Through its draft Startup India Action Plan, the Government has indicated its commitment towards a conducive ecosystem for startups. Continued from our previous post in this series, the new norms for eligible enterprises are as follows:
It is mandatory for government
departments and public sector units to procure at least 20% from the micro and small organizations. The
rule that came into effect from April 1, 2015 was designed to create greater opportunities for micro and small enterprises (MSE). Extending this benefit in the
manufacturing sector, the Startup India Action Plan exempts new units from the mandatory criteria about prior
experience and turnover for public tenders.
However, the companies will still need to demonstrate the
capability to execute the project they apply for. They will also need to have an owned manufacturing facility in
India. In addition, the parameters for quality and technical requirements under
the tenders will remain unchanged.
Acknowledging the high failure rate among startups, the
Government proposed a fast-track liquidation process through the Insolvency
and Bankruptcy Bill in 2015. The entities will be able to wind up within 3
months from the date of application to this effect. This period may be extended
only if at least 75% of the financial creditors agree.
A licensed professional will be appointed to manage the
insolvency resolution process (IRP), taking control of the firm’s assets and
liabilities as a liquidator. S/he will be responsible for the fast closure and
repayment to creditors within 6 months of appointment.
Labels: Business, india, Startups