Startup Recognition Framework

Why in the News?

Government revised the Startup Recognition Framework under the Startup India Action Plan to make it more inclusive for scaling and innovation-led businesses.

Key Features of India's New Startup Recognition Framework

• Eligibility criteria for Startup recognition:
  • Incorporated or registered in India: As a-
    • Private limited company (under Companies Act, 2013);
    • Partnership firm (under Partnership Act, 1932);
    • Limited liability partnership (under Limited Liability Partnership Act, 2008);
    • Multi-State Cooperative Society (newly included) under the Multi-State Cooperative Societies Act, 2002; or
    • Cooperative Society (newly included) registered under any State/UT Cooperative Societies Act.
  • Restrictions: Should not be formed by splitting up or reconstruction of an existing business.
  • Age limit: 10 years 
  • Turnover limit: ₹200 crore for any financial year (doubled from earlier ₹100 crore)
  • Nature of work: Working towards products/processes/services, or is a scalable business model with a high potential of employment generation or wealth creation

• Eligibility criteria for Deep Tech Startup (new sub-category): An eligible startup with following distinct criteria-
  • Nature of work: 
    • Development of solutions based on new or evolving scientific/engineering knowledge, including multidisciplinary area;
    • High percentage of expenditure on R&D activities relative to revenue/funding
    • Owns/in process of creating significant novel intellectual property (IP) and commercializing it;
    • Facing extended development timelines, long gestation periods, high capital and infrastructure requirements, and carrying large technical or scientific uncertainty.
  • Age limit: 20 years 
  • Turnover limit: ₹300 crore
• Conditions for investment:
  • Funds to be deployed primarily towards its core business activities, innovation, research, scaling, or operational requirements.
  • Not allowed to invest in certain assets or activities, other than when it is integral to its core business operations (See infographic)
• Authority responsible for recognition: Department for Promotion of Industry and Internal Trade (DPIIT)

Conclusion

The revised Startup Recognition Framework broadens eligibility and introduces targeted provisions for deep-tech enterprises, reflecting a shift towards supporting innovation-driven and high-impact ventures.