Government of India has announced Startup India Action Plan under which the start-ups are eligible for various benefits, monetary and otherwise. A start up to be eligible under Start up India Initiative has been defined as an entity (PRIVATE LIMITED COMPANY or Registered Partnership Firm or LLP REGISTRATION) that meets the following criteria:
- Age of entity is less than 5 years from the date of its incorporation/ registration
- Turnover for any of the financial years has not exceeded INR 25 crore
- It is working towards innovation, development, deployment or commercialization of newproducts, processes or services driven by technology or intellectual property.
- The entity should not have been formed by splitting up or reconstruction of a businessalready inexistence or created as subsidiary of an existing company or foreign entities
- A SOLE PROPRIETORSHIP or a public limited company is not eligible as start-up. A ONE PERSON COMPANY being a PRIVATE LIMITED COMPANY is entitled to be recognized as a ‘start-up’
Recommendation Letter for Start-ups
As per the guidelines issued by Government of India, start-ups have to get recommendation letter from the incubators or angel investor or have provisional PATENT REGISTRATION from Government recognized organization. Below you will find list of the Industry Association/Organization that can be approached for obtaining the recommendation letter:
This is the list which has been compiled by the Government of India. It covers most of the business fields.
There are 68 Government recognized Start-up incubators also. Majorly, there are two steps to register under Start-up India Scheme:
a) Register your Start-up as Legal Entity like PRIVATE LIMITED COMPANY, LLP REGISTRATIO Nor Partnership Firm in India.
b) Take Minimum One Recommendation Letter apart from the legal entity Registration –
- A recommendation (with regard to innovative nature of business), in a format specified byDepartment of Industrial Policy and Promotion, from any Incubator established in a postgraduate college in India; or
- A letter of support by any incubator which is funded (in relation to the project) fromGovernment of India or any State Government as part of any specified scheme to promote innovation; or
- A recommendation (with regard to innovative nature of business), in a format specified byDepartment of Industrial Policy and Promotion, from any Incubator recognized by Governmentof India; or
- A letter of funding of not less than 20 per cent in equity by any Incubation Fund/AngelFund/Private Equity Fund/Accelerator/Angel Network duly registered with Securities andExchange Board of India that endorses innovative nature of the business. Department of Industrial Policy and Promotion may include any such fund in a negative list for such reasonsas it may deem fit; or
- A letter of funding by Government of India or any State Government as part of any specifiedscheme to promote innovation; or
- A PATENT REGISTRATION filed and published in the Journal by the Indian Office in areas affiliated with the nature of business being promoted.
Useful Guidelines for the Incubators for Providing Recommendation Letter to Start-ups
1) A Maximum Fee of 5000/- INR can be charged by the incubators for providing the letter of recommendation under the Start-up India scheme.
2) In case, where an external expert is required to assess the innovativeness of a product or service or process, a maximum fee of 10000/- INR can be charged by the incubators.
So, it is important to keep these amounts in mind when you approach Incubators for Recommendation Letter so that you are not made a fool and over charged.
How to Apply for the Government Recognized Incubators
Here are 7 steps which are helpful when you apply to the Government recognized incubators for the recommendation letter:
- You have to setup your product as a legal entity as Registered Partnership Firm/LLP REGISTRATION/PRIVATE LIMITED COMPANY
- After setting up your product as a legal entity, you have to open a current bank account on your business name.
- Apply for the all the proper tax registration like VAT/CST or Service Tax.
- Apply for the Incubators as per your convenience or in your state as per the govt recognized list.
- You can apply through their official website or visiting directly to the incubators.
- Pay the appropriate fee to the incubators as per the Government guidelines.
- Get the Recommendation Letter From them.
Hope this article helps you getting Recommendation Letter for Start-up India Scheme.
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