Gujarat best place for start-ups, Rajasthan, Odisha also get honours

Maharashtra, Karnataka host highest number of registered start-ups

Gujarat tops first-ever start-up ranking of states by the Department of Industrial Policy and Promotion (DIPP), ahead of states such as Karnataka, Kerala, Odisha, and Rajasthan.

The first-ever States’ Start-up Ranking 2018 by the DIPP, released on Thursday, also showed major states remain a top draw for start-ups, while smaller states and the Northeast remain untouched by the start-up revolution. India currently has the third-largest start-up ecosystem worldwide. 

The ranking is based on 38 specific action points divided across seven broad categories that include the states’ start-up policy and implementation, incubation support, seed funding, angel and venture funding, simplification of regulations, easing public procurement, and awareness and outreach.

On the basis of performance in these categories, states have been recognised as the Best Performer, Top Performers, Leaders, Aspiring Leaders, Emerging States, and Beginners. Gujarat came out on top, followed by ‘top performers’ Karnataka, Kerala, Odisha, and Rajasthan. Northeastern states like Manipur, Mizoram, Nagaland, Sikkim, and Tripura came at the very bottom.

Interestingly, a report handed out at the launch of the ranking showed that Maharashtra, followed by Karnataka, Delhi, Uttar Pradesh, and Telangana, hosts the highest number of start-ups registered with the DIPP. Gujarat, with its credentials as the state with the best ecosystem, occupies the sixth place. The comprehensive national report on start-ups maps the road map of the Start-up India programme.

A total of 27 states and three Union Territories (UTs) participated in the exercise of ranking start-ups. The evaluation committee comprising independent experts from the start-up ecosystem assessed the responses across various parameters. Many parameters involved getting feedback from beneficiaries. More than 40,000 calls were made in nine different languages to connect with the beneficiaries to get a pulse of the implementation, a senior DIPP official said. An online portal was also launched, which was instrumental in enabling states to seamlessly submit their initiatives across these reform areas, he added.

Fifty-one officers from states and UTs have been identified as ‘champions’, who have made significant contribution towards developing their state’s start-up ecosystem.

Angel tax demon rears head

• Facing the ire of entrepreneurs and venture capital firms on the ‘angel tax’ they have to pay, the DIPP on Thursday said the existing mechanism to approve start-ups that apply for tax breaks, through an inter-ministerial board, is set to continue. 
   
• DIPP Secretary Ramesh Abhishek said start-ups would continue to require exemption from the inter-ministerial board that had been set up in 2016. Several start-ups have raised concerns on taxation of angel funds under Section 56 of the Income Tax (I-T) Act, which provides for taxation of funds received by an entity.
   
• Abhishek said the purpose of Section 56(2)(viib) of the I-T Act was to prevent money laundering, and investments made by alternate investment funds are exempted from this provision.