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Key highlights from Maharashtra state innovative startup policy 2018

The state of Maharashtra is a leading producer of entrepreneurs and though it has come in late, the innovative startup policy announced by GoM will definitely have far reaching positive effect on the startup ecosystem in the state. At the heart of this policy is the LEAPFROG principle, which will ensure that this policy is inclusive and covers the entire diaspora of stakeholders. The active participation of Government in supporting, building and sustaining startups is a welcome move. 
posted on 15th May 2018
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In an effort to give impetus to Government of India’s initiative ‘Startup India’, the Government of Maharashtra (GoM) has been focusing strongly on making the state as a hub for startups and providing entrepreneurs with a conducive environment to flourish. GoM has already announced a five-day event ‘Startup Week’ from June 25 to June 29, 2018, to be held in Mumbai to give the opportunity to startups to showcase their innovative products and solutions. Among the slew of other programmes and policies introduced by GoM, the formulation of ‘Maharashtra State Innovative Startup Policy’ is the most significant of all.

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Drafted by Skill Development and Entrepreneurship Department (SDED) of GoM, ‘Maharashtra State Innovative Startup Policy’ along with effort of MSInS and Fellows of GoM CM office, the Policy was approved and adopted on January 17, 2018 by the GoM. The GoM held a launch event formally on April 25, 2018 to unveil the Policy. Among many Treelife Consulting was a part to the launch event and to get insight into the policy at close quarters.

The policy targets to develop 15 incubators, attract Rs. 5000 crores investment, facilitate 10,000 startups and create 500,000 direct and indirect jobs through its LEAPFROG principle:

L – Lighten Regulatory Compliance

E – Connect the Ecosystem

A – Augment Infrastructure

P – Partner with Industry

F – Funding Startups

R – Realizing Human Potential

O – Organize Competitions and Events

G – Governance

Here are some key highlights from the policy document:

Startup Definition

GoM’s recognition to startup as an entity is in accordance with the definition laid down by Department of Industrial Policy & Promotion (DIPP) on ‘Startup India’ portal.

Relaxation of Local Laws

In August 2017, GoM had announced that businesses employing less than 10 employees were no longer required to obtain Shop and Establishment Act (known as Gumasta in regional language) license. The policy aims to ease out the norms of Act further by permitting startups with asset-light business models to incorporate at their residential address.

SGST Rebate

GoM may reimburse State and Good Services Tax (SGST) paid by startups, provided that customers of the said startups can’t avail system credit.

Relaxation of Norms for Government Tenders

GoM has exempted startups in the manufacturing industry from the criteria ‘prior experience and/or turnover’, a former prerequisite that discouraged startups from participating in government contracts. The entry of startups in public sector undertaking is expected to foster innovations in products, services and delivery of government departments.

Setting Up of LEAPFROG Maharashtra Portal

GoM will launch LEAPFROG Maharashtra Portal on the similar lines as ‘Startup India’ national portal. A mobile app is also under development. Both portal and the app will act as a single interface for startups to share knowledge, obtain clearances and approvals, and seek assistance on feasibility testing, business structuring, management evaluation, technology commercialization, fundraising and marketing.

Self-Certification

In April 2016, the Ministry of Labour had directed all state governments to grant an exemption to startups from select labour laws if they submit self-certification for legislation compliance. GoM will allow startups to file self-certification through the portal and/or mobile app and steer clear of inspections for a period of 7 years.

Infrastructure Augmentation

GoM will strengthen its focus on building state-of-the-art infrastructure to promote the state as a premier global hub for startups. A few major initiatives under infrastructure augmentation mentioned in the policy are:

• Incubators will be required to incorporate as profit ventures under Special Purpose Vehicle (SPV), either as a section 8 company or a private limited company. This will ensure their vested interest in the startups.

• Private incubators set up by industry associations and prominent companies will undertake minimum 10% product or service procurement from startups they promote and mentor.

• Maharashtra Virtual Incubation Centre will be set up to provide online financial, legal, cloud, IP and mentorship assistance to startups incorporated in Maharashtra. Government-backed incubators will get standard resources to create a digital presence to incubate startups set up outside Maharashtra.

Fund-of-Funds and Crowdfunding

With an aim to provide capital access to startups at early/seed, growth and maturity stages, GoM has set up several funds, including:

Fund-of-Funds: This will be a preliminary corpus of Rs. 100 crores and an accumulative corpus of Rs. 500 crores over a period of 5 years. This fund will invest in SEBI-registered funds.

Crowdfunding: The government will match the online contributions raised by social sector startups on crowdfunding platforms. However, the grant will not exceed Rs. 5 lakhs and is subject to contribution from at least 100 individual donors.

Competitions and Events

GoM will organize numerous competitions and events to provide national and international exposure to startups in the state. Apart from B-Plan competitions, industry get-togethers and idea pitching challenges, two unique events that the state will conduct are:

Startup Week: The state has launched an annual event called ‘Startup Week’ under which it will invite startups from selected sectors through EOL for a ‘proof of concept’ opportunity. The shortlisted startups can pitch to an expert panel comprising industry players, investors, academia and government officials. Three startups from each selector sector will receive a work order of Rs10-15 lakhs to prove their concept.

As a matter of fact, the state government has already set the ball rolling by announcing the first edition of ‘Startup Week’ to be held from June 25-29, 2018 in Mumbai. Startups from education, skilling, healthcare, agriculture, clean energy, environment, water & wastewater management, smart infrastructure & mobility, governance, financial inclusion and cyber security sectors can submit their applications to the Maharashtra State Innovation Society (MSInS). The enrolment dates are open until May 31, 2018. Check more details here.

Startup Symposia: This will be a two-day rotating event to provide a unified networking platform to startup ecosystem stakeholders across major cities of Maharashtra.

Governance

The policy sounds a promising beginning to the startup ecosystem in Maharashtra. However, its governance is equally crucial to ensure the accomplishment of desired results. Hence, GoM has entrusted the responsibility of governance to MSInS to implement, monitor and evaluate the policy features every year and make the amendments, if necessary, to suit the relevance of time. Since its inception in August 2017, MSInS has made commendable efforts to boost participation, performance and efficiency in startup innovations. We are sure it will be able to shoulder the new responsibility with aplomb.

Our thoughts

The policy though a late entry amongst various states, has been one of the well thought of policies. Its implementation and the actual realization of the thought into current laws and procedures will go a long way in making Maharashtra a forerunner in cultivating a startup friendly environment and attain the long term objectives of the policy of employment generation and economic prosperity. The policy can be accessed at: http://goo.gl/5iGNEn

Author: Jitesh Agarwal, Founder, Treelife Consulting

Author: Jitesh Agarwal, Founder, Treelife Consulting

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