Bihar, a state traditionally known for its rich cultural heritage, is now making strides on the path of industrial and infrastructural growth. With a vision to enhance its economic competitiveness, the Government of Bihar has focused on promoting innovation, strengthening infrastructure, and fostering the growth of start-ups. The role of start-ups in driving economic growth, job creation, and wealth generation cannot be understated, and Bihar is taking proactive measures to support the start-up ecosystem. Through the Bihar Start-up Policy, 2022, the government aims to provide a supportive environment for the youth and entrepreneurs, facilitating their growth and innovation.
Eligibility Criteria for Start-up Recognition in Bihar
To be recognized as a start-up under the Bihar Start-up Policy, certain eligibility criteria need to be met. These criteria are designed to ensure that the start-up is genuinely new, innovative, and has the potential for substantial growth. Below are the key recognition requirements:
- Incorporation Date: The start-up must not have been incorporated or registered more than 10 years ago. This ensures that the state supports only relatively young businesses that are still in the early stages of development.
- Entity Type: The start-up must be a Private Limited Company, a Partnership Firm, or a Limited Liability Partnership (LLP) incorporated under Indian laws. This ensures a formal legal structure for the business.
- Annual Turnover: The business must not have exceeded an annual turnover of Rs. 100 crore in any of the preceding financial years. This ensures that the start-up is in its initial growth phases.
- New Business Formation: The entity should not have been formed by splitting or reconstructing an existing business. This criterion guarantees that the start-up is truly innovative and not a mere reorganization of an established company.
- Focus on Innovation: The start-up must be engaged in the innovation, development, or improvement of products, services, or processes. This is critical to ensure that the business contributes to technological advancements and problem-solving.
- Scalable Business Model: The business model should have high growth potential, capable of generating substantial employment or wealth.
- Incorporation and Operations in Bihar: The start-up must be registered in Bihar, and its operations must be conducted within the state. This ensures that the state’s economic growth is directly benefitted by the start-ups it supports.
- Tax Liabilities in Bihar: The business must pay taxes on its operations within the state of Bihar, further contributing to the state’s development.
Benefits and Funding Support for Start-ups
The Government of Bihar offers a robust funding mechanism and comprehensive support to start-ups at different stages of their business journey. This includes validation, commercialization, and scale-up stages, with financial assistance and infrastructure support provided to ensure that start-ups can thrive and grow.
1. Validation Stage
- Seed Grant: Start-ups in the validation stage can avail themselves of a seed grant of up to Rs. 10 Lakhs, offered as an interest-free loan for a tenure of 10 years. This funding helps in validating business ideas and prototypes.
2. Commercialization Stage
- Early Stage Funding Support:
- Free Valuation: Start-ups will receive free valuation services to assess their business viability.
- Access to Angel Investors: The government will assist start-ups in connecting with angel investors to secure initial funding.
- Success Fee: A 2% success fee will be provided to start-ups for successfully mobilizing investments from state-registered angel investors.
- Matching Support:
- Financial assistance equal to the amount invested by angel groups and Category-I Alternate Investment Funds (AIFs) will be provided as a loan to the start-up. Terms and conditions for this loan will be determined by the Bihar Start-up Fund Trust (BSFT).
- Acceleration Program Support:
- Assistance of up to Rs. 3 Lakhs will be provided to cover the fees for participation in national and international acceleration programs. This will help start-ups enhance their capabilities and broaden their market reach.
3. Scale-Up Funding Support
- Venture Capital Funds:
- The SMIC (Start-up Mission and Incubation Cell) may invest in SEBI-registered AIFs and Venture Capital Funds (VCFs), ensuring that at least 50% of the funds are directed towards start-ups in Bihar.
- Public Listing Facilitation:
- The SMIC will assist start-ups in listing their companies on national stock exchanges like BSE and NSE. This support aims to help start-ups access public markets for raising capital.
4. Intellectual Property (IP) Support
- Zero Cost for Patents:
- The Government of Bihar will bear the costs associated with filing domestic patents for start-ups, enabling them to protect their innovations.
- Additionally, the government will provide reimbursement for the costs associated with filing foreign patents, helping start-ups gain global protection for their intellectual property.
5. Support for SC/ST, Women, and Differently Abled Entrepreneurs
- Funding Reservation for SC/ST Start-ups:
- 22% of the total funding corpus will be reserved for start-ups led by SC/ST beneficiaries.
- Relaxed Eligibility Criteria:
- The BSFT may relax eligibility criteria for start-ups owned by women, SC/ST, and differently-abled individuals, ensuring they have equitable access to funding and support.
Infrastructure Support for Start-ups
To further enhance the support system for start-ups, the Government of Bihar will facilitate the creation of shared infrastructure that can be accessed by start-ups to help them scale effectively without bearing heavy overhead costs. This infrastructure will include the following:
- Co-Working Spaces: Shared office spaces that provide flexible workstations and collaborative environments for start-up teams.
- R&D Labs, Conference Rooms, and Cubicles: Start-ups can use these spaces for research, meetings, and day-to-day operations.
- Shared Software and Hardware: Access to high-end printers, computers, and other essential equipment for efficient business operations.
- Testing Labs and Tool Rooms: Facilities to help start-ups test products, refine prototypes, and conduct quality checks.
- Shared Services: Legal, accounting, technology, patents, and investment banking services available to start-ups for ease of operations.
- Accommodation and Hostel Rooms: For out-of-town entrepreneurs, accommodation will be provided to reduce the cost of living and improve work-life balance.
- Community Events and Promotional Support: Networking events, mentorship programs, and visibility initiatives to help start-ups connect with investors and industry experts.
- Common Facilities Centers: These include warehouses, storage facilities, and quality assurance labs to assist with logistics and product quality checks.
Application Process for Start-up Recognition
To apply for recognition as a start-up and avail the benefits provided by the Bihar Start-up Policy, the following steps must be followed:
1. Prepare Documents: Ensure that all necessary documentation is ready, including the business registration details (Private Limited, Partnership, or LLP), tax registration, and other relevant legal documents.
2. Online Registration: Visit the official Bihar Start-up Portal. The portal will have an online application form where you need to provide the details of your business, including your start-up’s objectives, operations, financials, and innovation aspects.
3. Eligibility Verification: Your application will be reviewed to confirm that your business meets the eligibility criteria mentioned earlier, such as the entity structure, turnover limits, and innovative business model.
4. Submit Proof of Bihar Operations: You will need to provide evidence that your start-up is registered in Bihar and operates within the state. This may include office lease agreements, utility bills, or any other supporting documents.
5. Approval and Recognition: Once your application is approved, your start-up will be officially recognized under the Bihar Start-up Policy. You will receive a certificate of recognition, enabling you to access the various funding and infrastructure support benefits.
6. Access to Benefits: Once recognized, you can start applying for various forms of support, such as seed grants, angel investor connections, accelerator program funding, and access to co-working spaces and professional services.
Bihar Innovation Hub
In addition to the incubation centers, the Government of Bihar will establish the Bihar Innovation Hub. This hub will function as a full-fledged incubator, offering:
- Shared workspaces
- Business advisory services
- Access to funding
- Networking, merger & acquisition, and valuation support at the commercialization stage.
The Bihar Innovation Hub will be expanded into a Virtual Incubator, further increasing its reach and providing access to start-ups across Bihar, including those in rural and remote areas.
Conclusion
Bihar’s forward-thinking approach to promoting start-ups, through funding support, recognition, infrastructure, and specialized services, positions it as a key player in the development of India’s start-up ecosystem. The state’s commitment to fostering innovation, inclusive growth, and economic dynamism will not only benefit entrepreneurs but also contribute significantly to the state’s overall development. Through its comprehensive approach, Bihar is poised to emerge as a leading destination for start-ups, offering an ideal environment for the next generation of entrepreneurs to grow, innovate, and succeed.