The government has incorporated the definition of ‘start-up’ in the procurement process for consultancy and other services. The Department for promotion of Industry and Internal Trade (DPIIT) has amended the definition of ‘start-up’ and has been decided to partially modify it.
Old definition and some changes:
The DPIIT had amended also the definition of ‘start-up’ on February 19, 2019. In which an entity would be considered as ‘start-up’ to a period of 10 years from the date of incorporation or registration and its turnover does not exceed Rs.100 crore. Simply now the expenditure department said the term of prior turnover and prior experience may be relaxed for start-ups but it is subject to meeting the quality and technical specifications.
According to Finance Ministry, the quality and technical parameters are not to be diluted. An entity would be considered as a ‘start-up’ for up to 10 years of its existence and up to Rs.100 crore of turnovers. In the past, the existence period was 5 years and the turnover limit was Rs.25 crore.
Current Change in definition:
The change in the definition is that a start-up should be “working towards innovation, development or improvement of products or processes or services, or it should have a high potential of employment generation or wealth creation”.
The earlier prerequisite towards an entity was that it might be “working towards innovation, deploying new products of commercialization, processes or services driven by technology or intellectual property”.