Tamil Nadu govt announces package of concessions for startups to remove 'entry barriers'

CHENNAI: Recognising that startups in the state are facing many 'entry barriers' to establish themselves, the Tamil Nadu government has announced a package of concessions for them.

Exemption from payment of Earnest Money Deposit, exemption from the condition of prior turnover, exemption from the condition of prior experience and waiver of tender cost are the concessions to be provided to registered startups for public procurements that are below Rs 20 lakh in value. The procurement entities include government departments, PSUs, statutory boards formed by the government, local bodies, cooperative institutions, universities and government societies in the state.

These concessions will be given to startups registered with the Department for Promotion of Industry and Internal Trade or Tamil Nadu Startup and Innovation Mission. These startups should have a registered office in Tamil Nadu and the eligibility would be restricted to startups as defined in the Tamil Nadu Startup and Innovation Policy.

TANSIM has said that startups in Tamil Nadu are technically capable of providing solutions to various governance and other issues faced by departments in implementing schemes. Providing procurement preference to startups would also help them to scale up rapidly and create enormous employment and wealth in the state.

The order issued by the MSME department on July 22 pointed out that startups face many entry barriers because departments and public sector undertakings impose restrictions like Earnest Money Deposit, prior turnover condition, prior experience condition etc. Many state governments have recognised this problem and issued orders dispensing with such entry barriers for startups. The governments of Kerala, Karnataka and Telangana have already made such provisions by issuing necessary orders in this regard.

The order also said many startups struggle in the early stages because of lack of market for their products. The government is a major purchaser in the economy and patronage by it could solve the marketing problems of startups to a great extent. Moreover, purchases by the government are a great source of recognition to startups.