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Startup Punjab

Startup Punjab

Startup Punjab

The growth of a state’s economy greatly depends on innovation and entrepreneurship. The State of Punjab has a reputation of being the leader with rapid strides in all-round prosperity and growth. The State has excelled in various sectors across the spectrum like Industry, Agriculture, Education, Health, Literature, Sports, Arts and Culture. Punjab has been blessed with top infrastructure, human capital, enterprising and progressive people who strive to transform every potential opportunity into a booming success. Moreover, the State has identified that Startup and Entrepreneurship as the key pillar for economic growth, job creation, competitiveness and wealth creation. Based on the Startup Action Plan of the Government of India and Standup India, and the Industrial and Business Development Policy 2017 of the Punjab Government, the Punjab Startup and Entrepreneurship Development Policy has been initiated. I this article, we look at this Startup Punjab plan in detail.

Mission, Vision and Goals

The vision of the Startup and Entrepreneurship Development Policy is to develop the State of Punjab as a leading global hub for Startups and Innovation in order to accelerate the economic growth within the State and to offer large scale entrepreneurial and job opportunities in Punjab.

The Mission

The following are the critical points of the mission this policy looks forward to achieving:

  • To develop a conducive ecosystem by addressing the challenges in areas such as Market, Enterprise, Knowledge, Product, Ideas and Culture.
  • To create the environment and infrastructure that is necessary to promote entrepreneurial activities.
  • To foster Industry Academy linkages in growing an entrepreneurial culture.
  • To create an environment that is Startup friendly by streamlining rules and regulations along with laws.

The Goal

The following are the goals that the Startup policy aims to achieve in Punjab:

  • To facilitate 1000 startups in a period of 5 years.
  • To set up 10 incubation accelerators in Punjab with a particular focus on Digital Manufacturing, Agro and Food Processing, Lifesciences, and Information Technology.
  • To build strong linkages with the most significant institutions in the State.
  • To facilitate around 50 Entrepreneurship Development Centres in colleges and universities around the State.

Startup and Entrepreneurship

Punjab is popular for the enterprising spirit of its people. This is precisely what brought about the Green Revolution and also lifted the State to be a hub for Small and Medium Enterprises. With the launch of Startup Punjab, the State looks forward to building a robust ecosystem for nurturing innovation and startups. The necessary convergence and synergy in multiple Central and State programs that promote startups, innovation and entrepreneurship would be ensured by the State. It would encourage the networking of numerous academic institutions with the reputation of carrying out innovation and research along with other organisations that run incubators and accelerators.

University and College Incubators

The State would promote the setting up of Incubation Centres in colleges and universities around the state. These centres are crucial for the promotion of entrepreneurial culture among students. It inculcates the concept of entrepreneurship in the minds of students instead of just finding jobs after completing their studies. This would help students/ business owners to enjoy a creative, engaging and innovative environment along with the knowledge on the principles and practices of sound business ownership that the incubator programs would provide. Efforts are being put towards building a robust academia-industry linkage and network through incubation centres. The incubation facilities would be accessible to non-residents or non-students in order to bring significant benefits and knowledge to all stakeholders. Moreover, the students would be provided with information and support concerning the available schemes, incentives and grants initiated by the Centre and the State.

IKG Punjab Technical University

For offering a helping hand to the youth of the State and to shape them into entrepreneurs, IKG Punjab Technical University has set up a Startup Fund of INR 100 Crores in partnership with the State Government. This fund would be used for the promotion of incubation centres, initial funding for startups, scale up funding and to offer other support to the startup units. A quarter of the funds would be dedicated to promoting startups by Scheduled Castes and Women Entrepreneurs.

Incubation Centres

Incubation Centres by other Government Organisations: Multiple Incubation Centres are set up by various Central and State Government organisations like STPI Incubation Centre and Biotech Incubator. These centres would be promoted efficiently and effectively with necessary linkages with the industry and State Government programs.

The State of Punjab would also encourage incubation centres, and accelerators lead by the private sectors and offer them appropriate support. Various fiscal and non-fiscal incentives would be provided in order to promote the development of incubation centres in the private sector.

Sector Specific Incubators

With the aim to offer impetus to entrepreneurship in the focus sectors for the purpose of development, the State encourages the setting up of sector-specific incubators like Digital Manufacturing, Biotechnology and Lifesciences, Information Technology and Agro and Food Processing. These incubators would be set up in and around the existing industry clusters within the State.

Common Infrstructure and Co-Working Spaces

The State would support by facilitating the creation of adequate support through infrastructure to boost the innovation ecosystem. These infrastructure plans would be created across various sectors in every district in Punjab and include the following.

  1. Ready-to-use office spaces
  2. Software and hardware solutions
  3. R&D and testing labs
  4. Services such as legal, accounting, HR, IPR, etc.
  5. Facilities such as internet connectivity, electricity, water, security, etc.

Fiscal Incentives


Any entity that claims to be a startup unit would be required to meet the criteria listed below by the Government of India.

  • As a Private Limited Company as per the Companies Act, 2013, a registered Partnership Firm under Section 59 of the Partnership Act of 1932 or a Limited Liability Partnership under the Limited Liability Partnership Act of 2008 in India; and
  • Not prior to 7 years and for Biotechnology Companies, this period would be upto 10 years; and
  • With an annual turnover that does not exceed INR 25 Crores in any preceding fiscal year; and
  • Working towards innovation, improvement and development of products, processes and services, or if it is a scalable business model that has the high potential of wealth creation or employment generation;
  • The entity must not be formed by the split up or reconstruction of a business already in existence and must not be created by the reconstitution or demerger of activity already in existence;
  • The entity should not be a holding company nor a subsidiary of any firm already existing. The subsidiary of a startup would be an exception in this rule.
  • Location: The entity/ company would be required to be registered in Punjab under the Punjab Shops and Commercial Establishment Act of 1958;
  • Employment: The company is expected to employ at the least 50 per cent of its total qualified workforce from Punjab itself, which shall not include any contract employees.

Exit Conditions

  1. If the entity is found guilty on any charges of fraudulent activity or if the company is found to have any false declaration in order to claim any benefits from or derived under this policy. Legal action shall be initiated for the recovery of all financial assistance offered to the said entity.
  2. Once an entity is not recognised as a startup anymore, the Government or the entity through which the Government makes its investment would be eligible to exit their investment in the startup and guidelines for the exit would be framed for channelising the stakes into the startup.

Fiscal Incentives for Incubators

The following are the financial benefits that would be offered to Incubators as a part of this policy.

Serial Number Nature of Incentive Extent of the Incentive
1 Capital Subsidy
  • Government Host Institutes would be offered with a capital grant of 100% of FCI subject to a maximum of INR 1 Crores for setting up Incubators.
  • Private Host Institutes and Stand-Alone Incubators would be offered a capital grant of 50 percent of FCI with respect to a maximum of INR 50 Lakhs for setting up Incubators.
2 Recurring Expense Reimbursement Every Incubator that was approved shall receive support for recurring expenses such as Operational Subsidy assistance with a limit of INR 3 Lakhs per year for 5 years.
3 Mentoring and Training To provide mentorship for essential issues like fundraising, recruitment, scaling and product interface, Incubators would be offered Mentoring Assistance support with a limit of INR 3 Lakhs per year for 5 years.
4 Startup Competition Assistance To promote the culture of entrepreneurship in colleges, State and Central Universities and Eligible Institutes of National Importance established in the State, incubators in these places would be supported by the State Government to organize a startup competition fest annually where the State may offer assistance with a limit of INR 5 Lakhs per event.

The following are the fiscal benefits that would be offered to startup units as a part of this policy.

Serial Number Nature of Incentive Extent of the Incentive
1 Interest Subsidy Startups that are eligible would be offered interest subsidy of 8 percent per annum for 5 years on the rate of interest paid on the loans received from scheduled banks and financial institutions subject to a limit of INR 5 Lakhs per annum.
2 Lease Rental Subsidy Reimbursement of 25 percent of lease rental subsidy startups that are eligible in the State, and operating from IT Parks, Incubators or Industrial Clusters or any other notified location would be able to receive a maximum of INR 3 Lakhs per annum for 1 year.
3 Seed Funding A Seed Grant with a limit of INR 3 Lakhs per startup unit would be provided for the validation of the idea, prototype development, assistance directed towards travelling costs and implementing field, market research, skill training, marketing and initial activities to begin a startup and so on. Seed Funding to Startups shall be routed through the State or Centre recognised Incubators.
4 Scale-up Funding The Government has created a corpus fund of INR 100 Crores dedicated specifically for Category 1 funding that would meet the funding requirements for the scalability of Startups. The key features of the Fund would be the following:

  • It would have an initial corpus of INR 100 Crores to be invested within a period of 5 years as the AIF/ Alternative Investment Fund.
  • The fund would be directly invested into Startups but shall participate with the capital commitment in the SEBI registered Category 1 AIF Venture Funds.
  • SIDBI would be recognised as a professional fund manager for managing this specific Fund and would empower their empanelled VCs in order to fund Punjab Based Startups.
  • The mandate to make a 10 percent contribution in the total corpus of the VC Fund would be given by the State Government. However, this would be subject to the condition that the VC invests double the amount contributed by the State Government of Punjab in the startups based off in Punjab. The proportionate proceeds from Venture Funds shall be remitted back to the Fund. These returns along with the Capital Gains shall be used to continue funding Venture Funds to support the rapidly growing startup ecosystem continuously.
  • The State would contribute a total of 10 percent of the fund’s size that has to be wholly raised by VC, and it shall be released when the VC makes the investment in the Punjab based startup.

Access to various features

Every Startup unit is entitled to the following incentives provided to MSME Units in the Industrial and Business Development Policy of 2017 by the Government of Punjab.

Access to Finance

Serial Number Nature of Incentive Extent of the Incentive
1 Investment subsidy by way of reimbursement of the net SGST on the intra-state sale. Reimbursement of 100 percent of the net SGST for a period of 7 years from the date of commercial production with a limit of 100 percent of the FCI.
2 Interest Subsidy on term loan in the Border Districts and the Kandi Area Interest subsidy at the rate of 5 percent per annum only in Border Districts and Kandi Area subject to a maximum of INR 10 Lakhs per year for 3 years.
3 Interest Subsidy on a term loan to SC Entrepreneur or Women Entrepreneur Interest subsidy at a rate of 5 percent per annum only for SC Entrepreneurs or Women Entrepreneurs subject to a maximum of INR 10 Lakhs per year for 3 years.
4 Addition State support of interest subsidy under the Credit Linked Capital Subsidy Scheme (CLCSS) of the Ministry of MSME, Government of India. Interest subsidy at the rate of 5 percent subject to a maximum of INR 5 Lakhs per year for 3 years and would not exceed the amount of net SGST paid during the relevant year to such startup units eligible under the CLCSS Scheme.
5 Additional State Support of the reimbursement of guarantee fee charged under the Collateral Free Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) Scheme.

100 percent guarantee fee would be reimbursed to micro and small enterprises with a maximum of INR 1 Lakhs.


6 Financial assistance to the SMEs for the “Emerge” exchange platform set up by the NSE. To make the SMEs available on the exchange platform called “Emerge” set up by the NSE, the State would provide the following incentives.

  • 10 percent of the cost of the Public Issue expenses with a maximum of INR 2.5 Lakhs for the registration of the Nation Stock Exchange.
  • A direct subscription up to 10 percent of the Public Issue would be provided out of the corpus that is to be created jointly with the SIDBI, Nationalized Banks and the State Government with a maximum of INR 10 Lakhs.

Access to Infrastructure

Serial Number Nature of Incentive Extent of the Incentive
1 Exemption from Electricity Duty 100 percent exemption for 7 years
2 Exemption or Reimbursement from Stamp Duty 100 percent exemption or reimbursement from the stamp duty for the purchase or lease of land and building.

Access to Technology

Serial Number Nature of Incentive Extent of the Incentive
1 Assistance for Technology Acquisition 50 per cent of the cost with a maximum of INR 25 Lakhs for the purpose of adopting technology from an officially recognized National Institute.
2 Additional Support to ZED scheme of the Government Reimbursement of 50 percent of expenses with a maximum of INR 5 Lakhs incurred on plant and testing or machinery equipment for obtaining at least the silver category status under the ZED scheme.
3 Reimbursement of expenses incurred for Water/ Energy/ Safety Audit 75 percent to a maximum of INR 2 Lakhs for Energy Audit and a maximum of INR 1 Lakh for Water Audit and Safety Audit each.
4 Assistance for Environmental Compliance 50 percent financial support with a maximum of INR 25 Lakh on the capital cost for setting up of effluent treatment plants and for the installation of Air Pollution Control Devices.

Access to Market

Serial Number Nature of Incentive Extent of the Incentive
1 Reimbursement of expenses for patent registration 75 percent of the expenses with 10 Lakhs for domestic patent and INR 20 Lakhs for international patent.
2 Additional Support for the Performance and Credit Rating Scheme of the Ministry of MSME Reimbursement of 25 percent of the fee with a maximum of INR 10,000.
3 Reimbursement of expenses incurred on quality certifications 100 percent with a maximum of INR 10 Lakhs.
4 Design Clinic Scheme Reimbursement of the contribution of industries of INR 1 Lakh per program for the design awareness program by the National Institute of Design, Ahmedabad.
5 Vendor Development Program Assistance of INR 5 Crores to the MSME Punjab for assistance in the Industry for organizing Vendor Development Programs, Buyer-Seller meets, Reverse Buyer-Seller meets.
6 Marketing Support Assistance to the MSME for showcasing the products at local, national and international events.

  • At 50% of the total rent limiting to INR 10 Lakhs for the participation of minimum 5 units in thee Punjab Pavilion in the International Trade Fairs abroad.
  • At 25% of the total rent limiting to INR 3 Lakhs for Domestic Conferences and Trade Fairs.
  • Nil for Pavilion at progressive Punjab Events and Conferences
7 Freight Assistance to Export Oriented Units 1 percent of the FOB value or actual freight paid from the Manufacturing place to the Shipment place, whichever is less with a maximum of INR 20 Lakhs per annum.
8 Annual State Awards to MSME, SC, Women and Exporters An annual award of INR 3 Lakhs per unit for the excellence in productivity, quality, export for each category of enterprises.

Startup Punjab Hub

With the aim to create a single point of contact for the whole startup ecosystem and to enable knowledge exchange and the access to funding, the State of Punjab created the Startup Punjab Hub in partnership with the Startup India Hub which would be a critical stakeholder in the vibrant emerging ecosystem.

  1. Startup Punjab will work in a hub and collaborate with the Central and the State Governments, Indian and Foreign VCs, banks, incubators, angel networks, legal partners, consultants, R&D institutions and universities.
  2. The Hub would assist startups through their complete lifecycle with a particular focus on the essential aspects like obtaining financing, business structuring advisory, feasibility testing, technology commercialization, enhancement of marketing skills and management evaluation.
  3. They would organize mentorship programs in partnership with incubation centers, governmental organizations, educational institutions and private organizations who aim to foster innovation.

Intellectual Property Rights

The State of Punjab promotes the awareness and adoption of IPRs by startups and facilitate then in protecting and commercialising IPRs by providing access to high-quality Intellectual Property services and resources. This would include fast-track examination of the application for patents and rebate in fees.

Funding Support from various GOI Schemes

The Government of Punjab would work towards facilitating fund support from various Central Schemes for startups such as:

  • Credit Guarantee Fund for Startups
  • Providing Funding support through a “Fund of Funds” with a corpus of INR 10,000 Crores.
  • Tax Exemptions on Startups for 3 years.
  • Tax Exemptions on Capital Gains.
  • Tax Exemptions on investments above fair market value.

Women Entrepreneurship

Women entrepreneurs comprise a small percentage of the overall percentage of entrepreneurs. Women entrepreneurs are to be encouraged for significant economic and social development and inclusive growth. The State of Punjab has identified the particular challenges faced by women entrepreneurs in the formal and informal sectors of the economy including the rural and urban areas. This would create a facilitative environment for women to contribute to the development of the State’s economy.

The State never fails to encourage women entrepreneurs and to create awareness among women entrepreneurs through various State and Central sponsored schemes. The State would also offer complete support to women who have multiple ideas for businesses and are interested in starting their very own business ventures.

Scheduled Caste Entrepreneurship

All the sections of the society have to partake in the prosperity earned by the State for the growth and success to be entirely inclusive. It is also vital that the marginalised sections of the society also needs to see the vision of creating and scaling up ventures to be a significant participant in this growth story instead of just focussing on wage employment and education. There is a requirement to substantially raise the number of SC entrepreneurs and the number of SC-owned enterprises in order to enable the social-economic empowerment of the SC communities.

The State of Punjab would also encourage SC entrepreneurs as well as create awareness among them through various State and Centre-sponsored schemes and offer support in their ventures. The State would guide the Standup India program with different State Specific schemes in order to promote entrepreneurship amongst the SC youth.