New startup policy: Boon or Bane?

The newly announced startup policy in Karnataka is expected to further strengthen its leading position as a startup hotspot. The move to increase the grant as part of the New Age Incubation Network scheme and seed fund grant to startups run by women, students, and economically poor people is a welcome step.

The newly announced startup policy in Karnataka has evoked varied responses. It was started with a vision to give wings to startups in the state through strategic investment & policy interventions leveraging the robust innovation climate in Bengaluru. Thirty percent of awards were bagged by startups in Karnataka this year on the occasion of National Startups Day.

The new policy saw an increase of 30 percent in the New Age Incubation Network scheme and seed fund grant to startups run by women, students, and the economically poor. ‘Idea2POC’ initiative is India’s first multi-sector Startup Policy launched by the Government of Karnataka in November 2015. The objective is to encourage innovators who may need early-stage funding to stimulate the commercialization of their inventions and to help in validating Proof of Concept. Idea2POC is given in the form of Grant-inaid but limited to a one-time grant of up to Rs. 50 lakhs.

The exceptions for this scheme include a firm formed by a demerger, a franchise of existing business in State, a merged entity in the state, promoted or sponsored by or related to an industrial group in the State whose group turnover exceeds Rs. 300 crore, holding company or should not derive more than 50% of its income from investments and loans and a subsidiary of a firm in the state.

Speaking with NewsTrail, Garvit Garg, CEO of EduPhoenix Solutions, a startup, said that the easing of certain schemes and a huge fund being provided has helped him to get help and establish his business. A lot of women and young students have benefitted from this scheme. Meanwhile, Purusharth Ranjan, a student pursuing BBA said that Karnataka’s new scheme is very helpful to new generation entrepreneurs. The fact that 200 startups have been given seed funding of up to Rs.50 lakh during the current financial year is beneficial.

The startup policy initiated by the Government of Karnataka supports Technology Business Incubators in institutions of higher learning which in return supports the new business idea put forth by budding entrepreneurs. For many, unstated support unlike before such as startups being supported with incentives, channelizing innovation for social impact and incubation infrastructure created through privatepublic partnerships has been a catalyst for as many as 14 startups bagging awards on the National Startup Day. A fund of funds allocated for investing in venture funds was exclusively added from the angel stage funding. The startup cells are facilitated through the Factories Act 1948, the Maternity Benefit Act 1961, the Karnataka Shops & Commercial Establishments Act 1961, the Contract Labor Act 1970, the Payment of Wages Act 1936, the Minimum Wages Act 1948, and the Employment Exchanges Act 1959.