Startups - what you need to know?

 

Startups in India can be registered under the Companies Act, 2013 in the following forms:

• Private Limited Company (PLC) [Most Preferred]

• Limited Liability Partnership (LLP)

• One Person Company (OPC)

A startup is usually incorporated as a Private Limited Company (PLC) due to benefits such as limited liability, easy fundraising, and better credibility.

Definition of a Startup (As per DPIIT & Companies Act)

A company is recognized as a startup if:

• It has been incorporated for less than 10 years.

• Its annual turnover does not exceed ₹100 crore in any financial year.

• It is working towards innovation, development, improvement of products/processes/services, or has a scalable business model with high growth potential.

• It is not formed by splitting up or reconstructing an existing business.

Recognition is provided by the Department for Promotion of Industry and Internal Trade (DPIIT).

Benefits for Startups under the Companies Act & Government Policies

✅ Tax Benefits – Startups recognized by DPIIT can avail a 3-year tax holiday under Section 80-IAC of the Income Tax Act.
✅ Fast-Track Patent & Trademark Registration with 80% rebate on patent filing fees.
✅ Winding Up Process – Recognized startups can opt for fast-track exit within 90 days under the Insolvency & Bankruptcy Code (IBC), 2016.

A startup will lose its startup status if:
❌ It crosses 10 years from incorporation.
❌ Its turnover exceeds ₹100 crore in any year.
❌ It ceases to work towards innovation or scalable business growth

Kerala specific initiatives:-

Kerala Startup Mission (KSUM) is the central agency of the Government of Kerala dedicated to fostering entrepreneurship and nurturing startups within the state

• KSUM oversees approximately 40 incubators across Kerala, collectively providing nearly 1 million square feet of incubation space. These incubators offer essential infrastructure, mentorship, and resources to startups
• KSUM has set up Fab Labs equipped with advanced digital fabrication tools, enabling startups to rapidly prototype and develop products. Notably, the Super Fab Lab in Kochi, established in collaboration with MIT, is the first of its kind outside the USA, offering enhanced capabilities for hardware innovation

The Kerala State Private Universities (Establishment and Regulation) Bill, 2025

 The Kerala State Private Universities (Establishment and Regulation) Bill, 2025

Passed by Kerala Government on 25/03/2025.

Salient Features:-

1. Establishment of Private Universities

• Allows private entities and individuals to establish universities in Kerala.

• Universities can operate as multi-campus institutions within the state.

2. Governance Structure

• Governing Council: 12 members, including three government nominees.

• Executive Council: 9 members, with one government representative, responsible for managing funds and property.

• Academic Council: Advises on academic matters, with three government representatives.

3. Seat Reservation for Kerala Students

• 40% of total seats in each course must be reserved for students from Kerala.

• Within this, reservations for SC/ST/OBC students apply as per state policies.

4. Students’ Council

• A Students’ Council is mandated, headed by the Pro Vice-Chancellor.

• Includes 10 elected student members, with representation for SC/ST and female students.

5. Regulatory Oversight

• A government-established regulatory body will ensure quality standards in teaching, research, and development.

Pre Conditions:

• 10 Acre land
• endowment fund of 25 Crore is required
• carpet area - minimum twenty-four thousand square metres 

What is a Start up In India and what are there benefits in India?

In India the Department for Promotion of Industry and Internal Trade (DPIIT) defines a startup as an entity that:

1. Has not completed 10 years from its date of incorporation.
2. Is registered as a Private Limited Company, LLP, or Registered Partnership Firm in India.
3. Has annual turnover not exceeding ₹100 crore in any financial year since incorporation.
4. Is working towards innovation, development, or improvement of products, processes, or services, or has a scalable business model with a high potential for employment or wealth creation.
5. Is not formed by splitting up or reconstructing an existing business.

Benefits for Startups in India

1. Tax Benefits & Financial Incentives

✅ Income Tax Exemption (Section 80-IAC): Recognized startups can claim a 100% tax exemption on profits for any 3 consecutive years out of 10.
✅ Angel Tax Exemption (Section 56(2)(viib)): Startups are exempted from taxation on investments above fair market value received from investors.
✅ Capital Gains Tax Exemption: Exemption on long-term capital gains if reinvested in eligible funds.

2. Compliance Relaxations

✅ Self-Certification for Compliance: Startups can self-certify compliance for labor and environmental laws for up to 5 years.
✅ No Inspection for First 3 Years: Exempt from labor inspections (except in cases of specific complaints).

3. Funding Support & Government Grants

✅ Fund of Funds Scheme: ₹10,000 crore corpus managed by SIDBI to provide funding support to startups via SEBI-registered Venture Capital (VC) firms.
✅ Credit Guarantee Fund: Government-backed collateral-free loans for startups under CGTMSE scheme.
✅ Startup India Seed Fund Scheme (SISFS): Grants up to ₹50 lakh for early-stage startups for prototype development and proof of concept.

4. Faster Patent & Trademark Filings

✅ 80% Rebate on Patent Filing Fees: Startups get a significant rebate on intellectual property registration costs.
✅ Fast-Track Patent Examination: Startups can get patents examined in an expedited manner.

5. Ease of Public Procurement & Tenders

✅ Exemption from Earnest Money Deposit (EMD): DPIIT-recognized startups can participate in government tenders without EMD.
✅ No Prior Experience Required: Startups can apply for government projects without needing prior experience or turnover criteria.

6. Easier Winding Up

✅ Fast-Track Exit under IBC: Startups can wind up operations within 90 days under the Insolvency and Bankruptcy Code (IBC).

7. Incubation & Networking Opportunities

✅ Participation in Global & National Startup Events: Startups get access to various networking platforms, summits, and mentorship programs.
✅ Government-Backed Incubators: Startups can benefit from government-supported incubators and accelerators across India.

Conclusion

The Indian government offers significant tax, funding, regulatory, and operational benefits to startups. Registering under the Startup India program can help entrepreneurs scale their businesses faster with easier compliance and financial incentives

Whether REIT Investment is lucrative in India??

 Comparison of the dividend yields of publicly listed Real Estate Investment Trusts (REITs) in India:

Answer is yes. 90% Income has  to be distributed that makes a regular yield for the investor and clubbed with capital appreciation.

REIT Name	Dividend Yield (%)	Reasons for Yield
Embassy Office Parks REIT	6.5% to 7.81%	Stable rental income from premium office spaces, long-term lease agreements, and high-quality tenants.
Mindspace Business Parks REIT	5.7% to 7.5%	Diversified portfolio in IT parks and SEZs, strong presence in major IT hubs, attracting tech companies.
Brookfield India REIT	7.0% to 8.02%	Backed by a global asset management firm, diversified assets across key cities, targeting growth opportunities.
Nexus Select Trust REIT	7.2%	Focus on retail malls, benefiting from increasing consumer spending and retail sector growth

REITS IN INDIA

Real Estate Investment Trusts (REITs) are investment vehicles that enable individuals and institutions to invest in income-generating real estate assets without directly owning physical properties. SEBI (Securities and Exchange Board of India) introduced the regulatory framework for REITs in 2014, with the first Indian REIT launching in 2019. Since then, the REIT market in India has evolved, offering investors an alternative asset class with stable returns and liquidity.

Growth and Market Overview

The Indian REIT market has gained traction over the past few years, driven by increasing urbanization, demand for commercial real estate, and favorable regulatory reforms. As of 2024, the Indian REIT market has witnessed the launch of multiple REITs, primarily focused on commercial office spaces. The sector is supported by strong institutional demand, growth in the IT sector, and a rising need for high-quality office spaces in major metropolitan cities.

Key Benefits of Investing in REITs

1. Diversification: Provides access to real estate without the need for large capital investments.

2. Liquidity: Unlike traditional real estate investments, REITs are traded on stock exchanges, offering higher liquidity.

3. Steady Income: REITs are required to distribute at least 90% of their net distributable cash flows as dividends.

4. Transparency and Regulation: SEBI mandates disclosure norms to protect investor interests.

Major REITs and Their Promoters in India

Several REITs have been listed in India, primarily backed by real estate developers and global institutional investors. The key REITs and their promoters include:

1. Embassy Office Parks REIT

• Promoters: Embassy Group and Blackstone

• Focus Area: Premium office spaces across Bengaluru, Pune, Mumbai, and NCR

• Key Highlights: India’s first listed REIT (2019), significant exposure to IT/ITES tenants

2. Mindspace Business Parks REIT

• Promoters: K Raheja Corp and Blackstone

• Focus Area: Commercial office properties in Mumbai, Pune, Hyderabad, and Chennai

• Key Highlights: Diversified tenant base with strong multinational corporations

3. Brookfield India REIT

• Promoters: Brookfield Asset Management

• Focus Area: Premium commercial assets across NCR, Mumbai, and Kolkata

• Key Highlights: 100% institutional ownership, focus on Grade A office spaces

4. Nexus Select Trust REIT

• Promoters: Blackstone

• Focus Area: Retail real estate, shopping malls across major Indian cities

• Key Highlights: India’s first retail-focused REIT, leveraging consumer spending trends

Future Prospects and Emerging Trends

• Expansion into New Asset Classes: Future REITs may focus on industrial, logistics, and residential sectors.

• Increased Institutional Participation: Global investors continue to show interest in Indian REITs.

• Infrastructure and Government Support: Policies such as ease of FDI in real estate and tax benefits could further boost REIT adoption.

• Retail Investor Participation: Awareness and accessibility improvements could increase retail investments in REITs.

Conclusion

The Indian REIT market has emerged as a significant investment avenue, offering stable returns and diversification benefits. With strong backing from global institutions and regulatory support, REITs are expected to play a crucial role in the country’s real estate sector growth. As more investors recognize the benefits of REITs, the market is set for further expansion, providing attractive opportunities for both institutional and retail investors.

SM REIT

SM REIT in India are in the early stages of development. The Securities and Exchange Board of India (SEBI) introduced regulations for SM REITs in 2023 to regulate fractional ownership platforms and enhance transparency in real estate investments.

1. Eligibility & Structure

• Minimum Asset Value: ₹50 crore (as opposed to ₹500 crore for regular REITs).
• Minimum Issue Size: ₹25 crore for public issuance.
• Sponsorship: At least one sponsor required, holding a minimum of 15% in the SM REIT for at least 3 years.
• Trust Structure: Must be set up as a trust under the Indian Trusts Act, 1882 and registered with SEBI.
• Management: Managed by a SEBI-registered Investment Manager.
• Trustee: A SEBI-registered Debenture Trustee must be appointed.

2. Investment Criteria

• Minimum Investment in Completed & Income-Generating Assets: 80% of the total asset value.
• Under-Construction & Development Projects: Max 20% of the total value.
• Ownership: Directly or through Special Purpose Vehicles (SPVs) where SM REIT owns at least 50%.

3. Listing & Compliance

• Mandatory Listing: On recognized stock exchanges (NSE/BSE).
• Minimum Public Holding: 200 investors post listing.
• Leverage Limit: Cannot exceed 49% of total assets.
• Valuation Reports: At least twice a year by a registered valuer.

4. Distribution & Taxation

• Mandatory Distribution: At least 90% of net distributable income to investors.
• Tax Benefits:
  • Pass-through taxation for rental income.
  • Capital gains tax for investors on sale of units.

5. Investor Participation

• Minimum Investment: ₹10 lakh for non-institutional investors.
• Institutional Investors Allowed: Includes banks, mutual funds, AIFs, pension funds, etc.

LATEST PLAYERS IN INDIAN MARKET 

PLAYERS IN PROGRESS

• Property Share Investment Trust: PropShare Platina, aiming to raise ₹353 crore. The scheme proposed involves six floors of Prestige Tech Platina in Bengaluru, leased to a U.S.-based tech company. Registered as India's first SM REIT, it received its SEBI license on August 5, 2024. Mr. Kunal Moktan
• Strata: A commercial real estate investment platform, Strata applied for an SM REIT license and received approval from SEBI. The company plans to launch up to six schemes in FY26, aiming to democratize real estate investments by lowering the minimum investment barrier to ₹10 lakh.Received its SEBI license on January 8, 2025. Ms. Smruthi Manchi
• hBits: A fractional ownership platform, hBits applied for an SM REIT license and plans to launch its inaugural offering in the third quarter of the current financial year. The company aims to enhance transparency and investor confidence in fractional ownership of commercial real estate.
• Rudrabhishek Enterprises Ltd (REPL): Announced plans to launch an SM REIT under the name ImpactR SM REIT, with REPL acting as the investment manager. This trust obtained SEBI approval on September 24, 2024.Mr. Kunal Sawhney 
• Emberstone SM REIT: Approved by SEBI on October 29, 2024. Mr. Umesh Kumar
• WiseX: WiseX is working closely with legal and tax advisors to register under the SM REIT regulations. The company aims to complete the registration and receive the license before the six-month deadline set by SEBI.
• EFC (I) Ltd: EFC is in the process of forming an investment manager entity to manage assets and investments of an SM REIT through a wholly owned subsidiary. The company plans to file an application with SEBI within the next three to four months

CURRENT STATUS

As on March 2025, there are no fully operational SM REITs with publicly listed units in India. The sector is expected to evolve as more platforms receive regulatory approvals and launch their offerings.