Expert committee set up by RBI lauds State’s innovative approach

The start-up model of the State government continues to win accolades from experts.

An expert committee constituted by the Reserve Bank of India has recommended that Telangana’s innovative model for start-ups should be assessed for possible replication in other States.

The committee said the Telangana model aims to promote innovation and entrepreneurship, leveraging its natural demographic assets as well as its base of technology and research professionals.

The committee, headed by former chairman of the Securities Exchange Board of India U.K. Sinha, was constituted by the RBI to study the situation of the Micro Small and Medium Enterprises and suggest recommendations for the accelerated growth of the sector. The committee made a special mention about the State’s approach in its 142-page report recommending that the model could be replicated elsewhere.

The report said the innovation policy of Telangana is based around five pillars — development of physical infrastructure; programme management capabilities; focus on creating sustainable funding models and other instruments; development of human capital by creating the right environment and support systems for learning; and experimentation and innovation from the early phases of education. In addition, there was proactive engagement with industry to continuously promote and identify innovation and encouragement to start-ups in the rural and social enterprise by providing additional incentives.

The paper mentions the incentives being given to incubators like reimbursement of paid stamp duty and registration fee making incubators and host institutes eligible for 100% reimbursement of stamp duty and registration fee paid on sale/lease deeds on first transaction and 50% thereof on the second transaction.

SGST reimbursement

In respect of start-ups, the units are allowed to pay SGST to the department concerned and avail reimbursement on a yearly basis in addition to provision of 30% reimbursement of the actual costs, including travel incurred in international marketing through trade shows, subject to a maximum of ₹ 5 lakh a year per company.

The policy provides for reimbursement of cost of filing and prosecution of patent application to start-up companies subject to a limit of ₹ 2 lakh per Indian patent awarded.

In respect of foreign patents awarded, the reimbursement would be up to ₹ 10 lakh on single subject matter. This is in addition to the recruitment assistance of ₹ 10,000 per employee provided for promoting idea stage companies.

Self-certification

The State is also providing non-fiscal incentives to start-ups and incubators like self-certifications in prescribed formats.

The committee said it had deliberated on all aspects relating to start-ups in the country and that the major reason for migration of start-ups to other countries was because of better enabling environment like tax concessions, ease of doing business and well established infrastructure, among others.