Over the past ten years, the Startup India initiative has played a decisive role in building a strong entrepreneurial ecosystem in India. The country today has the world’s third-largest startup ecosystem, growing at a steady 12-15% annually. The number of DPIIT-recognised startups has increased from just about 350 in 2014 to more than 2.09 lakh today.
Using an average employment of 12 jobs per startup, job creation has grown from roughly 4,900 jobs in 2014 to over 21 lakh jobs now, showing how startups have become a major source of employment and economic energy.
Compliance Reforms: The Core Growth Driver
A key reason behind this transformation is the massive reduction in compliance burden by the Modi government.
More than 47,000 compliances have been reduced, over 4,458 legal provisions decriminalised, and over 64 regulatory reforms have been initiated since 2016 to improve ease of doing business, ease of raising capital and overall regulatory simplicity.
Together, these measures marked a decisive shift in governance, from punishment and inspection to facilitation and trust.
Major Compliance Reductions for Startups are:
4Startups are permitted to self-certify compliance with 9 labour laws and 3 environmental laws for 3 to 5 years, removing mandatory inspections during the early stage of operations.
4The startup recognition and approval process has been converted into a fully digital system through the Startup India portal and the National Single Window System, eliminating physical documentation and multiple departmental visits.
4DPIIT-recognised startups are eligible for 100% income tax exemption under Section 80-IAC for three consecutive years out of the first ten years, directly reducing tax liability in the growth phase.
4The Angel Tax under Section 56(2)(viib), which earlier taxed investments above fair market value at nearly 31%, has been abolished from FY 2024-25, removing valuation-based taxation on startup funding.
4Startups can now complete business closure within 90 days, instead of facing prolonged winding-up procedures.
4Prior turnover and prior experience requirements have been removed for government procurement, enabling startups to participate in public tenders purely on technical and quality criteria.
4DPIIT-recognised startups are exempted from Earnest Money Deposit (EMD) in government tenders, reducing capital blockage.
4Startups receive an 80% rebate on patent filing and a 50% rebate on trademark filing, while the government bears the full cost of IP facilitators.
4Patent applications from startups are fast-tracked for examination, reducing waiting time for intellectual property protection.
4The definition of small companies has been revised by increasing the paid-up capital limit to Rs10 crore and turnover limit to Rs100 crore, bringing more startups under simplified compliance rules.
4Investments received by eligible startups from accredited investors, AIFs, non-residents and large listed companies are exempted from share premium taxation under Section 56 up to an aggregate limit of Rs 25 crore.
From Regulation to Empowerment
Over ten years, Startup India has transformed the role of government in entrepreneurship, from regulator to enabler. By cutting compliances, reducing fear and simplifying taxation, the Modi government has ensured that startups can focus on innovation, job creation and global competitiveness.
Startup India today stands as one of the most impactful governance reforms in independent India, placing entrepreneurs at the heart of India’s economic future.