Key Highlights of Bihar’s Start-up Policy 2022

Bihar, a state known for its rich history, is now embarking on a journey to foster innovation and entrepreneurship through its latest initiative – the Bihar Start-up Policy 2022. This comprehensive policy is designed to create a conducive ecosystem for start-ups, providing them with the necessary support, resources, and incentives to thrive in today’s competitive landscape.

1. Preamble:

• Bihar is committed to development and economic growth.
• Start-ups and innovation are crucial for economic dynamism, job creation, and creating next-gen solutions.
• Bihar previously had a Start-up Policy in 2016 and 2017, with a Trust established for implementation.

2. Vision:

• The vision is to make Bihar the most preferred destination for start-ups and entrepreneurs, leveraging local youth for inclusive growth.

3. Policy Period:

• The policy is effective from the date of notification and applicable for five years.

4. Objectives:

• Promote entrepreneurship education and career among youth through programs.
• Support start-ups with seed funding and matching grants.
• Enable hassle-free statutory clearances and provide institutional support.

5. Eligibility of Start-Ups in Bihar:

• Must be within ten years of incorporation/registration.
• Turnover should not exceed one hundred crore rupees.
• Working towards innovation, development, or improvement.
• Must be incorporated or registered in Bihar with an office in Bihar.

6. Institutional Framework:

• Bihar Start-up Fund Trust (BSFT) is chaired by the Development Commissioner.
• Start-up Monitoring & Implementation Committee (SMIC) oversees policy implementation.
• Preliminary Scrutiny Committee (PSC) approves and refers applications.
• Start-up Support Unit (SSU) is a single point of contact for start-ups.

7. Roles of Governance Bodies:

• BSFT monitors policy implementation.
• SMIC oversees policy implementation, approves certifications, and liaises with stakeholders.
• PSC approves applications and assists in onboarding stakeholders.
• SSU is the single point of contact for start-ups, managing applications, providing support, and organizing events.

8. Third Party Agencies and Financial Management Company:

• Third Party Agencies (TPA) may be involved in rating systems and evaluating applications.
• Financial Management Company manages financial operations, disburses incentives, and facilitates funding.

7. Application Process and Certification of Start-ups:

• Start-ups submit online applications through the prescribed form on the Online Start-up Portal.
• SSU processes and shortlists eligible start-ups, providing hand-holding support.
• PSC, headed by the Director, approves shortlisted applications for referral to incubators.
• Incubators support start-ups, preparing proposals on business plans, funding needs, infrastructure requirements, and policy assistance.
• TPA evaluates recommendations, and SMIC certifies start-ups based on the rating criterion.
• Financial incentives are provided based on categorization through the rating mechanism.

8. YUVA: The Action Plan to Support Start-ups and Create an Enabling Eco-system:

• The Bihar Start-up Policy focuses on four pillars (YUVA): Yes to Start-ups, Unleash Regulatory Enablers, Vibrancy in Education System, and Access to Funding & Incubation Support.

9. YUVA: Yes to Start-Up:

• Promotion of awareness through campaigns like “Udyami Bihar, Samridh Bihar.”
• Recognition and promotion of successful local start-ups through Entrepreneurship Awards.
• Organization of state-level challenges/business plan competitions.
• Support for Start-up awareness activities such as Start-up fairs.

10. YUVA: Unleash Regulatory Enablers for Supporting Start-ups:

• Establishment of a comprehensive one-stop portal for the Start-up Ecosystem in Bihar.
• Optimizing the regulatory framework to minimize inspections and encourage self-certifications.
• Exemptions from licensing/registration for five years, along with other supportive measures.
• Preferential treatment for Start-ups in procurement processes and allocation of spaces in industrial parks.

11. YUVA: Vibrancy in Education System:

• Embedding entrepreneurship modules in curricula, introducing MOOCs, and making internships mandatory.
• Supporting educational institutes in establishing Entrepreneurship Facilitation Centers.
• Organizing competitions, innovation challenges, and social innovation challenges.

12. YUVA: Access to Funding and Incubation Support:

• Facilitating Incubation Centers and providing financial assistance for setting up new incubators.
• Reimbursement of incubation costs, fiscal incentives to incubators, and support for common infrastructure.
• Funding support for Start-ups in various stages, including seed funding, early-stage funding, and scale-up funding.
• Zero cost for filing patents (domestic and foreign) and additional incentives for specific categories like SC/ST, women, and differently-abled entrepreneurs.

13. Exit Conditions:

• Legal action will be initiated to recover financial assistance if a company is found guilty of fraud or makes false declarations to claim benefits under the policy.
• When an entity ceases to be recognized as a start-up, the Government or its representative entity can exit its investment, and guidelines for exit will be framed by SMIC. The right to nominate a representative director on the board will be extinguished upon exit.

14. Protection of Action Taken in Good Faith:

• No legal proceedings shall lie against Trust, Financial Management Company/Society, or officials involved in policy implementation for actions done in good faith.
• No legal proceedings shall lie for damages caused by actions done in good faith under the policy.

15. Transition from Bihar Start-up Policy 2017:

• Works done under Bihar Start-up Policy 2017 will be considered covered under Bihar Start-up Policy 2022.

16. Language Interpretation:

• In case of any discrepancy in the meaning and interpretation of the translated version of this policy, the English language version shall prevail.

17. Effective Date and Duration:

• The policy shall come into effect from the date of issue in the Bihar Gazette notification and remain in operation for five years from that date.

18. State Cabinet Approval:

• The proposal has been approved by the State Cabinet on June 17, 2022, through item number 13.

Key Definitions In the Policy:

1. Acceleration Program: A 3–4 month program for Start-ups at early traction and scaling stage, aimed at accelerating growth through intense, rapid, and immersive education.
2. Angel Investor: An individual or group investing in Start-ups at an early commercialization stage in return for convertible debt/equity.
3. Alternate Investment Funds (AIFs): Privately pooled investment funds, not presently covered by SEBI regulations governing Mutual Fund or Collective Investment Scheme.
4. Category I Alternate Investment Funds: AIFs investing in Start-up or early stage ventures, SMEs, social ventures, or sectors considered socially or economically desirable.
5. Commercialization Stage: Integral stage in a Start-up’s lifecycle where it scales up business and commercializes products/services.
6. Differently Abled: As defined in “The Rights of Persons with Disabilities Act, 2016” and other statutes for the welfare of persons with disabilities.
7. Entity: Private Limited Company, Registered Partnership Firm, or Limited Liability Partnership.
8. Financial Management Company/Society: Entity responsible for managing the fund and activities under the policy.
9. Government: Government of Bihar in this Policy unless specified otherwise.
10. Idea Stage: Integral stage where feasibility analysis is performed to evaluate the success/failure of the Start-up concept.
11. Incubator: Physical spaces supporting entrepreneurs in business planning, mentoring, funding, and various aspects to turn ideas into successful ventures.
12. Mentoring: Guidance and strategic support provided by industry experts/academicians to Start-ups.
13. Preliminary Scrutiny Committee (PSC): Committee as defined in para 6.3.
14. Registered: Entity registered with Registrar of Companies (RoC) Bihar.
15. Seed Grant: Financial assistance to develop a prototype product and generate investor interest for subsequent funding rounds.
16. Scheduled Caste (SC)/Scheduled Tribes (ST) Enterprise: Enterprise fully owned by SC/ST.
17. Start-up Support Unit (SSU): Unit as defined in para 6.4.
18. Start-up Monitoring and Implementation Committee (SMIC): Committee as defined in para 6.2.
19. State Supported Incubators/Incubation Center: Incubators supported by Government of Bihar and/or Government of India.
20. TBI (Technology Business Incubator): Recognized by Department of Science and Technology, Government of India.
21. Trust/Bihar Start-up Fund Trust: Nodal agency constituted for policy review and implementation.
22. Validation Stage: Integral stage where the product/service is produced and delivered in a limited capacity.
23. Venture Capital: Fund invested in Start-ups at the commercialization stage in return for equity shareholding.
24. Woman Enterprise: Enterprise headed by a woman where 100% stake is owned by a woman. Partial shareholding is not treated as a Woman enterprise.