Indian government readying blockchain-based validation framework for startups
The Indian government is reportedly eyeing a blockchain-based validation framework for startups to ease startup compliance hurdles and speed up processes. The government was reported to be forming a fresh panel earlier this year, to formulate a structure for regulations and use of blockchain technology in India.
According to a report, the DPIIT (Department for Promotion of Industry and Internal Trade) is currently working on structuring this system.
Present situation
At this point in time, startups have to separately submit the required documents to regulators, intermediaries and authorities that increases not only the compliance time but also results in duplication of efforts.
How the new framework will help?
The framework will help curtail the need for separate submissions of applications by startups to regulators and intermediaries since individual tested documents will be accessible on blockchain.
CBDT (Central Board of Direct Taxes), banks, PSUs (public sector undertakings), NBFCs (non-banking financial companies) and other regulators will be able to verify documents before providing financial or any other assistance to startups with this single-window blockchain platform.
They can verify the authenticity of the information submitted by startups and would enable a quick turnaround in inter-departmental verification processes.
The blockchain-based certificates authentication platform will allow fast entry and corroboration in a multi-participant system, scaling back the compliance hurdles and accelerate decision-making.
Functioning
Each startup recognised by DPIIT will be given four identifiers which are- a certificate number, name of the entity, incorporation number and blockchain ID. Using these credentials, any official stakeholder can have access to the documents or applications submitted by startups.
Under the framework, different departments and bodies will be empowered to use the applications for their regulatory purposes. For example, PSUs can verify certificate authenticity and the income tax department or CBDT can check and validate details before granting tax exemptions. Similarly, the GeM (Government e-Marketplace) can authenticate startup certificates for getting them onboard as vendors.
