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Startup India Action Plan: Simplified Legal Compliance

Speaking of startups, the Finance Minister said, “The more the sector becomes unregulated, the better it will be. One of the reasons why India became an important IT hub was because we had no laws governing it. The entire Startup India campaign is intended to create a supporting system.”

The Startup India Action Plan has tried to simplify the cumbersome and expensive laws that have long been blamed for adversely impacting the entrepreneurial initiative in the country, focusing on three key areas –

  • Simplification of Regulatory Procedures
  • Funding Suppor
  • Industry-Academia Partnership and Incubation

The regulatory simplification for eligible ventures includes:

Self-certification (See Update)

Cases of unwitting defaults in compliance by enterprises in their early stages are not uncommon. A lot can be attributed to rigid policies that have so far failed to factor the multiple challenges facing this segment. The Modi Government is planning a nifty solution to this problem in the form of self-certification. Accordingly:

  • Startups will be able to certify their compliance with 9 Environmental and Labor Laws through a mobile app to be launched by the Government.
  • No physical inspection will be made in case of Labor Laws for initial 3 years. However, if a verified written complaint is made against the enterprise, it will be subject to inspection.
  • Ventures falling under the ‘white category’ will be subject to only random checks for Environmental Law compliance. It is defined by the Central Pollution Control Board under the “Draft Document on Revised Concept of Categorization of Industrial Sectors” 2015 as a new category. Units with a pollution potential index of less than 15 fall in this segment. Currently 36 industries qualify as ‘white’.

Following laws are covered under the provision of self-certification:

  • The Building and Other Constructions Workers’ (Regulation of Employment & Conditions of Service) Act, 1996
  • The Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
  • The Payment of Gratuity Act, 1972
  • The Contract Labor (Regulation and Abolition) Act, 1970
  • The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  • The Employees’ State Insurance Act, 1948
  • The Water (Prevention & Control of Pollution) Act, 1974
  • The Water (Prevention & Control of Pollution) Cess (Amendment) Act, 2003
  • The Air (Prevention & Control of Pollution) Act, 1981

Online Solutions (See Update)The Government realizes the utility and growing role of mobility platforms in e-governance. Apart from a web portal for information dissemination and processing, a mobile app is proposed to cover similar aspects including quicker registration. Here are the salient features:

  • A simple form will be released for startup registration with relevant authorities.
  • The Mobile App/Portal will be integrated with Ministry of Corporate Affairs and Registrar of Firms at the back-end for faster information processing.
  • Users will be able to track the status of their application and download the registration certificate (once granted) through the App/Portal.
  • The App/Portal will also contain information about the applicable registrations, licenses, clearances and approvals.
  • Entities will be able to self-certify and file for compliance.
  • Application for various schemes under the Startup India Action Plan will be possible through the App/Portal.

The go-live date for the mobile platforms is April 01, 2016.

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