Bihar Startup Policy 2022

Bihar is progressing fast on the development track, with unrelenting efforts being made to strengthen infrastructure and promote industrial growth. The government of Bihar is committed to improving the competitiveness of the state’s economy and achieving inclusive growth. Start-ups and Innovation play a key role in economic growth. This can be realized by promoting innovation and creating an ecosystem that nurtures start-ups from concept to commissioning. Apart from creating jobs, start-ups focus on innovation to create next-gen solutions that bring economic dynamism.

The Government of Bihar formulated and noted the Bihar Start-up Policy, 2016, to create an independent and transparent ecosystem in which the state provides funding, promotion, and policy support. This policy was later amended as the Bihar Start-up Policy 2017. The State has set up a Trust, with an initial corpus of INR 500 crores, which acts as the nodal agency for implementing this policy.

The government has approved the Bihar Start-up Policy, 2022 to further boost the ecosystem and make it more holistic and beneficial for the state’s youth and entrepreneurs. This policy also aims to broaden coverage with an effective and faster implementation process.

Vision

The vision for the Bihar Start-up Policy, 2022, is to enable Bihar to emerge as the most preferred destination for start-ups and entrepreneurs by leveraging the potential of local youth through a conducive Start-up ecosystem for inclusive growth in the State.

Policy Period

Bihar Start-up Policy 2022 will be effective from the date of notification. The said date shall be considered the effective date of this policy from which its provisions shall come into force and shall be applicable for 5 years.

Objective

• Introduce, promote, and encourage entrepreneurship education and careers amongst youth and entrepreneurs through various programs like Udyami Bihar, Samridh Bihar Campaign, Entrepreneurship Awards, Innovation Challenges, and Business Plan Competitions.
• Support Start-ups by seed-funding as well as matching grants to increase their viability.
• Facilitate the development of Entrepreneurship Development Centers and Entrepreneurship Facilitation Centers to increase awareness and promote entrepreneurship amongst the youth.
• Encourage Entrepreneurship through education by introducing learning modules in universities and schools, MOOCs (Massive Open Online Courses), and internships, among other things.
• Facilitate development of new and support expansion of existing Incubators/common infrastructure spaces/Co-working spaces.
• Provide a one-stop comprehensive portal for start-ups to access financial support (SEBI registered Alternate Investment funds, Empanelled Angel Investor, etc.), regulatory support, a Network of mentors, and Empanelled Project Management Consultants.
• Enable hassle-free and time-bound statutory clearances for start-ups.
• Provide appropriate institutional support to nurture Startups, including mentoring, hand-holding, and training/orientation visits.
• Any other activity that will enable and create a Start-up ecosystem in the state.

Eligibility of Start-Ups in Bihar

An entity shall be considered as a Start-upon fulfilling the following conditions:

• Up to a period of ten years from the date of incorporation/ registration, if it is incorporated as a private limited company (as defined in the Companies Act, 2013) or registered as a partnership rm (registered under section 59 of the Partnership Act, 1932) or a limited liability partnership (under the Limited Liability Partnership Act, 2008).
• The entity’s turnover for any of the financial years since incorporation/ registration has not exceeded one hundred crore rupees.
• Entity is working towards innovation, development, or improvement of products processes, or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.
• Provided that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Start-up.’
• Provided Start-up must be incorporated or registered in Bihar and have an office in Bihar
• Provided further applicable taxes from the operations of the company are payable in Bihar.

Institutional Framework

A strong Governance structure shall be established for the effective implementation and monitoring of Bihar Start-up Policy, 2022. The composition of the governance structure is as follows:

• Bihar Start-up Fund Trust (BSFT) chaired by the Development Commissioner, Government of Bihar, for deliberation on the policy matters, inter-departmental collaboration, and bi-annual progress review on the policy implementation outcomes.
• Start-up Monitoring & Implementation Committee (SMIC) to make decisions on policy implementation, inter-departmental coordination, or any other issues referred by PSC for decision-making.
• Preliminary Scrutiny Committee (PSC) to oversee the work of the Start-up support unit as well as decision-making for effective implementation of the Start-up policy.
• Start-up Support Unit (SSU) to act as the single point of contact for all Start-up related matters.

Bihar Start-up Fund Trust (BSFT)

The Bihar Start-up Fund Trust is an autonomous body constituted under the Chairmanship of the Development Commissioner, Government of Bihar. The composition of BSFT is as follows:

Members	Designation
Development Commissioner	Chairperson
Principal Secretary, Industries	Member Secretary
Principal Secretary, Finance	Member
Principal Secretary, Planning	Member
Principal Secretary, Science & Technology	Member
Two eminent experts in the Start-up field nominated by the Department of Industries	Member
Director IIT Patna, Director CIMP	Member
2 Representative of Associations, Organisations and Institutions promoting Organisations and Institutions promoting Department of Industries	Member
Representative of Financial Management Company/ Society	Member

Role of Bihar Start-up Fund Trust

• Monitoring and review of Start-up policy and its implementation
• Amendments and/or modifications, if any, required in the policy
• Approve major issues like rating system of start-ups, detailed guidelines for Start-up approvals and handholding etc.
• Liaison with Central and other State Departments for effective implementation of the policy, if required
• Any other issues referred by SMIC.

Start-up Monitoring and Implementation Committee (SMIC)

SMIC shall be constituted under the Chairmanship of Principal Secretary, Department of Industries, Government of Bihar. The composition of SMIC shall be:

Members	Designation
Principal Secretary, Industries	Chairperson
Director to be notified by the Department of Industries	Member Secretary
2 Representatives of Associations, Organisations, and Institutions promoting entrepreneurship to be nominated by the Department of Industries	Member
Representative of Science & Technology Department	Member
Representative of IT Department	Member
2 Representative of Incubators to be nominated by the Department of Industries	Member
2 Representatives of Associations, Organisations and Institutions promoting entrepreneurship to be nominated by the Department of Industries	Member
Nodal Officer of SSU	Member

SMIC shall meet frequently, and the gap between two consecutive meetings shall not be more than 45 days.

Role of Start-up Monitoring and Implementation Committee (SMIC)

• Overall Implementation of the Policy
• Approval for certification of start-ups
• To onboard Start-up ecosystem stakeholders such as mentors, incubators, angel investors, venture capitalists, etc, and develop infrastructures such as common space, Start-up portal, EDC, etc
• To approve matching grants to start-ups, success grants, etc
• Liaison with other state Departments for effective implementation of the policy
• Any other issues related to the effective implementation of the Start-up policy

Preliminary Scrutiny Committee (PSC)

A Preliminary Scrutiny Committee shall be constituted under the Chairmanship of the Director to be notified by the Department of Industries, Government of Bihar. The composition of the Preliminary Scrutiny Committee shall be:

Members	Designation
Director to be notified by the Department of Industries	Chairperson
2 Representatives of Incubators to be nominated by the Department of Industries	Member
2 Representative of Associations, Organisations and Institutions promoting Entrepreneurship to be nominated by the Department of Industries	Member
Nodal Officer of SSU	Member-Secretary

Role of Preliminary Scrutiny Committee

• Approve, tag, and refer the applications shortlisted by PMA/ TPA to the subject-related incubators.
• Assist SMIC in onboarding Start-up ecosystem stakeholders such as mentors, incubators, angel investors, venture capitalists, etc., and development of infrastructures such as common space, EDC, Start-up portal, etc
• Assist SMIC on various issues related to the implementation of the Policy.
• Monitoring of Start-up Support Unit (SSU)
• To provide timely redressal of grievances of start-ups and other stakeholders.

Start-up Support Unit (SSU)

A Start-up Support Unit (SSU) under the Department of Industries shall be created for effective implementation of this Policy. The SSU shall be responsible for creating a conducive policy environment for the sustained growth of the Start-up ecosystem in the state.

It will act as a single point of contact for engagement with ecosystem stakeholders such as mentors, incubators, angel investors, venture capitalists, etc.

To manage the operations of SSU, the Department of industries may depute adequate manpower from
the department or through a Project Management Agency (PMA). SSU may also be placed in
Corporation or Company of the Government for effective functioning.

Role of Start-up Support Unit (SSU)

• Work as a single point of contact for start-ups in the state for providing information as well as handholding support
• Process applications through an online portal, their screening and approval by competent authorities
• All communications with start-ups
• Providing hand-holding support to start-ups through various stages
• Act as a single window system for getting all statutory clearances for start-ups
• Act as Secretariat for implementation of Start-up policy
• Organise events, sessions, trainings, visits, and other activities for promoting the Start-up culture

Third-Party Agencies

Third-Party Agencies (TPA) may be taken on board for:

• Design of the rating system for start-ups
• Evaluation of applications as per the approved rating system
• Recommending certification of start-ups
• Recommending seed funding/matching grants, etc, as per the approved criterion based on the rating achieved by the start-ups.

Financial Management Company

An existing or new Company of the Government of Bihar may be made a Financial Management Company to carry out the financial operations under this policy. Financial Management Company shall disburse incentives, loans, and other financial assistance to the Start-ups as decided by SMIC.

It shall carry out the following activities:

• Asset Management of the Trust
• Facilitation and assistance for funding to Start-ups such as seed grants, early stage and scale-up funding, and other funding support stated in the policy
• Financial assistance to develop and manage ecosystems such as Entrepreneurship Development Cells, common infrastructures, etc, and raise funds from multilateral donor agencies
• Facilitate Investment decisions under the policy in a time-bound manner

Application Process and Certification of Start-ups

• Startups shall submit their applications online through the Online Start-up Portal, along with a detailed description of the idea in the prescribed form.
• The SSU will scrutinize and process the online applications received. The SSU will shortlist the eligible start-ups according to the criterion approved by the Start-Up Fund Trust. The SSU will also provide hand-holding support to the Start-up applicants to improve their proposals.
• The short-listed applications will be approved by the Preliminary Scrutiny Committee headed by the Director to be notified by the Department of Industries for referring them to the incubators.
• After preliminary examination the shortlisted applications shall be tagged to the Incubators. The Incubators will provide hand-holding support and, after the incubation process, shall prepare a proposal for Start-upon the following issues:
  • Business Plan
  • The amount of funding assistance required at various stages
  • Any requirement of common infrastructure or other infrastructure created under this policy
  • Any assistance as envisaged under this policy
• The list of such recommendations/proposals received from incubators shall be evaluated by the Third Party Agency (TPA), and a rating will be provided according to the approved rating criterion.
• The Start-up Monitoring and Implementation Committee (SMIC) shall examine these recommendations and certify Startups as per the rating criterion.
• Financial incentives and other support shall be provided to start-ups based on their categorization through a rating mechanism. The detailed guidelines in this regard will be finalized with the approval of BSFT.

YUVA: The action plan to support start-ups and create an enabling eco-system

Bihar Start-up Policy has been designed on the following four pillars (YUVA)

• Yes to Start-ups (Awareness, Networking, and Mentoring Campaigns)
• Unleash Regulatory Enablers for Supporting Start-ups
• Vibrancy in the Education System to encourage and facilitate Start-ups
• Access to financing & incubation support

YUVA: Yes to Start-Up

Promoting Awareness Udyami Bihar, Samridh Bihar Campaign, and Facilitating Networking Platform for Start-ups

The government is committed to encouraging entrepreneurship as an education and career for the youth across all economic and social segments of the population. In order to inculcate entrepreneurial culture amongst youth, the Government shall:

• Launch Start-up outreach and awareness campaign Udyami Bihar, Samridh Bihar at State level in collaboration with Start-up stakeholders
• Recognize and promote achievements of successful local start-ups by organizing ‘Entrepreneurship Awards’
• Organize state-level challenges/ business plan competitions
• Support business networks (Industry Associations/Organizations promoting Start-ups) to organize Start-up awareness activities such as Start-up fairs

Assistance for Idea Development

A Conducive Start-up ecosystem enables youths to convert their ideas into meaningful propositions. A proper guidance system is essential for youth to express and enhance their ideas. In order to spread awareness and provide guidance to potential entrepreneurs, the State shall provide financial assistance to facilitate:

• Setting up Entrepreneurship Development Cells in Divisional towns in collaboration with Educational Institutes, Bihar based industrial associations/organizations promoting start-ups.
• Setting up Entrepreneurship Facilitation Centers at Educational & Professional Institutes

These Cells/Centers shall

• Under the Udyami Bihar, the Samridh Bihar Campaign organizes various promotional events to disseminate awareness about entrepreneurship and promote Start-up culture in the state.
• Provide assistance to students/potential entrepreneurs in presenting and enhancing their ideas to various stakeholders of the Start-up ecosystem, viz. government, education institutes, incubators, industry experts, legal, tax, and business consultants.
• We support start-ups with preliminary mentoring, business plan support, company registration, market research support, business structuring advisory, and management consultancy.

YUVA: Unleash Regulatory Enablers for Supporting Start-ups

Statutory clearances from relevant regulatory authorities are a pre-requisite for a Start-up to commence operations. Limited awareness of the processes increases the turnaround time for registration and, hence, delays the commencement of operations for Start-ups. A single-window clearance system supported by interactive training manuals and checklists would enable Start-ups to register themselves easily and timely.

A start-up ecosystem needs a single platform for interaction and collaboration with each other. In order to establish a single platform for interaction and information sharing of various stakeholders, a Start-up Bihar portal shall be launched. This portal shall provide instant accessibility to start-ups for:

• Accessing interactive tutorials for the registration process and a checklist for the various clearances required with specified timelines.
• Register with the relevant authority and fill out various state-level compliances through standardized forms.
• The portal shall also be integrated with other Government of India-sponsored Start-up Portals to connect with various ecosystem stakeholders.
• Interacting and collaborating with various stakeholders viz. Registered network of mentors and professional experts, incubators, academia, empanelled Project Management Consultants and angel investors, SEBI-registered AIFs (Alternate Investment funds) and other stakeholders.
• Empanel mentors of networks to start-ups having potential for growth and scalability.
• Access various state government schemes and incentives available to start-ups.

Optimizing Regulatory Framework-Enabling Regulatory Environment for Start-up Ecosystem

Starting up a business involves getting various stages of departmental approval and clearances. Most start-ups are unaware of the complex policies and regulatory framework, which may hinder their regular operations. Therefore, the Government must minimize regulatory compliances and punitive actions and provide support /awareness to these propellers of the next stage of economic growth.

In line with the above, the Government shall enhance the ease of doing business by minimizing inspections and encouraging self-certifications.

• Start-ups shall be exempted from licensing/registration for operations under various State Acts for 5 years. However, Statutory Licenses (such as Drug License, FSSAI, Building Plan, Fire Fighting) shall be required to be obtained by the Start-up if its nature of business/activity may lead to a potential threat to life and safety, in such cases, Government shall bear the cost of the license(s).
• Start-ups shall be exempted from inspections by Government Regulatory Agencies for a period of five years unless there is a threat to life and safety. The district magistrate shall obtain permission to inspect a unit for certain reasons.
• Self-declaration shall be submitted by Start-ups annually as per the format prescribed by the State Government.
• State Government Departments/ PSUs shall be advised to give preference to Start-ups in the procurement process for products/ services.
• State Government shall endeavour to allot 10% of spaces in forthcoming industrial parks, SME Clusters and Hub for Start-ups/Incubators/ Common Shared Infrastructure on preference.

YUVA: Vibrancy in Education System

Educational institutes provide an apt environment for introducing and teaching entrepreneurship and promoting a culture of innovation. The government recognizes the importance of reforms in education to create an entrepreneurial spirit among students.

In order to promote Start-up culture and innovation in the youth of Bihar, the Government shall facilitate/recommend the following interventions:

• Embed Entrepreneurship modules in high schools, universities, skill training, and vocational training institutes’ curriculums/ programs. Education institutes will be suggested to introduce Massive Open Online Courses (MOOCs) as electives and make internships/apprenticeships mandatory.
• Education / Professional Institutes shall be supported in formulating an Entrepreneurship Facilitation Centre to guide and assist students in pursuing entrepreneurship.
• Organize Business/Innovation Idea Competitions amongst students. Shortlisted ideas shall be provided support for prototyping and will be showcased in the Start-up Fest organized by the State.
• Organize social innovation challenges through Entrepreneurship Development Cells to provide challenge grants to 20 social innovators to support their ideas.

YUVA: Access to Funding and Incubation Support

Incubation centers are crucial for nurturing promising Start-ups. They provide access to a mentoring network, market network, shared physical infrastructure, etc. Creating Physical Infrastructure generally requires large capital investments.

Considering this, the following incentives/financial assistance shall be provided to start-ups:

• Financial assistance for setting up new incubators (both physical and virtual) and expanding state-supported Incubators.
• Reimburse the cost of incubating a Start-up, up to a maximum of Rs 2 Lakhs per incubated, to government-recognized private/state-supported incubators.
• The fiscal incentive to Incubators: 2% of the investment received by its incubated from SEBI-registered AIFs (Alternate Investment Funds) into Bihar-based start-ups.
• The Government shall provide financial assistance to match the funding raised by Incubator(s) from the Government of India and Multilateral donor agencies on a 1:1 basis on the same terms and conditions.

List of State-Supported Host Institutes/ Incubators

The Start-up Support Unit (SSU), with the approval of the SMIC, shall periodically update the list of state support host institutes and State-Sponsored incubators in the Bihar Start-up portal.

Common Infrastructure for Start-ups

The government shall facilitate the creation of a common infrastructure for startups. The shared infrastructure shall include:

• Co-working spaces.
• Provide shared facilities like R&D labs, cubicles, conference rooms, etc.
• Shared software and hardware like high-end printers, computers, etc.
• Common testing labs and tool rooms.
• Shared services like legal, accounting, technology, patents, and investment banking.
• Individual accommodation and hostel rooms
• Community events and promotional support for incubation and start-ups Common facilities Centers (warehouse, Storage, Quality Assurance labs) Common infrastructure spaces shall be established either by the Government or through PPP mode. This support shall be available to startups free of Cost and on a chargeable basis for specified periods as per norms decided by Bihar Start-up Fund Trust.

Apart from the incubation centers, a Bihar Innovation Hub will be set up, which shall provide all the services of an incubator, including shared workspaces, professional business advisory/consultancy, access to funding, and support at the commercialization stage, including networking, merger and acquisition, and valuation advisory, amongst others. This innovation hub shall be further expanded into a virtual incubator to expand its reach.

Funding Support to Start-ups

Funding support shall be provided to startups in various stages of their business cycle.

Validation Stage

A Seed Grant of up to Rs 10 Lakhs per Start-up as interest free loan for 10 years shall be provided to start-ups. This financial assistance shall be released on achieving milestones/phases and performance parameters as defined in the rating system. Financial assistance may also be provided to start-ups for validation of ideas, prototype development, assistance towards traveling costs, and carrying out eld/ market research/ skill training/ marketing and initial activities to set up a Start-up, etc. The actual amount of funding shall be based on the assessment made by the rating agency. The loan shall be returned after 10 years.

Commercialization Stage

• Free of cost Valuation for Start-ups.
• Facilitate access to Angel Investors.
• Start-ups shall be provided with a success fee of 2% of investment to mobilize investments from state-registered angel investors for early-stage funding.
• Matching Support: Financial assistance up to an amount equal to the amount invested in start-ups by the Angel Groups and Category—I Alternate Investment Funds may be given as a loan to the Startup. The rate of interest and terms and conditions of the loan shall be notified by the SMIC from time to time.
• Assistance to enroll and participate in Acceleration Program: Assistance up to Rs. 3 Lakhs per Startup to enroll and participate in the National/internationally recognized acceleration program. The fees/charges paid for attending the same will be considered eligible for getting assistance.
• The SMIC may participate in SEBI-registered AIFs (Alternate Investment Funds) and Venture Capital Funds. The Venture Capital Fund so created shall invest at least 50% (i.e., equal to twice the contribution made by the trust in the VC Fund) in start-ups located in Bihar.
• SMIC shall facilitate the listing and public issue of Start-ups in collaboration with National Level Stock Exchanges such as BSE/ NSE. Incentives/ provisions under the Bihar Industrial Investment Promotion Policy in force will be available to start-ups. However, the incentive for the same component cannot be claimed from more than one scheme. Efforts will be made to leverage relevant benefits available under various schemes of the Government of India. All the incentives shall be availed based on the categorization of start-ups through a rating mechanism.

Zero Cost for filing patents Domestic and Foreign

Intellectual Property (IP) is an invaluable business tool for start-ups or entrepreneurs, providing an initial start to one’s business. Investors weigh IPs heavily and create good value for the venture. To encourage the registration of IPRs (Intellectual Property Rights) by Start-ups and provide facilitation support for the protection and commercialization of IPRs, the Government shall:

• Bear all costs associated with filing domestic patents.
• Provide additional financial assistance in the form of reimbursement for awarded foreign patents towards filing fees.

Additional incentives to SC/ST /Women /Differently- Abled

Incentives listed below shall solely be applicable to start-ups that are fully owned by any one person of this category or a group of persons defined in this category. Efforts shall be made to identify persons belonging to the Scheduled Castes and Scheduled Tribe and promote entrepreneurship among them.

• SMIC may set up Project Management Units to specically handhold them in setting up their ventures.
• Entrepreneurs under this category will avail of additional grants/exemptions/subsidies than the limit fixed under clause12.5.1 and 12.5.2 of this policy:
  • Woman Enterprise-additional 5%
  • SC/ST-additional 15%
  • Differently Abled -additional 15%
• Additionally, 22% of the total corpus for funding start-ups shall be reserved for SC/ST beneficiaries.
• Based upon the requirement, the BSFT may relax the eligibility criteria, as stated in clause 5, for certifying start-ups belonging to SC/ST/ women and differently-abled.

Exit Conditions

If the company is found guilty of fraud or to have made false declarations to claim benefits from or derived under this policy, legal action shall be initiated to recover all financial assistance provided to such an entity.

Once an entity ceases to be recognized as a start-up, the Government or entity through which the Government makes its investment will be eligible to exit its investment in the Start-up, and guidelines for exit will be framed by SMIC for channelizing investments into the start-up. When the Government or its representative entity exits its investment, the right to nominate a representative director on the board of the Start-up will also be extinguished.

Protection of action taken in good faith

No suit, prosecution, or other legal proceeding shall lie against Trust, Financial Management Company/ Society, or any officer involved in the implementation of this policy in respect of anything done or intended to be done in good faith under this policy or in pursuance of any order, executive instruction, or direction made or given thereunder.

No suit or other legal proceeding shall lie against the Trust, Financial Management Company, or any officer involved in implementing this policy for damage caused or likely to be caused by anything done or intended to be done in good faith under this policy or in pursuance of any order, executive instruction, or direction made or given thereunder.

Important

• The works which are being done under Bihar Start-up Policy, 2017 will be considered as covered under Bihar Start-up Policy, 2022.
• In case of any discrepancy in the meaning and interpretation of the translated version of this policy, the English language version shall be binding in all respects and shall prevail
• This policy shall come into effect from the date of issue of the policy in Bihar Gazette motivation and shall remain in operation for 5 years from the date of such notification.
• The proposal was approved by the State Cabinet as item number 13 on 17.06.2022 by the order of the Governor of Bihar.