MODULE 3

Development and Government

Topics
Role of Central Government and State Government in
promoting entrepreneurship
Introduction to various incentives, subsidies and
grants.
Export Oriented Units – Fiscal and Tax concessions
available
Women Entrepreneurs Reasons for low / no women
entrepreneurs, their role , problems and prospects,
corporate entrepreneurship
Role of Central Government
Entrepreneurship development is one of the mechanisms
adopted by the Government of India towards the creation of
job opportunities.
The government's assumption is that support for innovation
will enhance entrepreneurship development, which will, in
turn, accelerate economic growth
The government set programmes to help entrepreneurs in
the field of technique, finance, market and entrepreneurial
development so that they help to accelerate and adopt the
changes in industrial development. Various institutions
were set up by the central and state governments in order to
fulfill this objective.
In the recent years, a wide spectrum of new
Programmes and Opportunities to nurture innovation
have been created by the Government of India across a
number of sectors.
 From engaging with academia, industry, investors,
small and big entrepreneurs, non-governmental
organizations to the most underserved sections of
society.
Initiatives Taken
Startup India
Through the Startup India initiative, Government of
India promotes entrepreneurship by mentoring,
nurturing and facilitating startups throughout their life
cycle.
 It is launched in January 2016.
With a 360 degree approach to enable startups, the
initiative provides a comprehensive four-week free online
learning program, has set up research parks, incubators
and startup centers across the country by creating a
strong network of academia and industry bodies.
‘Fund of Funds’ has been created to help startups gain
access to funding.
Make in India
Launched in September 2014
This has led to renewed confidence in India’s capabilities
among potential partners abroad, business community
within the country and citizens at large.
the initiative has ensured the replacement of obsolete and
obstructive frameworks with transparent and user-friendly
systems and helped procure investments, foster
innovation, develop skills, protect intellectual property
and build best-in-class manufacturing infrastructure
Atal Innovation Mission (AIM)
 AIM is the Government of India’s endeavor to promote a
culture of innovation and entrepreneurship, and it serves
as a platform for promotion of world-class Innovation
Hubs, start-up businesses etc.
Atal Incubation Centers (AICs) are another programme of
AIM created to build innovative start-up businesses as
scalable and sustainable enterprises
These incubation centers, with a presence across India,
provide access to sectoral experts, business planning
support, seed capital, industry partners and trainings to
encourage innovative start-ups.
INCENTIVES
Many incentives are provided by both Central and
State government to promote the entrepreneurship.
Fiscal and financial incentives
These are tools and resources that provide, subsidize, and/or
expand direct or indirect access to the necessary and
appropriate capital to scale innovation and entrepreneurial
activities.
These fiscal and financial resources enable and support
activities such as the commercialization of basic and
applied research emerging from universities and private
institutes. Financial incentives include direct assistance
such as grants, subsidies, loans, loan guarantees, and equity
participation that helps with project or company financing.
Services incentives
These are resources and incentives that provide and
subsidize access to expert/specialized support (firm
formation, capital access, mentoring, and entrepreneur
consultation/training), innovation-oriented professional
services (legal, accounting, marketing, and assistance with
program applications .

Subsidies
A subsidy is a form of financial aid or support extended to an
economic sector, business, or individual producer.
It is usually provided by the government, either directly or
through various agencies, with the goal of promoting
economic activity or achieving specific policy objectives
It helps in the development of new products and
technologies
These are the funds which helps to cover the initial
startup costs such as equipment purchase , marketing
expenses and hiring.
Government-backed guarantees on loans from
financial institutions, reducing the risk for lenders and
encouraging them to lend to startups.
These are providing with lower interest rates,
favorable repayment terms, and lower collateral
requirements.
Promoting Growth:
Subsidies are often used to stimulate growth in certain sectors of
the economy.

Encourages Innovation:
Subsidies allow entrepreneurs to take risks and invest in
innovative ideas without facing immediate financial burdens.

Job Creation:
Startups supported by subsidies often create new employment
opportunities, contributing to local economic growth.
Supports Economic Development:
By nurturing a vibrant entrepreneurial
ecosystem, subsidies helps to diversify the economy
and reduce dependence on other industries.
Reduces Failure Rates
Financial assistance and support services
increase the chances of survival and success for
startups during their critical early stages.
Grants

These are non-repayable funds provided by governments, non-profit

organizations, foundations, or other institutions to support individuals
and businesses in starting, expanding, or improving their ventures.

These grants serve as crucial financial assistance, helping entrepreneurs

overcome initial barriers, fund innovative ideas, and stimulate economic
growth.

Funds to develop comprehensive business plans, feasibility studies, and

marketing strategies.

Funding to support the design, testing, and refinement of new products

or processes.
So mainly these functioning are provide for the following
functions:

Startup Capital
Infrastructure Development
Early-Stage Support:
Trade Missions and Exhibitions
 Governments can sponsor trade missions and exhibitions,
providing entrepreneurs with opportunities to showcase their
products or services internationally.
 Subsidies can help cover costs associated with participation
Export Oriented Unit
 Export Oriented Units (EOUs) are industrial units that are established for the purpose of
producing goods and services for export. They are given various fiscal and tax
concessions to encourage export-oriented production. Some of them are:

 Duty-Free Import of Capital Goods:

 EOUs are allowed to import capital goods and equipment without paying customs
duty, provided they are used for production, processing, or packaging of goods for
export.

 Duty-Free Import of Raw Materials and Components:

 EOUs are permitted to import raw materials, components, and consumables without
payment of customs duty, excise duty, or additional customs duty.

 Excise Duty Exemption

 EOUs are exempted from paying excise duty on goods produced for export. This
exemption applies to both finished products and intermediate goods
Income Tax Benefits
 EOUs enjoy income tax benefits under Section 10B of the Income
Tax Act. The profits derived from export activities are exempt from
income tax for a specified period.
No Central Sales Tax (CST)
 EOUs are exempted from paying Central Sales Tax on goods
procured from domestic suppliers.
No State Sales Tax/VAT:
 EOUs are generally exempt from paying State Sales Tax or Value
Added Tax (VAT) on goods procured from domestic suppliers.
No Service Tax
 Services used for export production by EOUs are exempt from
service tax.
No Import Duty on Spares and Consumables:
 EOUs can import spares and consumables without payment of
customs duty, subject to specified conditions.
 Corporate Entrepreneurship
Corporate Entrepreneurship (CE) is the process by
which teams within an established firm conceive,
foster, launch and manage new businesses that is
distinct from the present company, leveraging the
parent company's assests, good-will, market positions,
capabilities and other resources.
CE is also defined as all entrepreneurial activities such
as innovation, venturing and strategic renewal within
existing firms.