What you need to know about Government schemes for starting a Business in India

The Indian government has launched a range of schemes to support and encourage businesses in the country. These schemes are aimed at providing assistance to businesses across various sectors and helping to stimulate economic growth and development. Starting and running a business can be challenging, and the government recognizes the difficulties faced by business owners and startups. Therefore, it has implemented various schemes in collaboration with different ministries, financial institutions, joint venture companies, public sector undertakings, banks, and other entities to ease the burden and promote new business setups and startups. Below are some of the Union Government Schemes for Businesses that have been launched. This article briefly describes the Government schemes for starting a Business in India, & a step-by-step guide to setting up a start-up.

Purpose of Government schemes for starting a business in India

The purpose of the government schemes for starting a business in India is to encourage and support entrepreneurs and startups in establishing and running their businesses. The schemes aim to provide financial assistance, reduce the burden of starting a business, promote innovation and creativity, and contribute to the economic growth and development of the country. Additionally, these schemes are designed to provide opportunities for employment generation, enhance skill development, and promote sustainable business practices. The government schemes aim to create a favourable environment for business development and entrepreneurship, leading to a stronger and more vibrant economy.

Benefits of Government schemes for starting a business in India

• Tax benefits: Startups are exempted from paying income tax for the first three years of operation, subject to certain conditions.
• Simplified compliance: Startups are exempted from compliance with certain labor and environmental laws for a period of five years from the date of incorporation.
• Funding support: The scheme provides funding support through various government schemes, including the Fund of Funds for Startups and the Credit Guarantee Fund Scheme.
• Incubation support: The scheme offers incubation support through various incubators and accelerators set up under the initiative.
• Intellectual property protection: Startups are provided with fast-track patent examination and a 80% rebate in patent filing fees.
• Innovation challenges: The scheme provides opportunities for startups to participate in innovation challenges organized by the government to solve various social and economic problems.

List of Government schemes for starting a business in India

• Startup India Scheme: Startup India is a flagship initiative of the Government of India launched in 2016 to promote entrepreneurship and create a favorable environment for startups in India. The program aims to nurture and support new ideas, innovations, and entrepreneurship to foster economic growth and job creation.

The Startup India scheme has been successful in promoting entrepreneurship and innovation in India. The scheme has facilitated the establishment of several successful startups in various sectors, including technology, healthcare, agriculture, and education.

• Mudra Yojana: MUDRA (Micro Units Development and Refinance Agency) Yojana is a government initiative launched in 2015 to provide financial support to small and micro enterprises in India. The aim of the scheme is to provide loans to entrepreneurs to start or expand their businesses. Under the MUDRA Yojana, loans are provided through various financial institutions, such as banks, non-banking financial companies (NBFCs), and microfinance institutions (MFIs). The loans are provided in three categories, namely Shishu, Kishore, and Tarun, based on the stage of the business and the loan amount required.

The Shishu category provides loans up to Rs. 50,000 for startups and early-stage businesses, the Kishore category provides loans from Rs. 50,000 to Rs. 5 lakhs for businesses that are established and expanding, and the Tarun category provides loans from Rs. 5 lakhs to Rs. 10 lakhs for well-established businesses. The MUDRA Yojana aims to provide collateral-free loans to entrepreneurs, making it easier for them to access credit. The loans provided under the scheme can be used for a range of business purposes, including working capital, purchasing machinery, equipment, and raw materials, and meeting other business expenses.

• Stand-Up India Scheme: Stand-Up India is a government initiative launched in 2016 to promote entrepreneurship among women and underprivileged sections of society. The scheme aims to provide loans to at least one woman and one person from a socially and economically weaker section for setting up a greenfield enterprise. Under the Stand-Up India scheme, loans are provided by banks to eligible borrowers for setting up a new enterprise in manufacturing, trading, or services sector. The loans can range from Rs. 10 lakhs to Rs. 1 crore, and are collateral-free for loans up to Rs. 10 lakhs. The scheme also provides support for the development of the business plan, market research, and other related activities.

The Stand-Up India scheme aims to promote entrepreneurship and self-employment among women and underprivileged sections of society, and to create jobs and economic opportunities. The scheme provides a range of benefits to the borrowers, including reduced interest rates, and a concession of up to 5% in interest rates for loans above Rs. 10 lakhs. Since its launch, the Stand-Up India scheme has been successful in promoting entrepreneurship among women and underprivileged sections of society. As of 2021, the scheme has disbursed loans worth over Rs. 26,000 crore to more than 1.5 lakh beneficiaries across the country. The scheme has helped in the creation of new businesses and jobs, and has contributed to the economic development of the country.

• Skill India Scheme: Skill India is a government initiative launched in 2015 to provide skill training and improve employability among Indian youth. The aim of the scheme is to train and certify people in various skills to make them employable and self-reliant. Under the Skill India scheme, the government provides training and certification in various skills through several programs and schemes such as Pradhan Mantri Kaushal Vikas Yojana (PMKVY), National Skill Development Corporation (NSDC), and Skill India Mission. The scheme focuses on various sectors, including agriculture, construction, healthcare, tourism, and hospitality, among others.

The Skill India scheme provides training in various types of skills, such as technical, vocational, and soft skills, to meet the needs of different sectors and industries. The scheme also provides training and certification for entrepreneurship and self-employment, to promote self-reliance and job creation. The Skill India scheme aims to  promote the development of a skilled workforce and to improve the employability of the youth. The scheme provides a range of benefits to the beneficiaries, including training and certification, financial support, and employment opportunities.

• Pradhan Mantri Mudra Yojana: Pradhan Mantri Mudra Yojana (PMMY) is a government initiative launched in 2015 to provide financial support to micro-enterprises and small businesses in India. The scheme aims to provide loans to entrepreneurs to start or expand their businesses. Under the PMMY scheme, loans are provided by banks, non-banking financial companies (NBFCs), and microfinance institutions (MFIs) to eligible borrowers for various business purposes, including working capital, purchasing machinery, equipment, and raw materials, and meeting other business expenses. The loans are provided under three categories, namely Shishu, Kishore, and Tarun, based on the stage of the business and the loan amount required.

The Shishu category provides loans up to Rs. 50,000 for startups and early-stage businesses, the Kishore category provides loans from Rs. 50,000 to Rs. 5 lakhs for businesses that are established and expanding, and the Tarun category provides loans from Rs. 5 lakhs to Rs. 10 lakhs for well-established businesses. The PMMY scheme aims to provide collateral-free loans to entrepreneurs, making it easier for them to access credit. The scheme also provides other benefits to the borrowers, including a credit guarantee scheme, to ensure that the loans are repaid.

• Atal Innovation Mission: Atal Innovation Mission (AIM) is a flagship initiative of the Government of India, launched in 2016 to promote innovation and entrepreneurship among Indian youth. The mission is named after former Indian Prime Minister Atal Bihari Vajpayee, who was known for his innovative and visionary leadership. Under the Atal Innovation Mission, several programs and schemes have been launched to promote innovation and entrepreneurship in India, including the Atal Tinkering Labs (ATLs), Atal Incubation Centers (AICs), and Atal New India Challenges (ANICs). These programs aim to foster a culture of innovation and creativity among young students and entrepreneurs, and to provide them with the necessary resources and support to develop and launch their innovative ideas.

The ATLs are designed to provide hands-on learning experience in science, technology, engineering, and mathematics (STEM) to young students. The ATLs are equipped with various tools and equipment, such as 3D printers, robotics kits, and electronics components, to help students learn and experiment with different STEM concepts.

• National Small Industries Corporation (NSIC) Subsidy: The National Small Industries Corporation (NSIC) provides various subsidies to small-scale industries in India. NSIC is a Government of India enterprise under the Ministry of Micro, Small and Medium Enterprises (MSME), which promotes and supports the growth of small businesses in India. One of the subsidies provided by NSIC is the Raw Material Assistance (RMA) scheme, which aims to provide assistance to small businesses in procuring raw materials at a concessional rate. The RMA scheme provides financial assistance of up to 90% of the cost of the raw materials to small businesses. The scheme is designed to help small businesses procure raw materials in bulk and at a lower cost, thereby improving their competitiveness.
• Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE): Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a scheme launched by the Government of India to provide collateral-free credit to micro and small enterprises. The scheme provides credit guarantee to the lending institutions in case of defaults by the borrowers. Under the scheme, micro and small enterprises can avail credit facilities up to Rs. 2 crore without collateral security or third-party guarantee. The scheme covers both new as well as existing micro and small enterprises, including service enterprises.

CGTMSE covers both term loans and working capital facilities. The guarantee cover provided under the scheme is up to 75% of the sanctioned amount of the credit facility. The annual guarantee fee charged by CGTMSE is very nominal and varies depending on the amount of the credit facility and the nature of the borrower.

• Stand-Up India: Stand-Up India is a government initiative launched by the Government of India on April 5, 2016, to promote entrepreneurship among women and Scheduled Castes (SC) and Scheduled Tribes (ST) communities. The scheme aims to provide financial assistance and support to these communities to start their own businesses and become self-employed. Under the Stand-Up India scheme, eligible borrowers can get loans ranging from Rs. 10 lakhs to Rs. 1 crore for starting a new enterprise in the manufacturing, trading, or services sector. The scheme provides collateral-free loans and also offers a concession in the interest rate.

To be eligible for the Stand-Up India scheme, the borrower should be a woman or a member of SC/ST community, and the enterprise should be in the non-farm sector. The borrower should also have a viable business plan and meet the credit requirements of the lending institution.

• Make in India: Make in India is an initiative launched by the Government of India in 2014 to encourage domestic and foreign companies to manufacture their products in India. The initiative aims to promote India as a global manufacturing hub and to create employment opportunities in the manufacturing sector. The Make in India program focuses on 25 sectors, including automobiles, aviation, biotechnology, chemicals, construction, defense manufacturing, electronic systems, food processing, IT and BPM, leather, media and entertainment, mining, oil and gas, pharmaceuticals, ports and shipping, railways, renewable energy, textiles and garments, tourism and hospitality, wellness, and others.

The initiative provides various incentives and facilities to domestic and foreign companies to invest in India. Such as simplifying the regulatory environment, providing a single-window clearance system for investors, facilitating land acquisition, and providing financial assistance and incentives. The Make in India program has been successful in attracting foreign investment and boosting the manufacturing sector’s growth in India. It has also contributed to creating employment opportunities and promoting economic development in the country.

A step-by-step guide to setting up a successful start-up in India

Sure, here is a step-by-step guide to help you set up a successful start-up in India:

• Research and Identify Your Business Idea: Start by researching and identifying the business idea you want to pursue. It should be something that you are passionate about, and it should also have a market demand.
• Develop a Business Plan: Once you have identified your business idea, develop a detailed business plan. This should include your business objectives, target market, financial projections, and marketing strategy.
• Register Your Business: Register your business with the Ministry of Corporate Affairs. Choose the type of business entity you want to set up, such as a Private Limited Company, Public Limited Company, Limited Liability Partnership, or One Person Company.
• Obtain Licenses and Permits: Obtain the necessary licenses and permits required to operate your business. This includes registering for GST, obtaining a trade license, and obtaining any industry-specific licenses.
• Secure Funding: Determine the amount of funding you will need to start and grow your business. Explore various funding options such as bank loans, venture capital, angel investors, and crowdfunding.
• Set Up Your Office: Set up your office space with the necessary infrastructure and equipment. This includes setting up your website, creating social media profiles, and purchasing equipment and supplies.
• Hire Employees: Hire employees as per your business requirements. This includes hiring skilled professionals such as accountants, lawyers, and marketing experts.
• Launch Your Business: Launch your business with a bang. Promote your business through various marketing channels such as social media, online advertising, and offline advertising.
• Monitor and Evaluate Your Business: Monitor and evaluate your business regularly to identify areas of improvement. This will help you to stay competitive in the market and grow your business.

Takeaway

The various government schemes for businesses in India provide several benefits to entrepreneurs and business owners. These schemes offer financial assistance, technical support, and guidance to startups and small businesses. They also help in the creation of employment opportunities, promote innovation, and foster economic growth. By availing of these schemes, business owners can access capital, acquire necessary skills and training, and develop their businesses. Additionally, the schemes aim to promote inclusivity and encourage the participation of women, minorities, socially and economically disadvantaged sections of society. Overall, these schemes play a vital role in supporting the growth of the business sector in India. It contributes to the development of the national economy.