The Government of India launches schemes from time to time for the benefit and upliftment of a particular industry or group of citizens within the country. Here is everything one needs to know about two such schemes – Stand-up India and Start-up India Schemes.
What is the Stand-Up India scheme?
Stand-Up India scheme is a scheme initiated by the Government of India, keeping women, scheduled castes and scheduled tribes in mind. It has been launched to provide finance and business opportunities to these categories. These individuals can avail Stand-up India loans anywhere between 10 lakhs to 1 crore.
This scheme promotes the establishment of greenfield enterprises in the form of a manufacturing unit, agriculture sector or trading purpose. A greenfield enterprise refers to a first venture of the eligible person in the aforementioned sectors.
Under this scheme, the funds are transferred directly to the recipient’s account. The Stand-up India loan provides 85% of the project funding; the remaining 15% must be borne by the eligible individuals. While the Stand-up India loan interest rate is kept minimal, the tenure of the loan is typically 7 years. However, an extension of 18 months may be given in some cases.
Eligibility for Stand-Up India Scheme
- Any scheduled caste or scheduled tribe and / or woman entrepreneur is eligible for this scheme. However, such a person should be above 18 years of age.
- Stand-up India Loans can be used only for greenfield projects, i.e. it has to be entrepreneurs’ first project in the manufacturing, trading or agriculture sector.
- In the case of a joint venture or partnership, the applicant should hold a 51% stake and should have the controlling stake of the company.
- Borrowers should have a clean record, meaning the applicant should not be a defaulter in any bank or financial institution.
What is the Start-up India Scheme?
The Start-up India Scheme is an initiative by the Indian Government to help young entrepreneurs develop unique business ideas and help them establish or grow their business. Under this scheme, the government helps a start-up or individual by providing financing with tax exemptions. It also ensures that creating a start-up is a smooth and straightforward process. The only condition to be considered is that the business should qualify as a Start-up.
Start-up India Scheme Eligibility
- The company should be registered as a private limited, a registered partnership firm or a limited liability partnership.
- The company should not be registered for more than 10 years.
- The company’s annual turnover should not exceed over 100 crores for any financial year since its registration.
- The company should not be formed by reconstruction or splitting up an old business.
- The company should be a scalable business model and should be an innovative idea.
- The company should consistently work towards improving the innovative product.
Benefits provided under the Start-up India scheme:
- Simple online application
The Government of India has launched a website and an app for registration under this scheme. Eligible applicants can simply fill out a form and upload the necessary documents to apply.
- Cost reduction
The government provides lists of facilitators for trademarks and patents. The facilitator fees are borne by the Government, while the Start-up bears the statutory fees. While filing patents, start-ups are given a reduction of 80% in the cost.
- Fund allocation
The government has set Rs 10,000 crore fund as venture capital for eligible start-ups.
Eligible Start-ups will be exempted from income tax for 3 years, provided they hold the certificate from Inter-Ministerial Board (IMB).
- Research and development facility
7 new research parks have been set up to help start-ups in the R&D sector.
- Tax-exemption for investors
People investing their capital in venture funds will get exempted from capital gains.
- Liberty to choose your investor
Eligible Start-ups have the option to choose between various venture capitalists.
Differences Between Stand-up India and Start-up India Schemes
- The difference in the purpose of the schemes.
The Stand-up India scheme provides business opportunities to the minority groups (scheduled castes and scheduled tribes) and women entrepreneurs. On the other hand, Start-up India provides business opportunities to companies that fall in the category of Start-up and may not generate adequate revenue.
- The difference in the benefits of the schemes.
Stand-up India scheme loan covers 85% of the project, and individuals can apply for loans between 10 lakhs to 1 crore. Whereas in the Start-up India scheme, the start-ups get various financing options to fund their company and are also exempted from tax.
- The difference in eligibility
The eligibility for the Stand-up India scheme is that the person applying should belong to SC/ST category or should be a woman entrepreneur. The Start Up India scheme eligibility requires the company to be recently founded with an innovative idea and the annual turnover should not be more than 100 crores.
The Government is supporting a new age of self-reliant India by promoting entrepreneurs and innovators. Tata Capital supports the government’s mission and provides a wide range of business loan offerings for start-ups and new entrepreneurs. Check your business loan eligibility and get started today!