g20 startups: G20 plans to define startups based on size, revenue and innovation

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The G20 countries plan to finalise a common definition of startups based on size of business, revenue and innovativeness by early July, with an aim to bring uniformity in their valuation and taxation. The G20 Startup20 Engagement Group has begun working on a definition, the first draft of which is likely to be made public by May 15, officials said.

“The agenda is to have a definition of startups in G20. Lack of a common definition is a key issue because of which valuation internationally and tax imposed are done differently,” said an official, who did not wish to be identified.

The official said deliberations are on among the grouping to arrive at a joint communique by the summit meeting in the first week of July.

As per the Department for Promotion of Industry and Internal Trade (DPIIT), an entity is considered a startup up to 10 years from its date of incorporation provided its turnover for any of the financial years since incorporation does not exceed Rs 100 crore.

Some G20 members, including those from the European Union, define startups as entities which are less than 10 years of setup, innovate in product and business models, and aim to scale up. South Korea defines all small and medium enterprises as startups.

“There needs to be a clear understanding on how a jurisdiction views startups. The Startup Group is working on whether there can be complete harmony across all issues or flexibilities can be explored,” said Chintan Vaishnav, Startup20 India chair.

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During its G20 presidency, India has established the first Startup20 engagement group which is looking at various components of startups, including size of business, revenue and innovativeness. Besides making the first draft of the definition public by publishing it online for stakeholder consultations, the group may bring in incubators to host townhall meetings with startups to discuss the draft.Getting an outcome on startups is crucial as the country has seen a 40% growth in the number of DPIIT-registered startups, about 29,000, in the past one year, taking the total registered startups to 95,000.

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