Policy Watch: Corporate Registry Clean-Up To IT Exemption For Startups

Income Tax Exemption Bonanza For 187 Startups

Good news for startups! The government, in a bid to promote the startup ecosystem in India, has approved income tax exemption for 187 startups under the revamped Section 80-IAC of the Income Tax Act. This will provide the much-needed financial boost to these companies.

This tax benefit will help startups that have been approved for the exemption. They will be eligible for a 100 per cent income tax deduction on profits for any three consecutive years within a 10-year period from the date of incorporation.

“The updated provision will provide a critical runway to startups focused on high-risk, high-impact innovation, especially those building in deep tech, fintech, climate, healthcare, and AI. Startups can leverage this support to align with national innovation priorities,” Shweta Rajpal Kohli, President and CEO, Startup Policy Forum, told The Secretariat.

Kohli added that by extending the eligibility window to startups, the government is sending a strong signal of long-term commitment to entrepreneurial growth.

An official statement said that startups that were not approved in the latest round, are being encouraged to reassess and refine their applications. Applicants have been asked to focus on demonstrating technological innovation, market potential, scalability, and a clear contribution to employment and economic growth, it said.

As of January, about 1.60 lakh startups have been recognised by the Department for Promotion of Industry and Internal Trade (DPIIT), providing more than 16.6 lakh direct jobs. While the US leads the world’s startup ecosystem, India ranks third. 

Clean-Up Time For India’s Corporate Registry

It is corporate spring-cleaning time, once again. The Ministry of Corporate Affairs (MCA) is about to delete more than 3,300 companies from the Registrar of Companies due to inactivity.

First, it needs to be made clear that this is no witch hunt. Section 248(2) of the Companies Act, 2013 stipulates that the Registrar of Companies can remove a business that never starts operation or remains dormant for at least two consecutive financial years.

India has 28.5 lakh registered companies, of which 18.5 lakh are active. Around 10 lakh companies are dormant or defunct. The authorities suspect that a few of these dormant ones are shell companies that are used for dubious and illegal financial manoeuvres.

Sometimes, even non-operational companies apply for removal from the registry. Authorities removed 16,798 companies in 2024, based on voluntary applications, although there was no clean-up from the government’s side.

A series of financial scandals and governance failures in the past exposed chronic gaps in India’s corporate governance landscape. This annual clean-up by the ministry is part of the regulatory purge that the government has undertaken in the recent past.

The MoS for Corporate Affairs informed Rajya Sabha last December that the government has removed more than 2.33 lakh dormant and shady companies in total over the past five years.

The MCA strives to preserve trust in the Indian business environment and align Indian corporate standards with global best practices. The process of removing dormant and suspected shell companies is an integral part of that process.

The detailed statistics of the over 3,330 companies to be removed this year are also quite interesting. Maharashtra has the largest number of companies in the removal list — over 700.

Delhi holds the second spot, with nearly 500 companies to be removed from the list. Karnataka is next with over 350 companies, followed by more than 200 each in Gujarat, Uttar Pradesh, and West Bengal.

India’s Semiconductor Mission Maintains Momentum 

The Union Cabinet greenlit a Rs 3,700 crore semiconductor manufacturing plant near Jewar airport in Uttar Pradesh on Wednesday. The plant will be a joint venture by HCL and Taiwan’s Foxconn. 

Foxconn is the world's largest contract electronics manufacturer in the world, supplying components to the likes of Nvidia and Apple. This is Foxconn’s re-entry into the semiconductor space in India, following the company’s earlier withdrawal from a joint venture in Gujarat in 2023. 

The decision came even as US President Donald Trump warned Apple, for which Foxconn makes chips, that he didn't want the iPhone maker "building in India", and that "India can take care of itself". 

India's proactive policy of attracting investments for the semiconductor industry using the PLI (Production Linked Incentive) scheme is bearing fruit, with this facility marking the sixth plant to be approved under the Indian Semiconductor Mission.

The aim of the initiative, launched in 2021, has been to position the country as a global hub for electronics manufacturing and design. 

In a month, the new plant will be able to produce 36 million display driver chips, which are a critical component in devices like smartphones, tablets, and laptops. They control the display of device screens and allow them to respond to touch.

It will also have the capacity to process 20,000 wafers per month. These wafers aren’t the biscuit kind, but thin slices of semiconductor material which are used to fabricate integrated circuits.

Across states, multiple ambitious endeavours are taking shape, and India’s semiconductor dreams are beginning to translate from policy to production. The Foxconn-HCL plant is expected to be operational by 2027 and create jobs for about 2,000 people, a step to strengthen India’s position in the global chip supply chain. 

(Contributed by Jayanta Roy Chowdhury, Mahua Venkatesh, Abhijit Mukhopadhyay & Prakriti Bakshi; curated by Bodhisattwa Maity)