An Entrepreneur’s Guide To Starting Your Own Business in India
India has opened its doors not only with foreign investment but also eased the process of starting a business for local entrepreneurs.
In fact, according to the World Bank’s report, Doing Business 2016, India ranks #130 out of the 189 economies ranked by the organization. The country has moved up four places since 2015, which spells good news for anyone looking to start a business here. What the report suggests is that the country has a lot to offer entrepreneurs, given that India has moved up from #164 in 2015 to #155 in 2016 in terms of starting a business, while also moving up in terms of access to electricity and obtaining construction permits.
“In the past year, India eliminated the paid-in minimum capital requirement and streamlined the process for starting a business. More reforms are ongoing—in starting a business and other areas measured by Doing Business—though the full effects are yet to be felt,”
the World Bank report said.
“Haven of Stability”
In February 2016, the President of India, Pranab Mukherjee, described the country as “a haven of stability” amidst the volatile global economies, with the Indian government having simplified procedures, while focusing on developing infrastructure, repealing obsolete laws and putting in place a “non-adversarial” tax regime to attract investments, said a news report on News 18.
Apart from the jump in the World Bank’s rating, President Mukherjee also drew attention to the rise of 39% in foreign investment flow to the country.
” India is a haven of stability in an increasingly turbulent global economy. GDP growth has increased making India the world’s fastest growing economy among large economies. “
(Source – Yourstory)
Making India Business Friendly
One of the major steps taken by the government has been to launch 500 e-governance services across 12 states, with the help of public-private partnerships. With a focus on infrastructure development, such as the Smart Cities programme that included 20 cities in its first phase, opportunities have been unlocked for business. In addition, there has been a push to improve access to clean energy, with the government having planned to increase renewable energy capacity across India to 175 GW by 2022. For this purpose, offshore wind farms, solar parks and the bundling of thermal with solar power are all in the pipeline. In fact, solar power capacity has doubled since 2014, crossing 5,000 MW.
“Make in India”: Helping Entrepreneurs
So, what does an entrepreneur look for when starting their own business?
The most important aspects to focus on usually include good infrastructure, ease of access to necessary resources and raw materials, ease of accessing financing, and, of course, quick and hassle-free procedures with minimal red-tape.
These were exactly the aspects that the “Make in India” program, launched in September 2014 by Prime Minister Narendra Modi, also focus on in order to ease the process of starting a business and running it in the country. According to the Wall Street Journal, the program was launched with the aim of transforming the third-largest economy in Asia into a “manufacturing powerhouse like China.”
What the Make in India campaign has been able to achieve in significant growth in foreign direct investment in the nation, which rose 40% to $23.7 billion within a year of the campaign being launched. Industrial production also received an impetus. The Make in India program takes into account what an entrepreneur usually seeks while starting a business and aims to simplify the process, while also nurturing and encouraging innovation.
Steps to Starting a Business in India
Before going ahead to learn the procedure of establishing a business in India, there are some steps that you should take to ensure that you lay a strong foundation for your enterprise. Here’s a look at the steps:
Step 1: Choose Your Business Offering
Not only is it important to select the industry to which your venture aims to cater to but also the product or service that you will be offering. This is possibly the most important decision you will need to take because the structure of your enterprise, the type of challenges you are likely to face and the competition you need to prepare for will all depend on this factor. One way to make an informed decision regarding the offering is to do a comparative analysis across products (How to create a comparative analysis – Edward Lowe Foundation) and services in your chosen industry, research the market well to determine existing trends and future demand.[box type=”download”] Click here to download a sample Comparative Analysis of Amazon v/s Ebay by Sandeep Krishnamurthy at University of Washington. [/box]
This is also a good time to do a competitor analysis for the product or service, while also charting out the life cycle of your offering. Consider the availability and investment you will need to make in terms of raw material, infrastructure and equipment, and man power. Also, make sure to check the government regulations and guidelines for your industry and your specific offering. This will not only help your business be compliant with the law but also help you discover government incentives that could ease your financial concerns.
Step 2: Formulating a Business Plan
A business plan should be the starting point for any enterprise. This is a formal, written account of the entrepreneurial vision and should include details of the operations and strategies of the proposed venture. This document will serve multiple purposes, from being a loan proposal to the bank if you need capital to an investment prospectus that can be handed out to potential venture capitalists who might consider investing in your startup. The business plan also is a road map for the entrepreneurial team. It helps lower anxiety related to the unknown future, while giving the team a means to make informed decisions, thereby lowering risk. There will be lesser unexpected situations to deal with if you have a well thought out plan to guide you.[box type=”download”] Click here to download Free Sample Business Plan templates for Startups. [/box]
Step 3: Set Up the Infrastructure
How do you commence operations until you have the basic infrastructural facilities?
Whether you are purchasing land to construct offices or a factory, buying built up premises or renting office space, you will need to not only determine the location but also the facilities required.
Do you need to be at a location that is well connected through rail networks so that you get your raw material with ease?
Do you need to be centrally located for your sales force to traverse the city and nearby areas?
What about access to water and electricity?
Does the space allow the business to expand in the coming years?
What equipment do you need to launch operations?
What IT infrastructure and telecom will you require.
These are all questions that should be answered at this stage. There are government subsidies and tax concessions for specific types of industries, land and businesses. Some research into all this will help save your capital, that can then be used for business operations rather than for setting up.
Step 4: Choosing the Business Structure
The type of business entity you establish should be based on several factors, which are usually interrelated. For instance, it is important to look at the nature of the business you wish to run. Do you want to provide professional services, such as lawyers, financial advisors or doctors? Do you want to run a restaurant? Or will you be manufacturing a product? The next thing to look at would be the scale of operations. Do you want to start small and grow over time? This, to a large extent, will be dependent on factors such as capital available for investment, the market you wish to address, such as local, national or international. Then you need to decide on the degree of control and liability you are comfortable with.
If you want complete control of all aspects of the business, a sole proprietorship will suit you more. Here, it also becomes important to know about the different business structure you can choose from in India.
Business Structures in India
A crucial step in launching your own startup is to know what form the entity should take. The structure of your establishment will not only depend on the sector you wish to function in but also your finances, level of independence, liability, volume of business, and ownership and control, says educational portal, eSupportKPO.com. It is important to choose carefully because once established, not only is it difficult to switch to another structure but doing so would entail a lot of waste of time, effort and resources. Here’s a look at the different structures permitted under Indian law.
1. Sole Proprietorship
This is the oldest and possibly the most common business structure in India. While it might also be the simplest structure to set up, it might not be suitable for all types of business. This is basically a one-man show, with the entrepreneur owning, controlling and managing all aspects of the business. The owner, therefore, as unlimited liability. Although this type of entity does not require formal registration, it does need trade-related licenses. Sole Proprietorship is most suitable for smaller businesses that address a limited and localized market, and require quick decision making.
The legal formalities are also less for this type of entity. On the other hand, the disadvantage of this structure is that it offers limited growth, which makes it less attractive for creditors and investors.
Regulated by the Indian Partnership Act of 1932, registration for this type of business entity is not mandatory and depends on the discretion of the partners. By definition, a partnership is a relationship between two or more people, “who have agreed to share the profits of a business” run by all of them together or any one of them, on behalf of all the partners. The owners of this type of business are individually known as the partners, while collectively being called the firm. The advantage of a partnership is that when people with different areas of expertise come together to form a business, the entity’s administrative capabilities increase, as do the skill resources, and at time even the financial resources. It also reduces risk, as compared to a sole proprietorship.
In India, a business can have a maximum of 10 partners, who are bound to the business through a legal contract, known as the Partnership Deed. The partners have unlimited liability and share the profits and losses. However, it is important to remember that the retirement or demise of one of the partners leads to the disintegration of the partnership. A new agreement will have to be created in such circumstances. A partnership deed should include:
- Name of the organization
- Name of the partners
- Type of business
- Location of the business
- Financial status of each partner
- Role played by each partner in the business
- Other related terms associated with the nature of the business.
A partnership is considered best suited for small businesses that require minimal capital and other resources to run the business. On the other hand, the drawbacks include the fact that it has a limited life, it is restrictive in terms of transfer of rights and that it has no concordant authority.
3. Public Limited Company
Governed by The Company’s Act of 1956, a public limited company is a form that is limited by shares, with no restrictions on the number of shareholders, acceptance of public deposits and transfer of shares. However, there need to be a minimum of seven shareholders for such a company to be registered. Such an entity also requires a minimum of 3 and maximum of 12 directors. Minimum funds of Rs 500,000 are required, while if the capital rises above Rs 50 million, it is mandatory for the organization to hire a company secretary. Ownership and management of the entity are independent of each other and do not play any role in each other’s responsibilities. The conditions that need to be fulfilled by a Public Limited Company include:
- The outline of the company is required to be filed with the Registrar of Companies before shares can be allotted.
- A certificate of commencement needs to be obtained from the Registrar of Companies before the firm can start business operations.
- A minimum of three directors need to be appointed.
- The members of the company are required to file a basic legal report with the Registrar of Companies.
There also are some firms that are Deemed Public Companies. The Companies (Amendment) Act 2000 has amended section 3 of the Act of 1956 to include circumstances when a private company, which is a subsidiary of a public company can be recognized as a public outfit. With the amendment, there now is a specific section, section 43(A) of The Companies Act of 1956, that outlines the conditions that need to be fulfilled to be recognized as a deemed public company.
4. Private Limited Company
In this setup, there are restrictions on the shareholders’ right to transfer shares, while the maximum number of shareholders is limited to 50. Such companies are not permitted to invite the public to subscribe to its shares or debentures. The number of directors can vary from two to 12. This type of organization is also governed by The Companies Act, 1956, and needs to register itself, similar to a public limited company, with the Registrar of Companies. With the Registrar offices located all across the country, you can apply with the one in the state in which you wish to run your business. The minimum funds required to register a private limited company is Rs 100,000. You might need to pay additional stamp duty, so it is useful to check with the regulatory body. A private limited company is considered easier to set up than a public limited one.
5. Limited Liability Partnership
An LLP is a combination of a partnership and an incorporated company. This type of entity is governed by the Limited Liability Partnership Act of 2008 and the Rules of 2009. According to this Act, an LLP is a “new corporate form of business” that offers an alternative to the traditional business form of partnership. This type of entity entails on the one hand, unlimited personal liability and on the other hand, statute-based structure of governance of a limited liability company, allowing businesses to form themselves in an innovative, flexible and efficient manner. What this essentially means is that the partners have the authority to directly manage the business, with no limitations on the number of partners.
However, at least one of the partners needs to be an Indian citizen. All partners have the authority to execute the legalities of the business with the filing of an incorporated document with the Registrar of Companies. The advantage is that very low capital is required to get an LLP going, with accounts being settled annually by each LLP with the Registrar.
6. Business Structures for Foreign Investors in India
- Representative Office
- Project Office
- Branch Office
- Joint Venture Company
- Wholly Owned Subsidiary Company
Step 5: Choose a Name & Register the Business
Choosing the name is an important step because the name should represent the brand image you wish to create. This is especially true if you will be functioning in an industry where the name could determine success. Did you know that there are experts you can seek help from while choosing the name? Brainstorm with viable names and shortlist the ones that you like. Check for trademarks to ensure that you are not in violation. Some say that choosing a familiar or comforting name will resonate with the customer base, while other believe that being creative is the way to go. Whatever your choice, once you pick the name, you are ready to register your enterprise. Here’s a look at the procedure to do so.
1: Obtain a DIN
This is the Director Identification Number that can be obtained online from the Ministry of Corporate Affairs website. The cost is Rs 100. The process you need to follow is:
- File an application with Form DIN-1 online for a provisional DIN. This will be immediately issued. The application form can then be printed. You need to sign it and send it for approval via courier to the Ministry of Corporate Affairs, along with proof of identity and address.
- The documents will be verified by the concerned authority, and upon approval, a permanent DIN number will be issued. This takes time, of about four weeks.
2: Obtain the Digital Signature Certificate
This too can be obtained online from one of 6 private agency authorized by the Ministry of Corporate Affairs (MCA). The process takes about 3 days. The company directors will need to submit the application form, along with proofs of identity and address. The fees might differ from one agency to another, ranging anywhere between Rs 400 and Rs 2,650.
3: Reserve the Name
You will need to register the name of your company with the Registrar of Companies. This too can be done online. The process is pretty quick and could take up to 2 days and cost you Rs 500. You will first need to check the availability of the name. You can do this through the MCA website or the Government of India portal. You can submit a maximum of 6 preferred names, which the Registrar of Companies staff then checks for similarities with the names of other enterprises registered in India. Once approved, the name will be displayed on their website. You might need to check the site to confirm this. It usually takes about two days for the name to be approved, given that it conforms to the naming standards put forth by the Companies Act.
Step 6: Get the Incorporation Documents Stamped
The company documents will need to be stamped either by the State Treasury or an authorized private bank. The cost you will incur for this process is as follows:
Rs 200 for Memorandum of Association (MOA) + Rs 1,000 for every Rs 5,00,000 or share capital or part thereof for Articles of Association (AOA) + Rs 100 for stamp paper for Declaration of Compliance Form 1.
The request for the stamping of documents needs to be accompanied by unsigned copies of the MOA and AOA, as well as the payment receipt. All these documents need to be submitted either to the Superintendent of Stamps or to an authorized bank. Make sure that none of the documents have anything written on them by hand. What you will get back is all the copies, with one being duly signed, stamped and embossed, showing that the requisite stamp duty has been paid. Once the MOA and AOA have been stamped, they need to be signed and dated by the company promoters and should include the name of the company and a description of its purpose and activities.
Step 7: Get the Certificate of Incorporation
Several forms need to be filed at this stage, including e-form 1, e-form 18 and e-form 32. The forms can easily be filed online on the MCA website. With the forms, you will need to also submit scanned copies of consent from the initial directors of the company, as well as scanned copies of the stamped and signed MOA and AOA. The fees can also be paid online via a credit card. However, you will also need to physically submit some documents to the Registrar of Companies, including a copy of the MOA and AOA, Form 1, Form 18, Form 32, the original approval letter for the company name, consent letter from the directors and a stamped power of attorney. The certificate of incorporation will then be sent to the registered office of your company via registered or speed post. The registration fee will vary according to the authorized capital of your company. The fee payment can be made both offline and online.
Step 6: Make your Company Seal
Although this is not legally mandatory, your company will need a seal not only to issue share certificates but also for various other documents. The cost will depend on the number of words you need engraved on the seal and the number of seals you want made. You might need to pay extra if you want the job done quickly. So, it could cost an average of Rs 300-Rs 500.
Step 8: Obtain a PAN
You will need to obtain a Permanent Account Number from an authorized agent or franchise, appointed by the National Securities Depository Ltd (NDSL) or Unit Trust of India Investor Services Ltd, as outsourced by the Indian Income Tax Department. This process takes about 7 days and will cost you:
Rs. 67 = Application fee of R.s 60 + Service tax of 12.36% + Application form of Rs. 5 (if not downloaded)
To obtain the PAN, you will need to file Form 49A, duly filled and accompanied by a certified copy of your company’s certificate of registration, proof of the company’s address and your personal identity proof. This application can be filed both online and offline, although the documents required will need to be physically delivered for verification.
Step 9: Obtain a TAN
A Tax Account Numhttp://www.businessgyan.com/procedure-vat-registrationber is necessary for tax purposes, specifically tax deducted at source. The TAN can be obtained from the Income Tax Department. The online application form (Form 49B) can be obtained from the NDSL site, which will then need to be printed, duly filled and mailed or couriered to the address provided. The form can also be submitted to any TIN Facilitation Centre that is authorized to collect TDS. You can locate the closest facilitation centre through the Income Tax Department’s website. This TAN will be required for all TDS/TCS payment challans and certificates issued by your business. The process of acquiring the TAN takes about 7 days and costs Rs. 57 (Rs. 50 for the application form + 12.36% service tax).
Step 10: Register the Business with the Office of Inspector, Shops and Establishments
According to the Shops and Establishments Act, an employer needs to register their establishment within 30 days of the business being opened. For this, you will need to submit a statement that contains the names of the employers and managers, as well as the name of the establishment, its postal address and category to your local shop inspector, along with the requisite fee. Once the information is verified, the certificate of registration is issued for the establishment. Each state has its own version of this Act, and you will need to check the rules and regulations for the state in which your business is located. The prescribed fee also differs from one state to another, and is usually based on the number of employees. The form for registration is available online, with each state having its own portal for the Inspector of Shops and Establishments.
Step 11: Register at the State Commercial Tax Office for VAT
The VAT tax was introduced in April 2005 as a replacement for sales tax. For this Form 101 has to be filled. The registration fee for the procedure is Rs. 5,100. The authorized representative who signed the form should be present at the Sales Tax office on the day of verification. After the verification of documents by the clerk, the applicant is sent to the sales tax officer. All the information on Form 101 is then entered into the system manually and the applicant gets a Tax Identification Number (TIN). The VAT registration certificate is received via mail in the next 10-15 days. Once you have your TIN, the company is considered fully registered. A few other documents are also required for the registration process, such as the MOA, AOA, identity proofs, etc. The whole process was taken online in 2009, which means that the company only needs to visit the Sales Tax Office once for verification.
Step 12: Register at the Profession Tax Office for Profession Tax
This process is completely free of cost and takes only 2 days for completion. According to Section 5 of the Profession Tax Act, every employer, unless he/she is employed by the government, is eligible for taxation and needs to obtain a certificate of taxation from the prescribed authority. The company can apply at the Profession Tax Office of the state in which the business is based by filling Form 1. The application should be supported by documents such as address proof, details of company registration number under the Indian Companies Act (1956), head office details, etc. The supporting documents will depend on the type of business a person intends to run and on state where he wants to run it.
Step 13: Registration with Employees’ Provident Fund Organization
Any company in any Indian state, except Jammu and Kashmir, that has more than 20 employees and is engaged in any of the 183 classes of business establishments, needs to comply with the Employees Provident Funds and Miscellaneous Act (1952). For this the company will need to register with the regional Provident Fund Organization (EPFO) for the allotment of establishment code. There is no cost for registration and the procedure takes up to 12 days. No separate registration is required for the employees but all the eligible employees are required to be a part of the fund. For this procedure, no online facility has been started yet.
Step 14: Register at the Employees’ State Insurance Corporation for Medical Insurance
In the registration process, every employer or establishment and paid employee is identified for the purpose of insurance. The employer has to submit Form 1 to the Employees’ State Insurance Corporation. The procedure is free of cost and takes up to 9 days for completion. After the submission of the form, the Employer Code Number is issued within a week. In next couple of days, an “intimation letter” is mailed containing the code number. The individual insurance of all the employees can be started after this code number is received. Temporary ESI cards are issued for employees, which are valid for 13 weeks, although the permanent ESI cards are issued soon too.
Step 15: Choosing the Nature of Corporation
A business corporation can be setup in various forms. The choice of enterprise decides the power, control, risk and responsibility of the entrepreneur. It also has a key role to play in determining profits and losses of the company. All the forms have their own pros and cons. Since running a business is a long term commitment, it is very important to do sufficient research and put in time to decide on the form of business. The final decision should be taken after keeping all the merits and demerits in mind and balancing them up.
The decision may depend on various factors, such as:
- The first thing that has to be kept in mind is the nature of the business. For example, direct service providing businesses, such as doctors, lawyers and restaurant owners, mostly prefer having the full proprietary. This gives the person more decision making power but also increases the risk factor in times of loss. On the other hand, partnerships are preferred for manufacturing organizations of larger scale.
- The second thing to be considered is the scale or volume of the business that you want to setup. The size of the market area (local, national, international) also has to be kept in mind for this.
- The money that has to be invested is another factor to be considered. As the company grows, more investments are needed and the profit is also shared between the partners.
- All the above factors also help in estimating the risk factor. When you are setting up a business, there are many financial as well as personal risks are involved. Therefore, it is important to understand how much risk or liability you are willing to bear.
Step 16: Regulatory Requirements
Once are you are done with all the internal decision making for setting up an enterprise, you need to consider the external factors that will affect your business. The Companies ActThe Company Act of 1956 regulates all the business affairs of the country. The Ministry of Corporate Affairs takes care of this Act and all the rules framed under it. It has guidelines that defines the powers of company directors, rules for raising capitals, holding company meetings, audit of company accounts and much more.
The Ministry of Environment and Forests (MoEF) regulates all the environmental aspects protecting air, water, noise, forests, wildlife, etc. There are separate laws and rules that have to be followed for the emission of hazardous waste. The ministry also conducts frequent surveys of flora, fauna, forests and wildlife, pollution, and regeneration of degraded areas. Since the environment is the primary provider of all the resources, all industries must follow the guidelines set for the protection of the environment to ensure sustainable development.
Step 17: Financing a Start Up
One thing that never stops in a business is investment. To make money, a company needs to put in money first. For efficient production, marketing and development of plans, the continuous flow of money is essential. The company needs money not only to commence its operations but also to expand them and grow. It is important to prepare a financial plan that states the funds needed, sources of these funds and their application. The process starts by calculating an amount that will be required by the firm for various needs.
Here’s a look at points that should be kept in mind while formulating this plan:
- Financial objectives of the company. For example, in some cases the motive may be to generate revenue, in other cases it may be branding.
- Nature and size of the business. The money needed will depend on whether it is a large, medium or small scale business.
- Credibility and image of the company. For example, if a company has a bad image in the market, it may have to reposition itself.
- Expansion plans should also be kept in mind. If the firm is planning to open multiple branches, suitable amount of money should be invested in all of them.
- Market trends and buying habits of local consumers. Investing in a sector that is not doing very well in that particular region will require more funds for marketing and establishing the brand image.
Step 18: Hiring Human Resource
The employees of a company define its success. The process begins with hiring manpower for various roles and responsibilities. Choosing the right people for right locations and right positions will play a key role in your business’ success. The location of the firm will also depend upon the availability of skilled labour, their attitude and flexibility towards work and on the wages that the company intends to pay. To keep expenses in check, it is also important to decide on the number of people that have to be hired. A balance between skilled and unskilled labour also has to maintained.
“If you can’t feed your team in two pizzas, it’s too large.” ~ Jeff Bezos, Founder, Amazon
The hiring process involves four steps:
- Manpower Planning
The aim is to identify the best candidates and put them in suitable roles. The procedure requires a lot of investment in terms of time, energy and money. So, it is important to not make any mistakes while hiring for the firm.
The company also needs to decide upon quantity and quality. Some of the jobs may require highly skilled workers for higher salaries while others may require more number of workers with less skills. The quality of production will depend on this decision.
What Makes India the Perfect Place to Launch a Tech Start Up?
Prime Minister Narendra Modi formally launched the Startup India initiative on January 16, 2016. The primary aim of this initiative is to promote and foster entrepreneurship and innovation in the country through the creation of an ecosystem that nurtures the growth of startups. According to the official website for this initiative, “The objective is that India must become a nation of job creators instead of being a nation of job seekers.” Noble as the sentiment might be, it is likely to come as a blessing for those with an ambition to launch their own business.
In fact, in a 2014 report by NASSCOM, Startup Landscape 2014, India was already the fourth largest base in the world for startups. Data released in this report demonstrates the sheer volume of the tech ecosystem in India, with 3,100 startups existing already in 2014. The ecosystem was projected to grow with more than 2,000 additional new startups in the country by 2020, with the job creation through these entrepreneurs touching a whopping 250,0300,000 in 2020, from 65,000-75,000 in 2014.
Six cities were identified as being home to 90% of the tech companies. Leading the pack were Bengaluru and New Delhi, while Mumbai, Hyderabad, Pune and Chennai were seen as emerging destinations.
Source: NASSCOM 10000 Startups Report
India’s Startup Ecosystem Favours Tech
The concept of a Startup Ecosystem is a fairly new one in India. With the push from the government, the country is now taking on a fundamental shift towards entrepreneurship-friendly policies and creating a conducive environment for business. A Startup Ecosystem comprises not only of the entrepreneurs and their startup, but all the various types of financial and non-financial support that a business might need, whether it is incubation, debt financing or tech support.
However, there is an undeniable “Technology Startup Bias” in the country, says a report on CII’s Startup Conclave 2015. The report points out that the ecosystem, especially for tech startups, has seen significant growth in terms of corporates and angel investors interested in offering support. Approximately 80% of investment is focused on technology, and within that, 80% is specifically focused on mobile solutions. A majority of these investments have so far been made in cities like Mumbai and Bangalore. With regard to mentoring and incubation, again most of the support available is for technology startups.
Emphasizing this affinity for tech startups in India, the second edition of the NASSCOM-Zinnov report on Startup India revealed that more than $5 billion had been made in investments towards startups in India in 2015 alone, up from the $3 billion in 2014. The report went on to point out that several initiatives by the central and state governments have been providing further support to new businesses in the country, with the majority of the 1,200 new startups launched in 2015 focused on B2C domains of ecommerce, consumer services and aggregators.
The Role of Startup Incubators
The main objective of an incubator programme is to ensure the success of a startup, by helping entrepreneurs with the various problems and hurdles that new businesses often face. This could be anything from capacity building to seed funding, providing workspace to mentoring and training. There are several such startup incubators available for businesses in India and can be of huge assistance to the entrepreneur. Here’s a look at some of the top programmes in the country.
Top Startup Incubator Programs in India
Startup Village: This programme focuses on technology product startups and is the first incubator in the country that is jointly funded by the public and private sector. Founded in 2012, the promoters of this incubator are the Government of India’s Department of Science and Technology, Technopark Trivandrum and MobMe Wireless. The chief mentor of Startup Village is Kris Gopalakrishnan, the co-founder of Infosys and the “most successful IT entrepreneur” of Kerala. The programme aims to incubate 1,000 tech product startups over a period of 10 years, although its prime focus is student startups from college campuses. To get into the programme, entrpreneurs are selected to make a presentation before Startup Village Angel Fund.
The contact details are as follows:
Address: 1st Floor, atop Cafe Coffee Day, 4th Block, 80 Feet Main Road, Koramangala, Bangalore — 560095
NSRCEL: Founded in 2002, the Nadathur S Raghavan Centre for Entrepreneurial Learning (NSRCEL) helps in business growth through its mentoring and incubation facilities. Located within the IIM Bangalore campus, “NSRCEL offers extensive engagement with industry in order to channelize and refine raw entrepreneurial energies that go on to become successful businesses. The Centre draws upon both the IIMB faculty and industry experts to provide mentoring support.” The organization also offers funding for its incubate companies through funds sourced from government schemes. To be accepted as an incubate, the entrepreneur will need to submit their business plan for review at NSRCEL.
The contact details for this programme are as follows:
Address: Indian Institute of Management Bangalore, Bannerghatta Road, Bangalore 560076
Contact: +91-80-26993701 Fax: +91-80-26993769
For Enquiries: email@example.com, For Mentoring and Incubation: Ideas@nsrcel.org, For Ecosystem and Events: firstname.lastname@example.org
Science and Technology Entrepreneurs Park: The Science and Technology Entrepreneurs’ Park (STEP) was set up at IIT Kharagpur in 1986 and launched services in 1989. It was created with financial support from DST, New Delhi, DST, West Bengal, ICI, IDBI and ICICI. The aim of this incubator is to help startups “survive and grow” through specialized support services offered through the most critical periods of an enterprise – its startup phase. The incubator provides space as well as seed funding with the aim of nurturing growth oriented entrepreneurs and businesses. It works in harmony with other incubation initiatives, such as Technology Incubation and Entrepreneurship Training Society (TIETS) and Technology Business Incubation (TBI).
The contact details for STEP is as follows:
Dr. Satyahari Dey, Professor
Department of Biotechnology, and Managing Director,
Science & Technology Entrepreneurs’ Park (STEP) Indian Institute of Technology Kharagpur,
India-721302. phone: 91- 3222-283760 or- 282247 (Office), – 277097 (Res.), -281366 (laboratory) fax: 91-3222-255303 or-278707
Deputy Secretary General, Asian Federation of Biotechnology, and Chair, Bioeconomy & Biobusiness Web: www.afob.org
Prof. Siddhartha Das
Phone: +91-3222-283256 ,+91-3222-281091
Mr. Subhash Chandra Santra
Seedfund: This is a physical incubator spread across 2,000 sq ft in Mumbai and offering consultancy for startups from diverse domains from sector experts, who provide inputs on various aspects of the business. Founded in 2011-2012, Seedfund provides funding for startups of an average of INR 1 crore to 1.5 crores, followed up with an investment of $2 million. To be chosen by this incubator, entrepreneurs are required to fill in a business plan form and provide details about the business, such as information on the team, business model, market opportunity and competitive landscape, apart from the current investment status and the amount of funding they are looking for. With three offices across India, the contact details for this programme are as follows:
3, Turf Estate, Shakti Mills Lane,
Off. Dr. E Moses Road, Mahalaxmi, Mumbai 400 011
Phone : (+91) 22 2490 2201/2/3/4
Lone Star, First Floor, #33,
Promenade Road, Frazer Town,
Bangalore 560 005
Phone: (+91) 80 41502412
DELHI NCR OFFICE
B&B Genesis (Ground Floor),
NOIDA – 201301 (U.P.)
Phone: (+91) 120-4348889
Amity Innovation Incubator: Founded in 2008, Amity Innovation Incubator is supported by DST, Ministry of Science & Technology of the Government of India. Located in Noida, U.P., the incubator focuses on Rural Innovation and Social Entrepreneurship, Information & Communication Technologies, Education & Education Technologies, Biotechnology & Life Sciences, Food & Allied Technologies, Nanotechnology and Material Sciences. It provides funding of up to INR 1 crore. To be accepted by this programme, the entrepreneur will need to send them a business proposal or incubation request, which will then be screened by industry experts and mentors across several parametres, such as the team, innovation scale, scalability, ideal gestation period, business model and ROI potential. The contact details for this incubator are as follows:
Address: Amity University Campus,E3, First Floor, Sector 125, Noida-201301, Tel No.: 0120-4659000, 4392243, Fax No.: 0120-4659009
OR you can fill a contact form at: http://www.amity.edu/aii/contactus.asp
Alternative Startup Scenarios: Setting Up a Freelance Business in India
On the other hand, you could consider establishing a company, i.e., a partnership firm, a private limited company or a limited liability company. While the entire team could comprise only of freelancers, working remotely, rather than setting up a physical office space, the procedure to establish the business will remain the same as that mentioned earlier for the specific structure you choose.
Several tech startups have chosen the freelance route, for instance, the web developer working as a freelancer from home or any space of their choosing. This type of business setup is more suited to tech companies than those in other domains.
If you need any assistance as a new entrepreneur, the Commissionerates or Directorates of Industries act as nodal agencies across the different Indian states, offering guidance for individuals wanting to establish an enterprise in the concerned state. They also act as the interface between the business and other agencies and regulatory bodies to help the entrepreneur get the required approvals and clearances. This eases the entire process, since everything is handled through a single point of contact. They also sanction incentives for eligible enterprises and work on creating an automatic and transparent system for the allotment of scarce resources or raw materials.
Starting your own business can mean a lot of hard work but it can all be completely worth it, given the degree of personal satisfaction and fulfillment you will experience when you achieve success.
All the amazing illustrations above are courtesy of Ranganath Krishnamani & Aman Rajwansh.