What Permissions / Licenses Needed To Start A Startup In India?

Having a great startup idea is just the beginning—make sure you have got the legal side covered too!

The startup ecosystem is flourishing in India, as evident with several firms already achieving the coveted ‘Unicorn’ status. As startups have potential to power innovation, create jobs and boost economic growth, the government is also providing adequate support and even funding assistance. The processes involved in launching a startup have also been simplified. However, some challenges still remain. Let us take a look at some of the important permissions and licenses needed to start a startup in India.

Type of business and registration – You first need to decide the legal status of your startup. Whether it will function as a partnership or sole proprietorship, private limited, LLP, etc. Once you finalize the legal status of the startup, you need to register the entity with the Ministry of Corporate Affairs (MCA). You will then be issued a Certificate of Incorporation.

Tax documents – You will need various tax registrations such as PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number). Depending on the annual turnover of your startup, you will need GST (Goods and Services Tax) registration. In most states, GST is mandatory in case of turnover of more than Rs 40 lakh. In case of special category states, the limit is Rs 10 lakh.

Industry licenses – This will depend on the type of industry your startup is operating in. For example, if the startup is in the food industry, you will need a license from FSSAI (Food Safety and Standards Authority of India). Similarly, for startups in pharmaceuticals, it is necessary to obtain a drug license. Another example is export-import business, where you will need to approach the Directorate General of Foreign Trade (DGFT) for an Importer Exporter Code (IEC).

General licenses – There are various other types of licenses that may be needed. It will depend on the type of startup. For any retail business, you will need a Shop and Establishment License from the respective state government. A trade license will need to be issued from your local municipality authority. If your startup impacts the environment, you will need clearance from the Ministry of Environment, Forest, and Climate Change.

Intellectual Property Rights (IPR) – As a startup, it is necessary to protect your idea, products and services from being stolen or copied by other entities. For that, you will need registrations such as patent registration, trademark registration and copyrights.

In addition to the above permission and licenses, you also need to ensure compliance with the existing labor laws. For that, you will have to get EPF (Employees’ PF Organization) and ESI (Employees’ State Insurance) registrations done. Depending on your location, you may also need approvals from local authorities. By skillfully managing these licensing requirements, you can set your startup on the path to success in India.