With the government’s announcement of the Start-up India initiative in January 2016, there have been discussions and endeavours to create an environment which is conducive for nurturing growth of innovations and startups. The latest development has been the relaxations by the Reserve Bank of India (RBI) on external commercial borrowing (ECB) by startups, introduced via Circular No. 13 of 27 October 2016.
As per the notification dated 17 February 2016 by the Ministry of Commerce and Industry, an entity would be considered as a startup (a) up to five years from its date of incorporation, (b) if its turnover for any of the financial years has not exceeded ₹250 million (US$3.7 million), and (c) if it is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.
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Manjula Chawla is a partner, Ritika Ganju is a principal associate and Kripi Kathuria is a senior associate at the Delhi office of Phoenix Legal.
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