.
Last but not least, Telangana has emerged as a major center for innovative startups. Its Start-up Telangana program focuses on creating economic growth in the form of jobs and business opportunities through the state’s incubator, Startup T-Hub. This hub provides startups with funding, mentorship, and access to technology resources and helps build and accelerate innovative businesses.
In conclusion, no matter which state you choose, India has some of the best state incentive schemes for startups. Setting up a business in India is a relatively hassle-free process if all the steps are carefully followed. The above article provides a detailed overview of the complete process, making it easier to understand and follow. The process can be daunting if attempted without proper guidance, and thus it is recommended that businesses seek the assistance of qualified professionals to ensure smooth operation and success.
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Disclaimer : “Neither this article nor the information contained herein shall in any way be construed as forming a contract or shall constitute professional advice required before acting upon any matter. CA Sharad Kumar Sharma has taken all due care in the preparation of this article for accuracy in its contents at the time of publication. However, no liability shall be accepted by him in the event of any direct, indirect or consequential damages arising out of or in any way connected with the use of this article or its contents.
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