In this article, Prakarsh Seth, pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the IPR benefits available under DIPP Startup India Program.

Start-up India

Start-up India is an initiative by the government of India which was first announced by Prime Minister Narendra Modi. This program was formed for the simplification of the process of new entrepreneurs. The three main objectives of this program are

• Simplification and Handholding.
• Funding Support and Incentives.
• Industry-Academia Partnership and Incubation.

This program is organised by Department of Industrial Policy and Promotions (DIPP). The focus area of this scheme is to discard the license raj and focus on simplifying the process pertaining to the domain of Land Permissions Foreign Investment Proposals, and Environmental Clearances.

Start-up Definition

As per the website of start-up India, the following criterion has been given for an entity to qualify as a start-up. Therefore, to avail the benefits under the scheme of start-up India, the following tests have to be passed:

1) The venture shall be started and has not crossed the age of 7 years, which shall be calculated from its date of incorporation/registration. In case of biotechnology firms, the age limit has been increased to 10 years.

2) the incorporation of the venture shall be done as:

a) Private Limited company or
b) Registered Partnership or
c) Limited Liability Partnership.

3) The turnover for any fiscal year shall not exceed INR 25 Crore.

4) The entity’s existence should not have been come into existence via the means of splitting up or reconstruction of a business already in existence.

5) The entity shall be working towards innovation, development or improvement of products or services. It can also be considered as a start-up if the potential of the business succeeding is high or is involved in high employment creation/ wealth creation.

IPR and Start-ups

IPR activity in India has shown significant growth in the last few years. The number of Patents filed has increased to a multiple time. The ministries have taken various initiatives to ensure that the intangible assets which have been registered are protected.

Benefits available for IPR under DIPP

Scheme for Facilitating Start-Ups Intellectual Property Protection (SIPP)

• This Scheme has been started by the government of India to nurture their innovation and creativity.
• This further helps in encouraging and promoting awareness IP in start-ups.
• It helps in promoting technologies in the start-up culture.

Importance of Registration

1) Self-Certification – This is an effective way to reduce the reduce the liability of certification as the start-ups are allowed to self-certify compliance with 9 labour laws and environmental laws. No inspection shall be done, for cases dealing with labour laws, for a period of minimum three years.

2) Start-up Patent application – This fast tracks the process of filing the patents and further grants a rebate of 80% in filing patents. This rebate will be provided on the total value of the patent fees and shall be provided once the patent is filed.

3) Public Procurement – This ensures that the opportunities given for start-ups and experienced entrepreneurs are equal. This has been changes as earlier there was a requirement of having a prior experience and or prior turnover but this has been relaxed for start-ups.

4) Winding Up of the Company– This ensures that the winding up of the company can be done in the period of 90 days under the insolvency and Bankruptcy Code 2016.

5) Investment – this has made possible the availability of INR 10,000 core worth of funds for investments into start-ups via the means of alternative investment.

6) Credit – This ensures that there is an availability of INR 2,000 crore worth o credit for start-ups through national credit guarantee trust or SIDBI over 4 years.

7) Tax exemptions – This ensures that there is a tax exemption of Income-tax for a period of 3 years. Further, this also provides for exemption on capital gain and on investments above fair market value which is made by incubators or angel investors.

8) Learning – This programme will provide opportunities to learn from the experienced and shall also promote the research and innovation among students.

9) Mobile application– The start-up India provides the facility to companies to register via a single platform on the mobile application. This process has resulted in the simplification and has made the process very easy.

How to avail IPR benefits

The ministry of commerce and industry in its recent move, for the purpose of ease of doing business, has stated that the businesses now have to get a certificate of recognition from DIPP. This certificate will be sufficient to avail all the benefits pertaining to IPR which are provided by the start-up India Programme.

This is a welcome move as earlier the budding entrepreneur had to go through an elaborate process of approaching an inter-ministerial board to get the intellectual property benefits.

This announcement was made at the Start-up India State’s conference.

Start-ups have also been made eligible for expedited examination of patent applications.

How to Avail the Certificate of recognition from Department of Industrial Policy and Promotion (DIPP)?

There are two procedures which have been laid out. The first one talks about the scenario wherein there has not been an application of a patent and the other one talks about the scenario where there has been an application for a patent.

For applicants who have NOT filed an application for Patent

The application form is available on the Start-up India website under the registration column.
The following information has to be filed
• Name of the entity
• Nature of the venture- whether it is a private limited company or a partnership or a limited liability company.
• The registration number or the incorporation number depending upon the nature of the venture
• Date of the registration or incorporation
• Address or registered office
• Details of the authorised representative
• Details of the partner

The following documents are also required to support the application
1. Letter of recommendation
2. Letter of support by Incubator

There has been a formation of panel of facilitators for providing assistance and support in filing application for IPR. The facilitation cost shall be borne by the Department Of Industrial Policy And Promotion.

3. Letter of recommendation, from an incubator established in a post-graduate programme. This has to be in a form as specified by DIPP.
4. Letter of Funding from Government of India or any state government.
5. In case the state government or the Central government has provided funds with respect to scheme pertaining to innovation promotion, then the letter of funding from the central or state government.
6. Letter of funding of not less than 20 percent in equity by any Incubation Fund/Angel Fund/Private Equity Fund which are duly registered with Securities Exchange Board of India which endorses the innovative nature of business. If the funding by SEBI is not less than 20% in equity via any of the abovementioned funds which have endorsed the innovative nature of the business of the entity to the applicant, only then the letter of funding can be submitted.
7. Letter of recommendation from Industry association recognized by DEPARTMENT OF INDUSTRY POLICY AND PROMOTION – A Recommendation Letter can be obtained by any Industry Association or Organisation which is recognized by DIPP.

Further, on the start-up India website, the organisations which provide funding has been given.

• The format of all the letters which have to be submitted has also been uploaded on the same website and shall be strictly followed.
• The time for the application to be processed shall be around 10-25 working days.

For applicants who have filed an application for Patent

Under this category, the procedure, which pertains to applicants who have filed for patent and as a result of which it has been published, is given.

1. The details which are mentioned above, under the first category, have to be filed on the start-up India website.

2. The option of “patent filed and published by the office of India Patent in the area of nature of business being promoted” shall be selected in the nature of recommendation

3. In the category of supporting documents for the recommendation, the journal extract of the patent application shall be uploaded.

4. The registration certificate or the incorporation certificate shall be uploaded depending upon the nature of your entity.

5. Under the column of brief note of your innovativeness of the product or service offered, the document providing the details of your company pertaining to the nature of the business and explaining your innovativeness shall be uploaded. This shall be in a PDF format.

6. With respect to tax benefits, there are two options which can be opted-

a) If you wish to opt for tax benefits – the process here will be cumbersome and time consuming as the application has to go through the Inter-Ministerial board for evaluation.

b) opt out for Tax benefits- If the aim of your enterprise is only to get the IPR benefits and you wish to save time and effort, then opting out for tax benefits can be considered.

7. The application shall be submitted as it has been self-certified.

If there has been any false information or the application has been uploaded without uploading any other document, or there has been a forging of a document, then the applicant shall be liable to a fine of rupees 25,000.

Points to remember

By the start-up India initiative, the government of India aims for simplification, funding support and industry-academia partnership. DIPP is the organisation responsible for its conduct. Not all ventures can come under the definition of start-up as the conditions mentioned above have to be satisfied. The start-up has to be registered to avail a number of benefits. Start-ups have to get a certificate of recognition from DIPP the process for which has been simplified. To avail the benefits from DIPP there are two ways to get certification as the procedure is different for start-ups who have applied for a patent and for those which haven’t is different.