J&K's Startup Policy 2018 envisions 500 new startups

With an aim to facilitate the growth of 500 new startups in the state in the next decade, Jammu and Kashmir Government in September 2018 launched its first startup policy.

The much awaited and needed ‘J&K Startup Policy 2018’ aims to nurture and inspire the young and entrepreneurial brains of Jammu and Kashmir to pursue innovation and entrepreneurship by creating a vibrant and conducive startup ecosystem in the state.

 The main objectives of ‘J&K Startup Policy 2018’ are:

1.         Facilitate and nurture the growth of at least 500 new startups in Jammu and Kashmir in next 10 years.

2.         Establish at least 10 new state-of-the-art incubators across all three regions of the state including private sector.

3.         Facilitate access to early stage investments for aspiring and existing startups.

4.         Facilitate setting up of Innovation Labs in selected Higher Secondary Schools and Colleges.

5.         Facilitate setting up of at least 3 fabrication labs, one each in Jammu, Kashmir and Ladakh regions.

6.         Create a strong institutional framework for effective implementation, monitoring and evaluation of this policy.

The policy mainly focuses on innovative projects – any idea capable of introducing new or disruptive technology in the development of existing and new products, processes or services, capable of addressing any of the present challenges before the society at large in an effective manner.

There shall be a special focus on startups. The policy shall work for platforms like startup hub, incubator, angel investors, innovation labs, Entrepreneurship Development Cells, Fabrication Lab etc.

The Jammu and Kashmir Entrepreneurship Development Institute (JKEDI) has been declared the nodal agency for implementation of the Policy and Director, JKEDI has been designated as the state nodal officer.

Focus Sectors

Under this policy some focus sectors have been identified. The policy shall give special attention to the startups         with disruptive value additions in these illustrative focus sectors,

1.         Food Processing and Allied activities

2.         Agriculture including Horticulture and Floriculture

3.         Textiles, Apparel & Fashion Technology

4.         Renewable Energy

5.         Handicrafts & Handlooms and their design element

6.         Electronics System Design and Manufacturing

7.         Information Technology enabled Services.

Recognition of a startup, incubator and angel investor: For recognition of a Startup, incubator and angel investor by the nodal agency they shall have to apply as per below given procedure:

Application procedure for recognition of startups:

1.         An entity willing to get recognised as a startup shall make an online application over mobile app or portal set up by the Nodal Agency.

2.         The application shall be accompanied by:

a.        A copy of Certificate of Incorporation or Registration, as the case may be;

b.        A write-up about the nature of business highlighting how it is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation; and

c.         Other details as specified in the online application format.

3.         The Nodal Agency may, after calling for such documents or information and making such enquires, as it may deem fit, do as under:

a.        Recognise the eligible entity as Startup; or

b.        Reject the application by providing reasons.

Benefits and Incentives

An entity recognized as a Startup as per the definition in this policyshall be eligible to avail the following benefits/incentives, which can be periodically reviewed and enhanced by the Government:

i)          Office Space

The Government of Jammu and Kashmir shall provide co-working space with uninterruptible high-speed internet to the selected recognised Startups at a subsidized price through JKEDI at its campuses in Pampore and Bari-Brahmana and at all the 22 district centres.

ii)         Monthly Allowance

Monthly Allowance of Rs. 10,000 (for a period of one year) shall be paid to the Startups subject to the approval of Startup Task Force and if it fulfils any of the following conditions:

1.         Has total equity financing of at least Rs. 5 lakhs from a Venture Capital Firm or a recognised Angel investor; or

2.         Has sanction letter of funding/grant from Government of India or any State Government; or

3.         The startup is physically incubated in a recognised incubator of the state for a period of 3 months;

In case of a startups falling under following categories the monthly allowance shall be Rs12,000:

i.          If the startup is from any of the focus sectors;

ii.          If it is founded by SC/ST/Women/ Specially Abled (with more than 40% disability);

iii.         If at least 25% of the shareholding is held by SC/ST/women/physically challenged;

iv.        If the SC/ST/Women / Specially Abled (with more than 40% disability) are the single largest shareholder in the startup.

iii)        Assistance for Product Research & Development/Marketing/Publicity

A one-time assistance upto Rs 10 lakhs may be given to a recognised startup for Product Research & Development or introduction of an innovative product or service in the market which shall be subject to the approval of Startup Task Force and fulfilment of any of the following conditions:

1.         Startup has got total equity financing of at least Rs 10 lakh from a Venture Capital Firms or recognised Angel investor; or

2.         Sanction Letter of funding / grant to the entity by Government of India or any State Government of at least Rs 5 lakhs; or

3.         The Startup is physically incubated in a recognised incubator of the State for a period of 3 months at least; or

4.         The startup has either published or has been granted a domestic or international patent.

5.         The startup has already been granted a monthly allowance under the startup framework.

In case of the startups falling under following categories the assistance for R&D/marketing/publicity shall be upto Rs 12 lakh:

i.          If the startup is from any of the focus sectors;

ii.          If it is founded by SC/ST/Women / Specially Abled (with more than 40% disability);

iii.         If at least 25% of the shareholding is held by SC/ST/women/physically challenged;

iv.        If the SC/ST/Women / Specially Abled (with more than 40% disability) are the single largest shareholder in the Startup.

iv)       Energy Assistance

To ensure uninterruptible power supply to startups, 100 percent subsidy on purchase & installation of Diesel Generator Set or Solar/Wind Generator or Hybrid Solar Wind System shall be available to recognised startups, subject to the terms and conditions of Jammu & Kashmir State Industrial Policy – 2016 and Procedural Guidelines to the Industrial Policy 2016-26. Energy charges from Power Development Department would be the same as it is for the industrial units.

V)        International Patent Filing Cost Reimbursement

Subject to the approval of Startup Task Force, cost incurred by recognized Startups for filing foreign patents on a single subject matter and patent prosecution shall be reimbursed upto 50% of the actual cost or upto Rs. 5 lakhs whichever is less. The reimbursement of the eligible cost on foreign-patent shall be done in 2 stages, i.e. 50% after the patent is published and the balance 50% after the patent is granted.

Vi)  Tax benefits and exemptions

Tax Benefits and Exemptions as defined in the Industrial Policy 2016 shall also be applicable to the recognized Startups in the State. Any amendments/ changes made from time to time made to Industrial policy shall also be applicable to the recognized startups.

Vii)  Public Procurement

All State Government Departments/Agencies/Public Sector Undertakings shall be authorized to relax norms in public procurements, subject to fulfilment of quality and technical specifications. All recognised Startups shall be given exemption from the prior experience criteria and prior turnover criteria in all public procurement. The Startups shall be required to pay 50% of the amount of Earnest Money Deposit or Bid Security prescribed by the tendering authority or Rs 5000 whichever is lower. Tender documents shall also be supplied to the Startups @50% of the price or at Rs 500 whichever is lower. This is as per provision available in the Industrial Policy 2016 at Para 3.24 which got extended to Startups in light of SAC decision No. 20/3/2018 issued vide Government Order NO. 180-IND of 2018 dated 16-07-2018. The notification(s) in this regard may be revised from time to time to be in sync with the notification(s) issued by the Central Government.

Viii)     Self certification of compliance under Labour Laws

The State Government would endeavour to initiate process of Self Certification for Startups and Micro & Small Enterprises under different Labour Laws applicable in the State.

ix) Exposure visits and workshops for startups

A corpus fund shall be created to conduct training workshops and to organize exposure visits for the State startups and incubates of the recognized incubators to national and international startup ecosystems/innovation hubs. Incentives in the form of conveyance, travel allowance/daily allowance, subsidized stall space shall be offered.

Selected startups shall be send to leading startup destinations in the country and abroad for getting exposure as well as an opportunity to meet and converse with leading Startups, thinkers and innovators. Provision shall be made to ensure 1/3rd representation of women entrepreneurs in all exposure visits. Existing programmes of the State Government such as Entrepreneurship Awareness Programme (EAP) shall also be accessed for some of these purposes.

X)        Infrastructure Support

As part of State Government initiative to make Jammu and Kashmir a Startup State, the Government would strive towards developing world-class infrastructure. The list of Incubators, EDCs, Fab Labs, IPR Facilitation Office shall be made available on the Jammu and Kashmir Startup portal which shall be updated on regular basis.

Xi) Financing

In order to facilitate access to investment opportunities, the Government shall encourage the Banks and financial institutions to enhance and extend their existing schemes of lending to the Startups on convenient terms (e.g. collateral-free lending, soft loans etc.).

Xii)   Grand Challenge for Idea to Proof of Concept (PoC) Fund

The nodal agency in collaboration with other Ministries of the State/Central Government shall organise sector specific Grand Challenge at least two times a year. The challenge shall be a unique opportunity for individual innovators or early stage startups to come up with commercially viable solution for specific challenges which shall contribute to well-being of the State.

Funding shall be in the form of Grant-in-aid to be released in tranches based on the life cycle of the business plan and cost of running pilot.

The Nodal Agency in conjunction with the concerned partner Department shall contribute for the required grant in aid.

Jammu and Kashmir Angel Network (JKAN):

To create and promote alternate funding options for the State startups, the Government will encourage Industrialists and Entrepreneurs to establish a Jammu and Kashmir Angel Network.

Academic Interventions

I) Innovation Labs

Schools and Colleges shall be encouraged to setup innovation labs. Budgetary provision would be kept to facilitate setting up of innovation labs in selected schools and colleges. For setting up an innovation lab, each selected School/College shall be provided funding upto Rs 5 lakhs and setup support by Jammu and Kashmir Nodal Agency.

ii)      Syllabus Update

Schools, Colleges and Universities shall be advised to update their respective curriculums to include a compulsory course on “Entrepreneurship Development” as an optional subject, to inspire students with the aspiration, capacity and inclination towards entrepreneurship. Various nationally and internationally accredited Massive Open Online Courses (MOOCs) focused on entrepreneurship can be included in the academic curriculum.

iii) Establishment of EDC (Entrepreneurship Development Cell) Network

Colleges/Universities that set-up EDCs to encourage students to take up entrepreneurship at the college level shall be networked. The network shall facilitate cross pollination of ideas across institutions and disciplines.

iv)  Training of trainers

Innovation and entrepreneurship teachers can propel the youth towards breakthrough discoveries. Strong emphasis shall be put on training the local faculty by Industry Veterans, Corporate and other leaders from startup ecosystem.

v)  Project Work

Student entrepreneurs working on startup ideas in any of their graduation year shall be permitted to convert their startup project as their final year project towards their degree completion.

vi) Attendance Relaxation

Students in Schools/Colleges/Universities involved in setting up of startups through recognized incubators shall be given upto 20 percent a relaxation in attendance.