CIA -III REPORT

MAKE IN INDIA, START-UP INDIA, AND SOCIO-CULTURAL

ENVIRONMENT GROUP V

for - BUSINESS ENVIRONMENT (COH133)

Department of Commerce
CHRIST (Deemed to be university)

Bangalore-560029

2022-2023
1. MAKE IN INDIA
Make in India is an initiative by The Government of India launched on 25 th September 2014 by
PM Narendra Modi as the logo signifies the Lion’s step that represents India’s success in all
spheres. It’s inspired by the Ashoka Chakra demonstrating the prime element of the national
emblem. The motto of this initiative is the slogan “Zero Defect Zero Effect”, which focuses on
manufacturing the products without any adverse effect or defect and ensuring not to bring out an
unfavorable environment.

1.1 THE 4 PILLARS OF MAKE IN INDIA

1.1.1 NEW MINDSET

The process where the government acts as the regulator for bringing in the
change or usage of alternatives by adapting new or different ways. Usually,
Industries view the Government as a body that supervises their business
activities. This campaign hence brings forth ways to modify how the Government
interacts and facilitates the development of the country. Workshops were
conducted that helped in bringing the set of officials such as Ministers, and
secretaries who collaborated and worked together in bringing and formulating the
set of instructions to prepare an action plan for a triennial aimed at raising 25 %
of GDP by contributing towards the manufacturing sector. This collaborative
model was successful in a short period by replacing outdated methods and
frameworks with a transparent user-friendly system.

1.1.2 NEW SECTOR

 This pillar focuses on the interactive collection of technologies (web platform)
and skillful pamphlets that spread information about these 25 sectors. FDI
(Foreign Direct Investment) has opened up in Railway, Construction, and
Defence production in a broad manner by simplifying factors such as enhancing
skills, bringing up the best way of promoting innovation that uplifts the
manufacturing sector that accelerates the growth of factories in the nation.

The 25 sectors of Make In India:

● Automobile
● Automobile components
● Aviation
● Construction
● Defense manufacturing
● Electrical machinery
● IT & BPM
● Leather
● Media and Entertainment
● Pharmaceuticals
● Ports & Shipping
● Railways
● Space
● Textiles & Garments
● Thermal Power

1.1.3 NEW INFRASTRUCTURE

The pivot goal of this framework is modernization that helps in the expansion of
industries (creating smart cities- to implement high-speed connectivity and
integrated logistics that are used to accelerate product delivery and customer
services). It is highly important to bring about industrial corridors and smart
cities; this pillar means that it is really important to get the approval of
strengthening the existing framework by upgrading IT facilities, institutes for
skill enhancement, compiling the global standards (advancing the practices in the
manufacturing sectors) sanctioning Industrialization and Urbanization.

INDUSTRIAL CORRIDOR: An industrial corridor is a group of infrastructural

investments made in a particular geographic area with the intention of promoting
industrial development. Industrial corridors are primarily set up 1) to attract investment
and increase employment in the manufacturing sector 2) to increase the manufacturing
sector's GDP contribution 3) to promote equal industrialization and urbanisation, and to
enhance the labour productivity and income levels.

There are 5 main Industrial Corridors, namely:

1. Delhi-Mumbai Industrial Corridor (DMIC)

 2. Chennai-Bengaluru Industrial Corridor (CBIC)
3. Bengaluru-Mumbai Economic Corridor (BMEC)
4. Vizag-Chennai Industrial Corridor (VCIC)
5. Amritsar Kolkata Industrial Corridor (AKIC)

DMIC (Delhi-Mumbai Industrial Corridor) is a big framework project with

technical and financial aid from Japan of about 100B USD (10,000 crore rupees)
intersecting 7 states: Delhi, Haryana, Uttar Pradesh, Madhya Pradesh, Rajasthan,
Gujarat, and Maharashtra. DMIC project seeks to establish a strong economic
base and the new cities in DMIC enable it to meet the pressures of
Modernisation, it helps to increase the potential of employment and industrial
outputs.

Dedicated Freight Corridor (DFC)- is established and owned by the Government

of India (PSU-Public Sector Undertaking) as the name itself signifies it enables
efficient transportation of commodities transferred in bulks in trucks, aircraft,
trains, or ship (freight transportation) throughout the whole nation.

1.1.4 NEW PROCESS

The key element of encouraging budding entrepreneurs is the prime motive for
the ease of doing business.

● The Affiliation of the Company has been reduced to 1 day then 10 days ●
The validity of the Industrial licensing was 3 years before which has been
extended to 7 years
● To facilitate the investors throughout the entire tenure of the firm, ‘Invest
India’ has developed a cell known as the “Investor Facilitation Cell”.

Therefore, these four pillars of this initiative uplift the Modern infrastructure
namely hardware, software, services, and facilities that support the business, and
secondly, it encourages entrepreneurship that persuades critical thinking that can
bring in changes for the development of the country.

1.2 ADVANTAGES

1.2.1 DEVELOPMENT OF JOB OPPORTUNITIES

It helps in providing job opportunities for the citizens of India, which also helps
in the reduction of unemployment, and helps people to enhance the skills and jobs
for the youth as they are the primary recipients of the country. This initiative
provides the chance which strives for the long-term goal of global manufacturing
which helps in the inflow of foreign capital.

1.2.2 EXPANDING GDP

The reinforcement in the manufacturing of goods and rendering services

increases the trade sector as well as boosts the GDP of the country. It develops a
platform that helps in investing in the country which stimulates the growth of the
 economy. The various investments in the commercial sectors such as
telecommunication, textile, etc., lead to an enormous flow of income
strengthening the economy of India.
1.2.3 FORTIFYING THE RUPEE

The arrival of various manufacturing industries would evolve India into a hub to
produce commercial goods that pave the way to a high inflow of Foreign
Investment that would raise the rupee against the monopoly of Dollars.

1.2.4 UPGRADATION OF TECHNOLOGY

As India is a developing country being an underdeveloped country before

evidently there was a lack of mechanisms, technology, and automation which is a
barrier to the development of the country.

1.2.5 DEVELOPMENT OF RURAL AREAS

It is inevitable that factories not only provide reinforcement to the specific areas
but also help the inhabitants of the locality with employment which enhances the
standard of living and quality of life of people. (Example: Hospitals, schools,
libraries, parks, and other public facilities or services for upgrading the general
public.)

1.3 DISADVANTAGES:

1.3.1 EXHAUSTION OF NATURAL RESOURCES

This initiative targets the expansion of manufacturing sectors or industries as the

ultimate objective is the establishment of setting up numerous factories as it
consumes natural resources leading to the high chances of rapid depletion and it
might take much more time to replenish it soon.

1.3.2 FOUNDATION OF MANUFACTURING ECONOMY

The Indian Economy is one of the massive economies in the world comprising
three major factors that are agriculture, industries, and services. With the
establishment of the Make in India movement, the economy assumably relies on
manufacturing and exporting whereas the import industries remain constant
which ultimately become a huge loss for the other sectors of industry.

1.3.3 DISRUPTION OR LACK OF CARE IN THE FIELD OF AGRICULTURE

The adverse effect of this initiative lies in the agricultural sector as with the
richness of the land 60% of the nation is cultivable. The insistence of this
campaign leads to the establishment of enormous companies that set up their
factories for agricultural purposes which in excess might also bring in a massive
disruption that can endure subsequently.

1.3.4 UNHEALTHY RELATIONSHIP WITH CHINA

 This disadvantage states that as China is already ranked as the top nation in
global manufacturing output, this campaign might eventually be the reason to add
to the existing long-term quarrel between the two countries. But in addition, if
this initiative progressively becomes a massive success, it will gradually make
the situation even worse, as India and China are economically growing. On the
other hand our nation has skilled human resources over China. Henceforth, in the
future Make in India will feasibly strive towards the enhancement of goals.

1.3.5 ATTRACTION OF THE INTERNATIONAL BRANDS

This initiative will increase the worth and the brand value of Indian products but
due to the obsession of trademark foreign merchandise the noble citizens or
upper-class individuals will eventually purchase those brands this is highly
challenging to entrepreneurs of our nations as they might also find it to be a big
obstacle regarding promotion of the local brands (regional products)

1.4 MAKE IN INDIA vs MADE IN INDIA?

Make in India is an instrument by the Indian Government that addresses the fall or decline in
production without being required to make direct investments in the industry so that it enhances
and uplifts these sectors which promote and provide new possibilities and new opportunities.
Make in India is also a call that invites foreign factors through technology, capital, and
investment, to employ the Indian workforce by effectively and efficiently using the natural
resources in India. Meanwhile, Made in India implies productive factors such as workers,
technology, labor, land, and natural resources (domestic factors) that signify the own brand of
the nation with the identity that emphasizes its origin from India.

1.5 COMPANIES THAT BENEFITED FROM THIS CAMPAIGN

Examples Of Indian Brands:

● Britannia is one of the largest food brands in India.

● Bharti Airtel is the Most Marketed Indian Telecom Service
● Bajaj Auto is an Indian automobile that became famous as an Indian multinational
company
● Lakme- cosmetic brand that is made in India
● Amul – the Taste of India
● Dabur- is the largest Fast-Moving Consumer Good in India

1.6 MAKE IN INDIA SCHEMES:

● Skill India
● Startup India
● Pradhan Mantri Jan Dhan Yojan
● Swachh Bharat Abiyan
● Digital India
2. CORPORATE SOCIAL RESPONSIBILITY

Business depends on society for needs like money, raw materials, labour, and skills. Thus,
businesses depend on society for existence, sustenance, and encouragement. The dependence of
business on society is so complete that as long as the latter wants the former, the business has a
reason to exist. Being so dependent, business has definite responsibility towards society.

Eg: Our obligation to Christ- as a student we have to maintain the surroundings clean and tidy
Similarly for Companies

CSR refers to the responsibility of decision-makers to take actions that help society and serve its
interests. By practicing CSR, also called Corporate citizenship, companies can be conscious of
the kind of impact they are having on all aspects of society including economic, social, and
environmental.
CSR makes a corporation accountable for any of its actions that affect people, their
communities, and their environment.

Eg: ITC and its 1 rupee to education policy

Social responsibility is not new to our country. In the olden days, whenever there was a famine
the leading businessmen in that area would assist the needy.

The Companies Act, 2013 provides for CSR under section 135. Thus, companies must follow.
Companies are required to spend a minimum of 2% of their net profit over the last 3 years as
CSR.
3. BUSINESS ETHICS

3.1 MEANING:
It refers to the extension of personal moral principles, a sense of right and wrong to
business. In simple terms it is the application of ethics into business.

There are two relevant theories that are widely discussed about business ethics. They are
as follows:

● THEORY OF MORAL UNITY: It advocates that business actions should be

judged by the general ethical standards of society. In this theory, it is said that
there exists only one ethical standard that applies to all entities in the society, be
it business or else.

● THEORY OF AMORALITY: It agrees that business can be amoral. This theory

also argues by saying that the actions of the managers/executives finally benefit
the stakeholders and the society itself.

3.2 SOURCES OF BUSINESS ETHICS

Managers are influenced by three aspects of ethical values: religion, culture, and law. All
value systems share the concept of mutual assistance as a unifying principle.

3.2.1 RELIGION

Religion is one of the first sources of ethical motivation. All major religions
uphold the idea of reciprocity toward one's fellow humans. The great faiths
around the globe emphasize social responsibility and the need for an orderly
social structure in a way that promotes the benefit of all people.

3.2.2 CULTURAL EXPERIENCE

A system of norms, beliefs, and standards that are passed down through the
generations and applied to behaviour to produce within-bounds behaviours is
referred to as culture. The three main moral codification eras that humanity has
experienced; the hunting and gathering stage, the agricultural stage, and the
industrial stage— are what led to the creation of civilization.
3.2.3 THE LEGAL SYSTEM

Laws are codes of conduct that govern people's behaviour in every culture and
are adopted by legislatures. These laws keep changing themselves as new
problems and ‘evils’ arise. Whatever codes of ethics are codified by legislation,
they apply to business. The public expects corporations to uphold the law, and by
doing so it is seen as being morally right.

3.2 WHY IS BUSINESS ETHICS IMPORTANT

3.2.1 ETHICS CORRESPONDS TO BASIC HUMAN NEEDS:

Man has a natural urge to uphold moral principles in both his personal and
professional lives since, as a manager, he is aware that his choices could have an
impact on thousands of employees' lives. The majority of individuals also want
to be a part of a group that they can respect and be pleased to be associated with
because they believe that the group's goals and actions are honourable and
beneficial to society.

3.2.2 VALUES CREATE CREDIBILITY WITH THE PUBLIC:

Even people who are not intimately familiar with how a firm operates will
honour and respect one that the public perceives as being ethical and socially
responsible.

3.2.3 VALUES GIVE MANAGEMENT CREDIBILITY WITH EMPLOYEES:

Values are intended to serve as a shared language between leadership and its
followers. When employees believe an organization's ethics are sincere, it helps
to establish shared objectives, standards, and terminology.

3.2.4 VALUES HELP BETTER DECISION-MAKING:

An ethical attitude helps the management make better decisions, i.e., decisions
 which are in the interest of the public, their employees, and the company's long-
term good, even though decision-making is slower.

3.2.5 ETHICS AND PROFIT:

Ethics and profit go together. A company that is inspired by ethical conduct is

also profitable.
3.2.6 LAW CAN NOT PROTECT SOCIETY, ETHICS CAN:

Ethics is important because the government, law, and lawyers cannot do

everything to protect society. Where the law fails, ethics can succeed.

3.2.7.ETHICS AND STAKEHOLDERS:

The demands being placed on businesses to be ethical by their various

stakeholders are constantly becoming more complex

3.2.8.ETHICAL VIOLATION:

Business ethics provides us with a way of looking at the reasons behind such
infractions, and how such problems might be dealt with by managers and
regulators.

3.3 ETHICAL DILEMMAS

The ethical dilemmas confronted by a manager stem from three sources: face-to-face
ethics, corporate policy ethics, and functional area ethics.

3.3.1 FACE-TO-FACE ETHICS:

As there is a human element in most business transactions, like, a purchasing

agent may develop a personal relationship with the sales representative, face-to-
face ethical dilemmas arise often.

3.3.2 CORPORATE POLICY ETHICS:

Companies are often faced with ethical dilemmas that affect their operations
across all departments and divisions. For example, people often alter timesheets
to cover up being late.

3.3.3 FUNCTIONAL AREA ETHICS :

Functional areas of a business, like Accounting, are likely to face ethical issues.
Ethical issues crop up in purchasing departments, marketing departments,
accounting departments, and in the area of sophisticated communication
technology.
3.4 MANAGING ETHICS

Some of the managerial interventions to ensure ethical conduct are:

3.4.1 CORPORATE CULTURE AND ETHICAL

CLIMATE

Corporate culture is a mix of ideas, customs, traditional practices, company

values, and shared meanings that help define normal behaviour for everyone who
works in a firm. An Ethical climate is the implicit understanding among
employees. Three different types of ethical yardsticks are egoism, benevolence,
and principle.

Example:Transparency International India has signed agreements known as

“Integrity Pacts” with 29 public sector enterprises in India, which requires the
undertakings to have transparency in their procurement deals.

3.4.2 TOP MANAGEMENT

The top executives are responsible to ensure that ethical standards are upheld in
their organization. Management should refrain from adopting strategies, incentive
schemes, and schedules that put unreasonable pressure on employees.
Management should emphasize the need to stick to ethical practices, for example,
German engineering giant Siemens AG has agreed to pay a record $80 million
fine to the US authorities to settle a bribery investigation under the Foreign
Corrupt Practices Act.

3.4.3 CODE OF ETHICS

A Code of ethics is the voluntary statement that organizations that commit to

specific beliefs, values, and actions set out for appropriate ethical behaviours for
employers. There can be

● Organizational or corporate code of ethics

● Professional code of ethics
● Industry code of ethics
● Program or group codes of ethics.

Example: Tata`s Code of Conduct

The Federation of Indian Chambers of Commerce and Industry has recently

issued a declaration on `Norms of business Ethics`.
EFFECTIVENESS OF CODES:

Ethical codes do ensure ethical conduct among organizational members, given

they adhere to the following requisites.

● A code needs to be developed and finalized after consulting with the

employees
● A code must is written, launched, and followed; taken into consideration
every time before taking any major decision
● A code once introduced and should not be breached as per the wishes of a
 manager or other staff
● Senior managers need to be held responsible for enforcing codes, such
compliance should be considered while evaluating senior managers.

3.4.4 WHISTLE-BLOWING

When an employee finds that some sought of unethical practices are being carried
out in his/her organization she/he “blows the whistle” by reporting the same to
the authorized parties. Whistle-blowing is considered to be a highly effective
fraud detector. The flip side of this method is that the whistleblower is often
subject to grave harm and sometimes affects the operations of an organization.
Example: Enron scandal. Tata Motors and Murugappan group are companies that
have evolved effective Whistleblowing policies.

3.4.5 ETHICS TRAINING PROGRAMMES

Nearly all companies provide training in ethics for their managers and employees.
This is done to make sure that the employees and managers have a proper
awareness of the official company policy on ethical issues and to show them how
to implement them in everyday decision-making.

3.4.6 ETHICS AND LAW

The similarity between ethics and law is that both aim at one thing- defining what
is right and what is wrong. Ethics is a more complex concept than law. Laws are
societies' attempts to define right and wrong in different spheres of life. Ethics
deals with human concerns which go beyond the scope of laws and written rules.
Similarities and differences apart, legal rules help promote ethical behaviours in
organizations. For example, The Foreign Exchange Management Act.1999, The
Companies Act.1956.
3.4.7 LEADERSHIP

Leadership is a significant factor that affects ethical conduct. Leaders set formal
rules and if they abide by those rules it sets an example to follow the correct
behaviour. Tata Group of Companies, WIPRO, and Hindustan Unilever are
known for honest and fair dealings, for which credit goes to their founders and
successive leaders.

3.4.8 STRATEGIES AND POLICIES

While formulating strategies and policies for the growth of an organization

managers must adhere to ethical principles. Policies should be in such a manner
that it promotes successful operations while supporting honest achievements.

3.4.9 INDIVIDUAL CHARACTERISTICS

An individual’s behaviour is guided by internal inclinations and external forces.

Whatever traits an individual possesses, the environment within the country
influences the employee’s ethics. Generally, employees tend to be more ethical in
 organizations having a code of ethics.

3.4.10 VISION STATEMENTS

Vision represents the core values a company stands for. The statements generally
include

Ethical values a company is planning to uphold. These must be communicated to

the employees as well.

3.4.11 REPORTING/ADVICE CHANNEL

Ethics management includes gathering information on ethical matters and

providing employees with appropriate channels for reporting or receiving advice
regarding ethical dilemmas.

3.4.12 RISK ANALYSIS AND MANAGEMENT

It is necessary to evaluate the risk posed by unethical behaviour and to monetize

its effects.

Example: Ranbaxy
3.4.13 AUDITING, ACCOUNTING, AND REPORTING

This tool involves obtaining an organization’s ethical performance. Social

accounting is a voluntary process concerned with assessing and communicating
organizational ethical performance. Organizations use both quantitative and
qualitative data to conduct social accounting.

Example: The Shells Sustainability Report,2008.

3.5 IMPROVING ETHICAL DECISION-MAKING

3.5.1 PRACTICAL SUGGESTIONS FOR MAKING ETHICAL DECISIONS

● Principles of Moral Idealism, intuitionism, and utilitarianism.

● Considering tactics that illuminate moral choices
● Writing down the pros and cons in the form of a balance sheet
● Sorting out ethical priorities before problems arise
● One should commit oneself publicly to ethical issues.
● One should set a good personal example for employees.

4. CORPORATE GOVERNANCE

4.1 MEANING AND OBJECT:

It refers to the activities of a corporation; the system of rules and practices and processes
by which the company is directed and managed.
According to the Organisation for Economic Cooperation and Development: “ A set of
relationships between the company board, shareholders and other stakeholders”.

Corporate governance is a structure through which objectives are set and means of
attaining those objectives and monitoring performances. It helps to ensure the structure
maintains integrity and its responsibility to the stakeholders, encompassing all
management spheres. Governance balances all the interests of its stakeholders and
assures disclosure of all relevant information on management, ownership, financial data,
operations, etc.

4.2 FEATURES:

● To ensure adequate and appropriate systems of control in a company- for

operation.
● To depict the relationship between various stakeholders.
● A preventive check for undue power by a single individual or group. ● To
ensure that the company is managed in the interest of the stakeholders. ● To
encourage both transparency and accountability investors require.

4.3 IMPORTANCE

● To ensure success and competitiveness in the long run.

● To be at par with international standards.
● The World Bank in this regard formulated a draft for developing countries’
industries for effective governance. Hence this helps distill the best governance
practices from this draft and developed countries.
● To adhere to professionalism in the company.

4.4 FACTORS

4.4.1 OWNERSHIP STRUCTURE

The ownership structure can be either dispersed between individual and

institutional shareholders or concentrated in the hand of a few large shareholders.
The US and UK are examples of the former and Germany, and Japan of the
latter.

In India, the ownership structure is a co-existence of state, private, and

multinational enterprises along with individual investors.

It is claimed that a concentrated structure is more effective in corporate

governance. This is due to the presence of large/ dominant shareholders having
more awareness and being more participative in the Annual General Meeting
(AGM) or through their elected board members.
4.4.2 BOARD STRUCTURE

The company's Board of directors is responsible for setting corporate objectives,

developing policies, and selecting executives for administration. They are also
responsible for the management's performances- ensuring that the company is run
well, and protecting shareholders' interests.

The size, composition, and structure of the board barriers from company to
company even industry-wise. There are single-tiered and two-tiered companies,
companies that have either 'inside' and 'outside' directors or even both. The size
of the board generally ranges from 9-15, having no upper limit. The minimum
number of directors required for a limited company is 5.

But in the end, the quality of the directors supersedes the number and
composition of directors on the board.

4.4.3 FINANCIAL STRUCTURE

The proportion between debt and equity has rather great importance on the
quality and type of governance of the company.

Lenders and institutional lenders have a significant influence on management and

control. Since they have more information than the other investors, they can
favour decisions that have a positive impact on them.

Such lenders favour long-term investment rather than short-term, as the interest
earned by then will be more. This may or may not be in line with the interests of
other stakeholders. But as they exercise more roles not only as a source of capital
but also through their position of a nominee director, they play a large role in
corporate governance.

4.4.4 INSTITUTIONAL ENVIRONMENT

As known, businesses are affected by the legal, political and economic

environment. Hence they play a crucial role in corporate governance. Corporate
governance is economic and legal institutions that are often outcomes of political
decisions.
Eg: the voting rights held by the shareholders are based on the Company’s Act
2013, the financial claims of creditors are followed according to the bankruptcy
law, etc.

4.4.5 INSTITUTIONAL INVESTORS

Institutional investors and investee companies have one-one meetings discussing

strategies, paths to achieving goals, and overall governance. This is a special
privilege held by Institutional Investors. They have voting rights like any other
 investor and can participate in the board through their nominee option.
Rating agencies in India like CRISIL, brickwork, etc set useful benchmarks to
identify good governance and take such company profiles for investments.

4.4.6 EXECUTIVE COMPENSATION

Executive pay has a huge impact on the corporate governance of the company.

Large compensation of executives has always been a subject of discussion. This

is because oftentimes the pay is more than the growth rate (of the profits) of the
company. And in such cases how will companies grow? How is economic
growth possible?

Ultimately, shareholders are the deciding factor in executive pay, hence it must
be left to them. On the other hand, the availability of technicians and managers
must be increased.

4.5 MODELS OF CORPORATE GOVERNANCE

4.5.1 ANGLO-AMERICAN MODEL

The main focus of this model is on the stock market performance of the
company- the central element of governance. Their capital is sourced from
shareholders who are dispersed.

It is due to this reason such companies maintain high levels of transparency and
accountability to their shareholders and investors. Executive pay is dependent on
the behaviour of shares in the market.

This model is practiced in the US, the UK, Ireland, and Australia. Latin
American countries and other developing countries also take up these models.

4.5.2 CONTINENTAL EUROPEAN MODEL (RHENDISH)

In this model, companies have small numbers of large investors- where banks
play a significant role. Their main focus is the long-term preservation of
influence and power. Capital is raised from not only the stock market but also
from banks and institutional lenders. Thus banks have an important role.
Other goals of governance and owners are market expansion, shareholders’ value,
and employee retention. The pay of executives is based on managers and the
board.

Countries like Germany, France, and Italy follow this model.

4.6 MECHANISMS OF CORPORATE GOVERNANCE

Mechanisms of corporate governance refer to the various procedures, laws, and
regulations that exist to ensure companies follow corporate governance benefitting not
just the management but also the varied stakeholders.

4.6.1 BOARD OF DIRECTORS

The Board of Directors (BoD) is responsible for the overall governance of the
company. They are the persons who take decisions in the name of the company
for the benefit of its own and investors. The BoD is given certain authority to
carry out its functioning (mentioned in the Companies Act, 2013).

Hence, the Board is one way to ensure good governance in the company and
holds accountability for the same.

4.6.2 COMPANIES ACT, 2013

It is the apex regulatory law for all companies in India. This act has set a few
guidelines and requirements for the company to abide by. The Companies Act
mentions the requisites companies must have for governance.
The legal rights of shareholders are also mentioned in it. Some of them are:
● Vote for resolutions
● Appoint independent directors
● Take part in AGM
● Remove directors
● Fix remuneration of executives

4.6.3 SECURITIES LAW

SEBI is the primary body that sets the securities law of our country. It was
formed to protect the interest of all parties involved in stock markets and to deal
in securities- mainly the investors and brokers. SEBI ensures that the companies
do not indulge in any unfair practices that harm investors, their investments, and
the balance of the market.

Some of the functions of SEB are as follows:

● To ensure disclosure of all relevant information in the annual accounts and
prospectus.
● Control takeover of companies to prevent cannibalization and to protect the
minority shareholders.
● To ensure that the promoters hold at least a 20% stake in the company for a
minimum of 3 years.

Through these measures, SEBI holds companies responsible and accountable for
their functioning and governance.

4.6.4 DISCIPLINE OF CAPITAL MARKET

Market discipline refers to the system to promote transparency and disclosure of
information and risks associated with the investors.

When companies take decisions that are either harmful or opposed to the interest
of the minority shareholders, they can refuse to subscribe to the shares of
companies in both markets, selling their shares, and thus depressing the price of
the share prices. Such situations make companies susceptible to takeovers.

Lenders and debtholders too have a role in the company’s management. They
have contractual rights and this enables them to monitor the management’s
actions. And their ability to do so is high since they are large institutions with
greater stakes.

As a result, in a well-functioning capital market, companies voluntarily adopt

transparency and transparent practices. They also conduct external monitoring to
reassure potential investors.

It is due to this reason many Indian companies have now gone for more
disclosure and transparency than the requisite- to create an “honest” image with
the investors and aim at shareholders’ wealth maximization.

4.6.5 NOMINEES ON THE BOARD

The nominee (Director) is a director appointed on the company’s board by
financial institutions, banks, or any investors (individual or institutional). A
nominee director can only take decisions on behalf of the board and can not take
independent decisions. The AoA of the company must have the provision for the
appointment of nominee director(s).

Institutional investors are debtholders and even debtholders. As equity holders,

they appoint nominees to the board, who protect the interests of institutional
investors. Even though it has been pointed out by various committees that the
role of nominee directors is passive, active participation has emerged as
effective.

4.6.6 STATUTORY AUDIT

The audit is another effective mechanism for good governance- if done properly.
Auditing enhances the credibility of the financial reports ensuring that they are
prepared properly and completely. It also proves the reliability and usefulness of
investment decisions.

Such reports are essential for raising capital and for investors to trust the
company. Good corporate governance is assured iff there is good auditing. That
being said it is only one of the factors for measuring the quality of governance
and not the only one.
 Issued faced:
● The degree of audit independence is low
● The quality of the audit is not up to the standards
● Too much internal control in the auditing process

4.6.7 CODE OF CONDUCT

Code of conduct is the system of checks and balances at the level of BoD and
chief executives to prevent concentration of power and establish disclosure of
information.

It relates to effectiveness and accountability- effective refers to the quality of

leadership of the directors and accountability is concerned with the transparency
of the company.

The various sections of this element are:

● Role of Directors: this refers to the composition of the BoD, the number of
‘insider’ directors being balanced out by ‘outside’ directors with the
board chairman and chief executive being separated.

● Role Non-Executive Directors: The majority of the directors are required to

be independent of the board. Non-executive directors are those who
provide their insights based on their expertise and help in decision-
making and policy development. As opposed to independent directors
who have no relation with the company, non-executive directors may or
may not be representatives of major shareholders.

● Executive Directors: These directors develop strategies for growth,

overseeing the operation and leading them. The main concern with such
directors is remuneration. The remuneration is fully disclosed to the board
and the shareholders.

● Financial Reporting: A proper Audit Committee be appointed after which

the non-executive directors report the effectiveness of the same.

4.6.8 INDEPENDENT DIRECTORS

Independent directors are required for compliance, at least one-third of the total
number of directors of the company. The main role of such directors is the
protection of minority shareholders. They are expected to be academics, experts
in different fields, and retired bureaucrats.

But in reality, many are relatives of CEOs since it is the CEO that appoints
directors and not the board.

5. SOCIALAUDIT
 5.1 INTRODUCTION

Social Audit is a systematic study and evaluation of an organization's social performance

as distinguished from its economic performance. Social Audit leads to a report on the
social performance of a business unit

Theodore Kreps may have been regarded as the founding father of the ideas. He wrote
monographs on the measurement of social performance in which he summarized his
findings in 72 industries spanning over 2 decades. He suggested eight areas for appraisal:
1: Price
2:Wages
3:Research and Development
4:Public Relations
5:Advertising
6:Community Relations
7:Employment Stabilization

5.2 EVOLUTION

Social Audit system in India had a breakthrough in 1979 when Tata Iron and Steel
Company appointed a committee to examine and report whether the extent to which the
company has fulfilled the objectives contained in claims 3A of its Articles of association
regarding its social and moral responsibilities to the consumer employees shareholder
society and local community of society and the reported that the social performance of
the company has been of high order in its magnitude is perhaps unequaled in India.
Starting with TISCO, the social audit has picked Unit Trust of India, premises financial
institution also planned for social audit.

Social audits can be made by internal auditors, external consultants, or a combination of

the two. The internal auditor has the advantage of familiarity with the business but his
assessment can get influenced by his loyalty to the company. Bowmen's original
proposal was that a social audit should be made by outside consultants for inside. And
should be made only every 5 years.

5.3 BENEFITS

● A social audit helps the company to look at itself and identify how well the
company has adhered to its social objectives
● Social audit encourages social performance throughout the organization ● Social
audit helps a company's reputation by publishing audit reports which enhances the
company's reputation in the public eye.
● From the results company, ‘s can encourage and develop a socially responsible
culture for everyone in the company.
● Social audit data helps to compare the effectiveness of different types of
programmes.
6. CULTURL ENVIRONMENT
The cultural environment consists of the influence of religious, family, educational and social
systems in the marketing system

6.1 IMPORTANCE OF CULTURAL ENVIRONMENT

To understand the customers of a particular region, studying their social and cultural
environment is very important. The cultural environment is the behaviour of certain
groups of people based on factors influencing their culture. Understanding the cultural
environment is very important for any business to stay alive in the market as it helps
them make the right product for the right people at the right place and right time.

6.2 IMPACT OF CULTURE ON BUSINESS

6.2.1 CULTURE CREATES PEOPLE

The concept of culture is of great significance to business because it is the culture

that generally determines the character of the people. It is not that all people are
alike in a particular culture. There are subcultures within a culture. When people
with different cultural backgrounds promote, own, and manage organizations
then the organizations themselves tend to acquire distinct cultures like the culture
of the Tata group of companies is different from that of ‘Birlas’.

Culture performs at least four functions

● Culture distinguish between one organization and another

● It conveys a sense of identity for organization members
● It helps in creating a sense of commitment to do something worthy of one's
interest
● It enhances social system stability.

So by setting proper standards for organizational behavior, culture serves as a

kind of social glue that holds the organization together.
6.2.2 CULTURE AND GLOBALIZATION

As business units go international the need for understanding and appreciating

cultural differences across various countries is essential. Work motivation,
business goals, objectives, the meaning of colours, and numbers vary from
country to country. If one moves from one country to another there comes an
element called “Cultural Shock” ie; confusion, disorientation, etc. For example,
an executive transferred from India to Japan will require a lot of adjustments to
make. Therefore, to get over "Cultural Shock," one must understand and value
cultural variations across different nations.

6.2.3 CULTURE DETERMINES GOODS AND SERVICES

Culture determines the type of goods and services a business should produce. The
type of food they eat, and the kind of dress they wear vary from culture to
culture. Businesses should realize these changes and come up with products
according to them. Failing to understand these changes leads to losses and even
the closure of businesses.

6.2.4 LANGUAGE AND CULTURE

Language is the foundation of any culture, and the interrelationship between

language and culture is very strong. Language can be either low or high context.
Low-context language is in which people state things directly, there is no need to
interpret the situation and in high-context language, people state things indirectly
means communication has multiple meanings that can be interpreted only by
understanding the situation.

Language plays an important role in making a business successful by:

● Providing a clear understanding of the business of the situation

● Establishing a flattering bridge
● Making it easy to understand any culture
6.2.5 THE VIEW OF THE SCIENTIFIC METHOD

Unlike Western society, our society is steeped in fatalism and the theory of
karma. Indians do absorb and accept new technologies and production methods
as our followers are receptive and open. Being scientific does not mean one
should reject traditional methods, however, consider both traditional and modern
technologies together. It is only our custom to perform a pooja before the
commencement of any business activity. It is a kind of activity done to remember
the god for a second. The green revolution is one of the classic examples that our
farmers are open to modern methods and not only to traditional methods.

6.2.6 ETHICS IN BUSINESS

Ethics refers to the code of conduct that guides an individual in dealing with
others. It deals with behavior of individuals, one should be honest and
straightforward with others treating them the way they wish to be. Managers
should treat all the employees fairly, treating them differently creates chaos and
affects the running of the business. Every individual has a right to ensure the
whole group is working ethically, not only himself.

6.2.7 RELIGION AND CULTURE

Religion refers to a specific set of beliefs and practices agreed upon by several
persons. It plays an important role in one's life. It develops a person to lead a
disciplined life. Some of the major religion across the world is Christianity,
Hinduism, Islam, and Buddhism. Irrespective of the country a person belongs to,
he may practice abnormal things in the name of religion which cause
considerable impact on one's life and also among others.

In business, religion is influenced to some great extent, the attitude of people

towards business, and relationships between coworkers all get influenced by
religion. Some religions prohibit the use of alcohol and non-vegetarian food
items for example Birlas being Jains have not entered into catering and hoteliers.
The religion of a country may affect the working of a business in the US majority
is Christians. Being a Hindu setting up a firm out there without knowing the
culture will be a task for him. Conflicts between religions also adversely affected
the functioning of the business.

Religion also plays a role in deciding holidays, festival seasons are peak for the
business to offer discounts to increase their sales and also provide incentives to
employees. People opt for some auspicious days for the commencement of
business or some other activities.

All religion impacts in some following way:

● Specific religious laws

● Clothing requirements
● Ban on use of alcoholic drinks
● Foods that are forbidden
● Restriction on business and trading hours

6.2.8 MARRIAGE
Marriage is a social institution that results in the multiplication of people, settled
life, and systemized and organized activities all have economic significance. The
meaning of marriage differs from person to person, for a woman working in a
firm is forced to leave the job after marriage because of the pressure she has from
the husband's family or the change of place which is a great loss to the society as
well as to the economy. The institution of marriage is losing its purity because
people working in the same company from different castes fall in love which
leads to marriage. Even after two or three years they lose interest in each other
and decide to get divorced thus the number of divorced cases is increasing in
family court day by day.

6.2.9 AUTHORITY

The exercise of authority varies according to the management style, but different
styles are likely to be present in different cultures. Traditionally our society was
known for authority and power being concentrated with the king or boss, but one
of the merits of our society is that the boss is governed by the concept of Dharma,
a concept unique to our culture.

6.2.10 ATTITUDE:

Attitudes are the positive or negative evaluations by which one's behaviour is

determined. Attitude towards work has more importance on productivity, job
satisfaction, and motivation which are related to human resource management. A
positive attitude towards work benefits both employee and employer. A positive
attitude towards one's work is called a work ethic. Compensation and reward
systems are major elements in determining work attitudes. A negative attitude
leads to low productivity, poor customer engagement, and reduced energy levels.
People have some set of basic philosophies to guide their actions. One's beliefs
and values relate to what is right and wrong. People’s attitude towards time also
depends on culture. Western, as well as capitalist societies, believe that a wastage
of time is a waste of money.

6.2.11 COLLECTIVISM AND INDIVIDUALISM

Collectivism emphasizes the importance of community whereas, individualism

focuses on the individual's freedom and rights. Collectivism helps to create unity
and peace. It helps to achieve the goals of the organization. Gives more priority to
the organization's interest over individual interest. Individualism develops self-
confidence, gives more freedom, and is more independent. Priorities individual
interests.

6.2.12 AMBITIOUS

An ambitious individual is extremely motivated. Those individuals are ready to

take risks, strive to achieve goals, desire to succeed, and face new challenges.
Ambition always makes you desire success. Ambition always makes you move
forward even if failures happen it constantly reminds you to move forward until
you succeed in achieving the goal. The economy will be livelier if the majority
population is ambitious.

In society, more people are found to be complacent because they are not ready to
face new challenges. People are not ready to take risks or to work hard.
6.2.13 EDUCATION

Education was only given to the Brahmins in the traditional period. Education
was prohibited for other castes. But as time passes and as the economy develops
things have changed. Today education is very necessary as the economy
developed and the demand for education has also developed in every area. A
country’s economic progress relies on the education of its people. Education and
training help people to perform their work more efficiently. Education helps you
to be up-to-date about the trends and improve your skills accordingly. If a person
doesn't have the skill to perform a job then he can always learn which helps in the
development of his skills.

6.2.14 FAMILY

The family has an important impact on culture. In our culture family plays a very
crucial role. A joint family or also known as an extended family system was very
common for a long time in our culture. In times of hardship, people could depend
on others in a joint family. The death of a person in a joint family does not affect
as hard as in a nuclear family. In business, joint families are found to be very
helpful for accumulating capital. But joint families also have their disadvantages
such as loss of independence, and an increase in responsibility. As technology
advanced and the importance of education increased nuclear families started to
increase and now it has become common. Women have become more
independent and enjoy equal status with men. The joint family business has also
reduced and started turning into limited companies.

6.2.15 CULTURAL RESOURCES

India is a beautiful country with beautiful mountains, rivers, flora and fauna,
architecture, forests, temples, and so on. India has bi contributions to the world
mainly spices, cotton, rice, the invention of the decimal system, and Sanskrit
literature. Some ancient cultures have been taken away since it is considered
wrong like animal sacrificing, sati, child marriages, and caste discrimination.

Culture is a big business as well because it helps countries to exchange their

cultural products and earns foreign exchange
Example: Japan earns vast sums through exports of its cultural products like pop
culture, food, etc.

6.2.16 CUSTOMS AND MANNERS

Customs are practices that are established by people that have been transferred
from generations and it is still performed today. Some practices can be bowing,
and shaking hands. Manners are the behaviour of people towards others. This
behaviour shows our respect towards people around us. Customs and manners
can differ in each country. A businessman should know the customs and manners
of their respective country as well as about the country in which they are going to
start the business. Failing to perform or respect customs and manners may lead to
failure.

Example: In Vietnam, while greeting, people shake hands with a person . In

South Korea when you greet someone you are supposed to bow.

6.2.17 SUPERNATURAL BELIEFS

Supernatural beliefs are beliefs that do not have any scientific evidence which
supports their belief. Supernatural beliefs also affect the working of a firm.
People belonging to Hindu religious beliefs in Vastu. Vastu decides the entrance
of the firm, the place where the employees sit, the CEO’s cabin, and whether the
company should buy another business or not. Islamic religion gives more
importance to individuals' responsibility towards society, giving charity to the
poor, helping the needy, and earning profits through the right ways.

6.2.18 FUNCTIONAL AND DYSFUNCTIONAL CULTURES

Cultural effects can be both functional and dysfunctional. A functional culture is

positive and it contributes towards the success of an organization whereas
dysfunctional culture affects the performance of an organization negatively.

Culture leads to the following:

● Clannishness
● Diversity
● Mergers and acquisitions
● Groupthink

In a clan-cultured business the people in business look after each other. They
have strong bonds with each other and they can be like a large family.

Accepting people without discrimination, accepting people from all backgrounds

skills, and abilities. Having diversity in the workplace helps the organization as
the employees come up with new ideas, and effective communication between
employees helps in the development of the organization.
For mergers and acquisitions culture acts as a barrier. Financial matters were only
concerned in the past but in the present, it is based on cultural compatibility.
Culture leads to groupthink. Groupthink refers to when all people in the group
think the same. There is a misconception that the group cannot make mistakes in
judgments. The group must consider the majority response.The idea of the
minority group is avoided. Since the view of the majority is taken into concern,
the minority viewpoint is neglected even before bringing it up.

● Benefits of culture:
○ 1. Effective control :

Culture acts as a control tool that forms the behaviour of

employees. When people do not act according to the culture of the
organization managers get involved and give correct actions.

○ 2. Promotion of innovation

Innovation and creativity are one of the major emerging factors of

an organization's culture. An organization always supports
creativity and innovation. It motivates employees to come up with
new ideas.

○ 3. Strategy formulation and innovation

An organization's culture influences the formulation of strategies

and its formulation. Culture makes the employees work in a
manner that helps in executing the strategies. The organization
needs to change to the dynamic changes in technology.

○ 4. Strong commitment from employees

Culture makes the employees have a commitment to the

organization and to achieving its goal. Provides job satisfaction to
the employees. Commitment towards the organization makes the
employees more productive. They are ready to take new
challenges and risks.

○ 5. Performance and satisfaction

As the organization has a common goal all the employees strive

together to achieve the goal. Employees have a high level of
motivation which makes them face new challenges and take risks.
Also, culture acts as a tool to form the behaviour of
employees. The positive impact that culture has on individuals
always leads to job satisfaction and high productivity

6.2.19 BUSINESS PARTICIPATION IN CULTURAL AFFAIRS

 The business mainly does two things:

● Support Activities Related To Culture

Giving suitable attention to the workers, giving opportunities to all the

employees to express their ideas or views. Employing artists and
musicians, introducing awards for excellence.

● Beauty In Building Design

More attention is given to the design of buildings. Earlier much attention

was not given to the construction of buildings. But today buildings and
industries are constructed keeping in mind aesthetic values.

Business participating in cultural affairs improves the quality of life.

Improves the quality of employees working in the organization and
improves their communication among employees as well.

7. STARTUP INDIA

Start-ups are defined to b as businesses that are in their initial stages, a startup is a business that
“come up with a unique solution (a product, software, or service) to erase a complicated
problem”

Many would say that the trend of startups started during 2008, the period of “the Great
Recession”. This period brought many economies to their knees- companies were shutting
down, and consequently, employees were being laid off.

This had a major impact on the professionals of India. Many that were fired started looking for
alternatives, one such alternative was startups.

Since then companies like policy bazaar, zomato, Oyo, etc. have become unicorns. Seeing this,
the government of India put forward an initiative
Start-up India was put forward as a vision on the 15th of august 2015 as part of the prime
minister's independence speech from the red fort.

Five months later, on 16 January 2016, as envisioned by the prime minister, Startup India was
launched.

Startup India as of 2020 consensus has been reported to generate 1.7 lakh jobs

7.1 THE EVOLUTION OF INDIAN STARTUPS

1. IT matters: the roots of IT in India could be seen during the 1950s. In 1968
corporate giant tata set up their tata consultancy services. It partnered with US
based mainframe manufacturing company. As IT grew in popularity so did
engineering aspirants. As a result 25% of the world engineers are Indians. Today,
India’s IT/ITES and BPO firms constitute a $180 billion industry primarily focused
on the global market.Today, India’s IT/ITES and BPO firms constitute a $180
 billion industry primarily focused on the global market. Success of Indian IT
business encouraged indians to look for high paying jobs. Between 1960s-1990s
an average middle class family had atleast one primary earner who was either
employed by teh government or had a private sector job or owned and ran a
business. As more money began to spread, the indian economy opened upto the
global market creating more consumptions and increasing the amount of
entrepreneurs.
2. Rise of consumerism: now as the indian market has started interacting with the
global market, the consumption of Indians rose and consequently their demand
too due to the rise is disposable income. The rise in usage of smartphones,
internet etc. Thus ecommerce started flourishing and people started betting on it.
This was a mammoth wave as its suspected that the startup culture had started in
this wave.
3. Up the innovation drive: the last wave of the startup culture in India has 2
defining characteristics: B2B models and deep-tech, IP-driven innovation.Over the
last 2 decades India has transformed from being just a mere outsourcing hub to now
a significant R&D for centre for many multinational and silicon valley startups.

7.2 BENEFITS

1. Relaxed Norms: Once you are recognized by the DPIIT you become a DPIIT-
authorised startup. All the startups that get recognized by the DPIIT get listed on the
government Emarket space. A DPIIT-authorized startup can apply for government
tenders without any prior proof.
2. Tax Exemption: Once a DPIIT-authorised startup, you can avail of a 3-year tax
holiday off the 10 year. Recognized startups can avail of angel tax benefits in India
under section 56 of the Income tax act. 448 startups have been provided tax exemption
under section 80-IAC and 6000 startups have been granted the angle tax

3. Access to Funding: There are 2 types of funds that can be availed by startups. As a
part of startup Indian companies can raise money from a corpus fund of Rs. 10,000
crores it is called the fund for startups. Formally known as the startup India seed fund
scheme(SISFS) this fund is used and provided to the companies at their initial stage.

4. Easy exit: It's a known fact that anything that starts has to end at a certain point. A
startup recognized under a startup can shut down its operations within 90 days of its
application

5. Cheaper Patent costs: Companies recognized under DPIIT can process their patents
and other intellectual property rights at considerably low cost. Startup India provides an 80%
rebate for companies to file patents. The application process can be fast-tracked and processed
within 72 hours

7.3THE ACTION PLAN

The plan had 19 subsidiary action plans that focused its efforts on 3 key areas:
simplification and handholding, funding support and incentives, and industry-academia
partnerships and incubation.

The 3 pillars of the plan were:-

1) Simplification and handholding

2) Industry academia partnership and incubation

3) Funding support and incentives

7.4 SIMPLIFICATION AND HANDLING

Simplification and handling focuses on easier compliance, easier exit strategy for
failing startups, fast tracking for approval of patents, providing necessary legal
support and website symmetry for easier information accessing and
communication to interested or budding entrepreneurs.

7.4.1 ACTION PLAN 1

Compliance regime based on self-recognition. The objective is to keep

compliance costs low so that businesses can focus more on the functioning of the
business than the regulatory burden. The Ministry of labor and employment and Ministry
of environment, forest, and climate change are responsible and take decission in this
regard. The outcome of this initiative are:

1. Self-certification

2. 15 states complied with the advisory for 5 years

3. 9 states complied with the advisory for 3 yrs

4. 169 startups availed of benefits

5. 36 white industry sectors identified for availing services

7.4.2 ACTION PLAN 2

Start-up India hub. The objective of this action plan is to create a common
platform for various startup stakeholders to exchange information and promote
access to funding. Department for Promotion of Industry and Internal Trade
(DPIIT) is in charge of this wing. The outcomes of this plan is that the hub
engages more than 4 lakh users, an entrepreneur can connect to 665 incubators
and 165 accelerators
7.4.3 ACTION PLAN 3

Rolling out mobile app and portal is another action plan of Start Up India. The
objective is to help startups to interact with government and various regulatory
bodies for information exchange and business needs among stakeholders. DPIIT
is again responsible for this wing of Start Up India. The outcome of this plan was
that over 2 lac queries were resolved and the learning courses were accessed by
over 2.85 lakh aspiring entrepreneurs.

7.4.4 ACTION PLAN 4

Providing legal support and fast-tracking patent examination at lower costs.

Providing access to high-quality Intellectual property services and resources, and
also promoting awareness of the same was the objective of this plan. This
initiative helped in filing 5020 patent applications and 12264 trademark
applications.

7.4.5 ACTION PLAN 5

Relaxed norms of public procurement for startups was yet another part of Start
Up India.Providing an equalitarian platform for startups was the objective of this
plan. The Ministry of micro and small scale businesses was accountable and
responsible for the implementation and functioning of this plan. The initiative led
to public procurement grievance where DPIIT recognized startups can submit
their grievances which later would be resolved by the DPIIT in coordination with
the concerned parties

7.4.6 ACTION PLAN 6

Faster exit for startups. The objective is to make it easier for startups to dissolve.
The Ministry of corporate affairs is responsible for the same. According to the
insolvency and bankruptcy code, 2016(code) insolvency of corporate entities and
partnership firms can be accomplished in a time-bound manner.Section 12 of the
code also tells us that insolvency shall be completed in 180 days. It might be
extended by another 90 days and can be completed with a maximum period of
330 days. If the application form is submitted for insolvency and an insolvency
professional takes over the management of the corporate debtor, the assets.

INDUSTRY ACADEMIAAND INCUBATION

Industry academia and incubation aims to exempt income tax and capital tax
gains for eligible startups, fund of funds to involve more capital into the startup
ecosystem and credit guarantee system.

7.4.7 ACTION PLAN 7

Providing funding to startups through a fund of funds worth Rs 10,000 crore is

the next plan of Start Up India. The objective is to provide funding for the
development and growth of startups. TheSmall Industries Development Bank of
India (SIDBI) is held responsible for this plan. As of December 1, 2020, the Fund
of Funds has made a commitment of Rs. 4,326.95 CRORE to 60 Alternative
Investment Funds (AIFs). AIFs are formed as an investment to collect and
disburse funds in accordance with the investment policy.

Investments of RS. 4,509.16 CRORE has been made in 384 STARTUPS.

7.4.8 ACTION PLAN 8

Provide sufficient credit to startups is the 8th plan of Start Up India.this plan was
implemented to ensure growth of innovative minds by providing them with
guaranteed credit for all sections of the society. The Department for Promotion of
Industry and Internal Trade (DPIIT) and Small Industries Development Bank of
India (SIDBI) are the responsible bodies of this initiative and require to ensure
proper implementation of their duties. The concerned bodies, to ease access to
early stage debt, to finance the capital requirements for startups, proposed to
launch a credit guarantee scheme with a corpus of RS 500 crore per year for four
years. A Credit Guarantee fund for startups has been proposed with a corpus of
RS 2,000 CRORE. The proposal targets coverage of guarantee for approximately
RS 15,000 CRORE for 3000 units with an average loan size of Rs 5 crore to
eligible borrowers.

7.4.9 ACTION PLAN 9

Tax exemptions are provided on capital gains is the following plan that was
initiated through Start Up India. The plan helps promoting investment into
startups by mobilizing capital gains on capital assets example: investments into
startup companies will have lesser tax on the gains on trading them. The
Department of Revenue, Ministry of Finance is the body designated for the same.
This plan led to the introduction of SECTION 54EE to the INCOME TAX ACT,
1961 in May 2016: exemption from tax on long-term capital gain if such long-
term capital gain is invested in a fund notified by the Central Government. The
maximum amount that can be invested is RS. 50 LAC, along with the amendment
in Section 54GB of Income-tax Act in February 2016: exemption from tax on
capital gains arising out of sale of residential house or a residential plot of land if
the amount of net consideration is invested in prescribed stake of equity shares of
eligible Startup for utilizing the same for purchase of specified asset.

7.4.10 ACTION PLAN 10

Tax exemption for startups up to 3 years was yet another objective of Star Up
India. The objective was to promote growth of startups and address working
capital requirements. Department for Promotion of Industry and Internal Trade
(DPIIT) is the responsible body for this leg of Start Up India. The profits and
gains derived by an eligible startup from eligible business may get 100%
exemption for three consecutive assessment years out of seven years from the
year of its incorporation. In order to further rationalize the provisions relating to
startups, Finance Act 2020 provided for an amendment in SECTION 80-IAC
which allows for a deduction of an amount equal to hundred per cent of the
profits and gains derived from an eligible business by an eligible start-up for
three consecutive assessment years out of ten years from the date of
incorporation. This amendment will take effect from 1ST APRIL 2021. To avail
these benefits, a Startup must get a Certificate of Eligibility from the INTER-
MINISTERIAL BOARD (IMB). 319 STARTUPS have been granted income tax
exemptions till November 2020

7.4.11 ACTION PLAN 11

Tax exemptions provided to investments above fair market value, though similar
to the previous action plan is quite different. The objective was this plan is to
encourage seed capital investing. The Department of Revenue, Ministry of
Finance takes the role for implementation and decision with regards to this
matter. Recognized startups are exempt from tax under SECTION 56(2) (VIIB)
of the Income Tax Act when such a startup receives any consideration for issue
of shares which exceeds the Fair Market Value of such shares. The startup has to
file a duly signed declaration in Form 2 to DPIIT {as per DPIIT notification
G.S.R. 127 (E) dated 19th February 2019} to claim the exemption from the
provisions of Section 56(2) (viib) of the Income Tax Act.

7.4.12 ACTION PLAN 12

Organizing startup fests to showcase innovation and provide a platform for

collaboration forms the 12th plan for Start Up India. This aims to provide
national and international visibility to startups in india and to galvanize the
startup ecosystem. The Department for Promotion of Industry and Internal Trade
(DPIIT) is the designated ministry for any matters related to this branch of the
initiative. Startup India Global Venture Capital Summit 2018 and 2019 witnessed
participation of over 700 DELEGATES from the investor community, across 10+
COUNTRIES, in panel discussions, innovation showcase, closed door
roundtables and investor interactions. 12 GRAND CHALLENGES have been
organised by DPIIT in collaboration with other ministries and public
organizations.

7.4.13 ACTION PLAN 13

Launch the Atal Innovation Mission(aim) with self employment and talent
utilization(setup) forms to be yet another important branch of the Start Up India
initiative. This helps to serve as a platform for promotion of world-class
Innovation Hubs, Grand Challenges, startup businesses and other self-
employment activities, particularly in technology driven areas. NITI Aayog is the
responsible head for affairs realed to AIM. As of Feb 2020, 14,916 SCHOOLS
across the country have been selected for Atal Tinkering Laboratories, out of
which 4,875 have received RS. 12 LAC grant each and are operational.

7.4.14 ACTION PLAN 14

Using private sector for incubation setup is also a feature of Start Up India. This
leg of the initiative helps to ensure professional management of government
funded incubators. NITI Aayog again is the responsible body for it. New
Incubation Centers: Atal Innovation Mission (AIM) has selected 86
INCUBATORS across the country to provide financial support through grants in
aid and has already disbursed grants worth ~RS 201 CRORE TO 68
INCUBATORS till date • Within the past three years, and as self-reported by the
incubators, – 1,250+ STARTUPS have been incubated in the Atal Incubation
Centers/ Established Incubation Centers out of which ~500 are women led
startups. 144+ MSME’s have been supported to build business sustainability and
Rs. 62+ CRORE of seed funding have been leveraged from other sources based
on the RS 6+ CRORE GRANTED BY AIM. – 13,800+ JOBS have been created
by the startups incubated at the Atal Incubation Centers/ Established Incubation
Centers. – 1,000+ MENTORS have been onboarded by the Atal Incubation
Centers/ Established Incubation Centers to guide startups. – 2,200+ EVENTS and
700+ TRAININGS have been reported by this network of Atal Incubation
Centers/ Established Incubation Centers.

FUNDING SUPPORT AND INCENTIVES

Funding support is provided to the startups to foster creation of new incubators,

labs, competitions, events and grants

7.4.15 ACTION PLAN 15

Building innovation centres is provided for incentivising entrepreneurship and

Star Up in India. The aim of this to drive successful innovation through
expansion of incubation and R&D efforts. Ministry of Human Resource
Development and Department of Science & Technology takes the responsibility
of this feature of the initiative. Total of 8 research parks established: IIT Delhi,
IIT Kanpur, IIT Gandhinagar, IIT Mumbai, IIT Guwahati, IIT Kharagpur, IIT
Hyderabad, IISc Bangalore. Further support to a research park in IIT
Gandhinagar is ongoing
7.4.16 ACTION POINT 16

Promoting startups in the biotechnology sector serves as another action plan.

Here, the object is to facilitate bio-entrepreneurship, having the Department of
Biotechnology responsible and mentoring activities under this branch. 1000+
startups, entrepreneurs and SMES 00+ initial public offers filed. 5 technology
transfer offices have been established till date at birach’s bionest incubators, 4
birac regional sectors established

7.4.18 ACTION POINT 17

Launching innovation programes for students. The objective of this plan is to

encourage culture of innovation in the field of innovation for students. The
Ministry of Human Resource Development (MHRD) and Department of Science
& Technology serves as the supervising body for the same. 158 projects have
 been approved under Uchchatar Avishkar Yojna(UAY)-I and Uchchatar
Avishkar Yojna (UAY)-II, National initiative for developing and harnessing
innovation(NIDHI) aims nurturing of startups through scouting, supporting and
scaling of innovation

7.4.18 ACTION PLAN 18

Annual incubator grand challenge fosters creation of world class incubators in

India. NITI Aayog is the responsible body for the activities related to this plan.
An incubator grand challenge exercise is being carried out for identification of
these incubators under the Established Incubation Centres (EIC) programme of
Atal Innovation Mission (AIM). AIM has selected 16 incubators across the
country to provide financial support through grants-in-aid and has already
disbursed grants worth RS. 54.65 crore to nine incubators till date.

7.5 HOW TO REGISTER?

1. A person should first recognize her company as a private limited company or limited
liability partnership or as partnership firm.
2. The person needs to log in to the official website of startup India wherein he/she has
to fill in the necessary details and upload the required documents

3. To avail of benefits from the scheme, the company has to first be recognized by the
department of industrial policy promotion and should b certified by the inter-ministerial
board to be eligible

4. After the successful submission of the documents, you will be provided with a
recognition number and a certificate of recognition.

5. The company receives the certificate in 2 working days.