startup India challenges
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Each startup has a unique challenge and each challenge has a government policy to get through with it. In this article, Aditya Shrivastava, Content Marketing Manager discusses the top 5 startup challenges and government policies to overcome them.

Ever since the ambitious Startup India policy was announced, India saw an unprecedented growth in individuals coming up with new ideas, new innovations, and new startups. Although the perspective given to general masses is that there is a trajectory of growth, 90% startups fail within the first five years, as per a report by Forbes.

This hasn’t stopped some of the most promising startups and entrepreneurs from budding. While most of them have the prerequisite domain knowledge, business vision, zeal for becoming an entrepreneur and technical know-how, however, they often are either not able to find a survivable ecosystem or are unable to fathom the policies and schemes which could help them grow.

So where is that Mr. New Startup faces the biggest hurdle?

For the first-timers, be it entrepreneurs or startups, certain assistance is required to meet various conditions like innumerable registrations, certificates, finance, labor and environment-related compliances, and various other bureaucratic regulations. Startup India in January 2016 through its aggressive policies and incentives promised to provide any such assistance to such entrepreneurs. However, it failed miserably, as per a report by India Today.

Even after 2 years, Startup India doesn’t seem to be coming close to providing such assistance. It wouldn’t be entirely wrong to say that such flawed operations and inactive approach have only resulted in a handful of startups becoming successful.

Imagine if Startup India had launched a comprehensive course which could cover every policy to help you and give you a practical sense of helping your business. How helpful could that be?

It is undeniable that there are tons of startup policies. What is more comprehensive than the policies is the list of qualifying parameters and compliances that the entrepreneurs are required to adhere to. These act as a major speed breaker for the companies. In addition to this, the functional hassles along with dealing with the officers just add on to the trouble. Thus, unless the new entrants have sufficient social and legal knowledge they do not receive the required recognition they deserve have tried to identify what are the major areas in which young entrepreneurs and innovative techies require help and what are the policies which could be helpful for them.

Read the 5 most helpful government policies and schemes that can help your startup grow:

1) Financial Assistance Schemes

Raising funds for any startup is the biggest task. The Ministry of Micro, Small & Medium Enterprises has launched various schemes for ensuring that funds are directed towards you in the easiest manner. Here are some of the schemes that can help you:

  • Prime Minister Employment Generation Program

After the successful Prime Minister Rojgar Yojna (PMRY) and Rural Employment Generation Program (REGP), the government combined the two and launched Prime Minister Employment Generation Program in collaboration with Khadi and Village Industry Commission to ensure that employment opportunities are created for the urban and rural areas by the means of enabling them to start self-sufficient employment ventures. The scheme provides setting up of a project at subsidized costs and funding up to 25 Lakhs for setting up a manufacturing unit and up to 10 Lakhs for establishing a service unit.

You can read more about the policy here.

  • Credit Guarantee Fund Scheme

Startups are often considered as high-risk loan areas and therefore banks are often skeptical to provide them loans. This leads to one of the major issues faced by most startups unless they are heavily financed or self-sufficient – non-availability of timely and adequate credit. In case they do, they face issues in getting it at the optimum credit rate.

The policy facilitates both term loans and working capital facility up to Rs. 100 Lakhs per borrowing unit. The best part of the scheme is that such credit is extended without any collateral security or third party guarantee to micro and small enterprises.

You can read more about the scheme here.

Apart from these policies, there are several other policies like Multiplier Grants Scheme, Credit Guarantee Scheme, Bank Credit Facilitation Scheme, Pradhan Mantri Mudra Yojna, Stand Up India, Sustainable Finance Scheme, SMILE, Startup Assistance Scheme.

2) Research and Development Scheme

After getting the due funds, the next area that startups struggle with is research and development. A startup which is continuously dealing with innovation or technology has to heavily invest in research and development. A startup dealing with artificial intelligence without R&D team cannot survive. While most of the startups undergo huge research before launching a product, after the launch they simply concentrate on the product and eventually lose their relevance. In order to save the entrepreneurs, the government has launched the following schemes:

  • Promoting Innovations in Individuals, Startups, and MSMEs (PRISM)

This policy is launched by Department of Science and Industrial Research to support individual innovators with various financial grants. Under this scheme, funds are directly provided to the innovators with centres like SIIC, IITK which are playing a key role as processing and monitoring agencies. SIIC has been known to facilitate more than 17 innovators with the financial aid of 1 crore in the previous schemes. Under PRISM, another policy, a maximum grant of Rs. 50 Lakhs for developing prototypes is permissible.

You can read more about the policy here

3) Schemes for Technology Upgrade

Apart from research and development, startups struggle the most to stay at par with the international competition. In the longer run, it doesn’t work out. The technology they started with becomes obsolete or has a depreciating effect on the productivity. However, these schemes can help you sail through this low:

  • Capital Subsidy Support on Credit for Technology Upgradation

A scheme designed to upgrade your business and matching up to the global standards, this scheme by MSME is a boon for your new business. The aim of this scheme is to provide credit/loan for upgrading the technology, at convenient rates. The scheme not only provides subsidy up to 15% of the capital but also has a provision for loans up to 1 Crore.

More details can be found here.

Interestingly, there are a lot of policies which are meant to help you with the technological update. A few of them like Technology Development Program, Infrastructure Development Scheme, Atal Incubation Centres, etc. are all developed and designed to ensure that the startups don’t suffer because of technological hush-hush.

4) Intellectual Property Protection Schemes

It is undeniable that India is leaving absolutely no room to make a mark in the international plenary in terms of technological advancement. However, given our past, it is in the alfresco that various countries have time and again claimed rights over our innovations.

What if this happened to you? You developed a world-class technology and before you could patent it, some Chinese company launched a similar product? What would you do? Intellectual property (IP) protection is one area you need to be extremely cautious about it. Read about it, learn or take an online course. It’s on you. Realising the importance of IP protection, for the first time government is trying it’s best to ensure that the history doesn’t repeat itself via these policies:

  • Support for International Patent Protection in Electronics & Information Technology

Ministry of Electronics and Information Technology launched this scheme to enable startups to acquire support for International Patent Protect and encourage innovation. This is an attempt to assess the value and potential of the global intellectual property in addition to get a hold of opportunities in the Information Technology and Electronics sector. The government has launched this scheme in two phases:

  1. Support for International Patent Protection in E&IT
  2. Scheme to Support IPR Awareness Seminars/Workshops in E&IT Sector

You can read about the schemes here.

5) Scheme for Marketing

Widely unidentified, marketing is one of the biggest challenges for a startup. While most of the companies think that sales is a hurdle and once there is a stable market they can be successful, however, what most don’t realize is that sales are not possible without marketing. Even if they realize, they are generally out of funds to support marketing vertical. The government has come up with the following policy to overcome this challenge:

  • Scheme for Providing Financial Assistance For Marketing Support

A scheme specifically designed to provide institutional support to Micro, Small and Medium Enterprises, this scheme’s objective is to facilitate the formation of a consortium of MSMEs to market their goods and services. The scheme is designed to enhance competitiveness and marketability of their products through National Small Industries Corporation (NSIC). Apart from offering assistance towards airfare, space rental & shipping/transportation charges the scheme offers 20% of the total subsidy admissible under advertisement, publicity and theme pavilion subject to a maximum of Rs. 20 Lakh.

You can read more about the scheme here.

There is no denying the fact that Startup India has given a huge boost to the startups in the country. As mentioned in this article, “Startups seem to be the next darling of the Indian middle class, right next to Bollywood and cricket.” However, lack of awareness or problematic government assistance could prove to be a catastrophe for your startup. It could go from being glamorous to clamorous. A little knowledge, some updates, and a lot of passion could certainly change that.

Stay updated, stay ahead. Good luck!

3 COMMENTS

  1. You are missing the main problem where I am stuck for my start-up.
    How can I know which rules and regulations I will have to follow to run my business?
    I have been searching google over a month to know what rules and regulations I have to follow so government don’t put me behind bar but I couldn’t found anything related to that.
    They should have one good website where you can search your business type and can find the all government rules, regulations and policies that you have to follow as a business owner.

  2. […] has increased manifolds. Dynamic regulatory compliances have led to individual startups dying, and other challenges like lack of proper contracts, improper co-founders agreement, and most importantly creating a […]

  3. […] per this article, “Startup India in January 2016 through its aggressive policies and incentives promised to […]

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