There is no denying the fact that it is the era of start-ups in India. With over 40 unicorns emerging in India in merely one year, the newly formed business entities are believed to grow as high as sky, if not higher. So believes the country’s finance minister Nirmala Sitharaman!
After giving tax incentive for three consecutive years, the government has decided to extend the period by one more year to take the period of tax incentive for a total of four years.
“Eligible start-ups established before March 31, 2022 had been provided a tax incentive for three consecutive years out of ten years from incorporation. In view of the COVID pandemic, I propose to extend the period of incorporation of the eligible start-up by one more year, that is, up to March 31, 2023 for providing such tax incentive,” said Nirmala Sitharaman during her Budget 2022 speech on Tuesday.
Even on the first day of budget session of Parliament, President Ram Nath Kovind underscored the instrumental role played by start-ups in India when he said the country saw the establishment of 60,000 start-ups since 2016 which created more than six lakh jobs. In a mere one-year period i.e., 2021, over 40 unicorns emerged in India, each with a minimum market valuation of ₹7,400 crore, Mr Kovind had pointed out.
New manufacturing units
The Budget also had plans to give incentives for new manufacturing entities under concessional tax regime. For new domestic manufacturing units, government had introduced a concessional tax regime of 15 percent tax. The last date for commencement of production was supposed to expire on March 31, 2023. In the Budget 2022, this date has been deferred by one more year to March 31, 2024.
New Patents
Another policy decision that is worth commending is the start-ups intellectual Property Protection Program where the government has simplified and accelerated the processes related to patents and trademarks. As a result of this, nearly 6,000 patents and over 20,000 trademarks were applied for in this financial year.
The number of patents filed in India has gone up from 39,400 in 2010-11 to 58,502 in 2020-21 and the patents granted rose from 7,509 to 28,391 during the same time period. No wonder then the ranking of India in Global Innovation Index has climbed 35 ranks, from 81 in 2015-16 to 46 in 2021, according to the Economic Survey 2021-22.
Nevertheless, the number of patents granted in India is still small when compared to patents granted in China, USA, Japan, and Korea which stood at 5.30 lakh, 3.52 lakh, 1.79 lakh, 1.35 lakh respectively for 2020.
To further improve the situation for start-ups in India, the government (as mentioned in the Economic Survey) is making concerted attempts to reduce the pendency for final decisions in acquiring patents.
The good news is that average pendency for patents in India has reduced from 64 months in 2017 to 42 months in 2020.
With all these steps taken, the future of start-ups in India seems nothing but brighter.