India’s startups have outgrown being a niche experiment. They’re hiring people, building products, and scaling fast. The problem was simple: the usual compliance system — repeated inspections, stacks of forms — slows them down. So the Centre and a number of states decided to give eligible startups breathing room.
How? By letting them declare compliance themselves for a fixed period instead of facing routine physical inspections. It’s a practical trade: fewer inspector visits in exchange for clear, auditable declarations filed online. The Shram Suvidha Portal is the central entry point for this, and some states have their own portals and extra rules. Below I explain what the relaxations cover, how long they last, and what each state’s specific rules are.
Labor Law Relaxations
If a startup is recognised by DPIIT and files a self-declaration within its first year, it gets an inspection break under certain labor laws. That declaration goes through the Shram Suvidha Portal. The rule is simple: no complaint, no inspection — up to the stated period.
In year one, the exemption covers six major labor laws. These include the laws dealing with construction workers, inter-state migrant workmen, gratuity, contract labour, provident fund contributions, and employee state insurance. In plain words: several of the laws that most disrupt a new unit’s daily work are moved to a self-declaration basis for the initial setup year.
From year two through year five, the system shifts to self-certified returns. Instead of inspectors turning up, startups file formal returns that cover a broader set of laws — nine labor laws in total. Those nine include the Industrial Disputes Act and the Trade Unions Act, alongside the other laws already noted such as the Contract Labour Act, the EPF Act and the ESI Act. The emphasis is on documented accountability rather than constant on-site checks.
This isn’t a loophole. If complaints are made, or if the written self-certifications are shown to be false, the exemption can be revoked and inspections resumed. The idea is to reduce unnecessary interruptions while keeping worker protections enforceable.
Environment Law Relaxations
Not every startup poses the same environmental risk. The Ministry of Environment, Forest & Climate Change has listed 36 “white category” industries — activities with a low pollution score. Startups in those categories can self-certify under the main water and air pollution laws.
Specifically, the three environmental acts covered are the Water (Prevention & Control of Pollution) Act of 1974, its Cess Amendment of 2003, and the Air (Prevention & Control of Pollution) Act of 1981. Important timing detail: although the general startup window may extend to ten years in some cases, the environment self-certification benefit is limited to the first five years after incorporation. That keeps lower oversight for genuinely low-impact early-stage activity while allowing more scrutiny as the business grows.
Maharashtra
Maharashtra aligns with the central approach but spells out eligibility tightly. To qualify there, a startup must be incorporated in the state as a private limited company, a registered partnership, or an LLP. Turnover must not exceed INR 25 crore in any financial year since incorporation. The general eligibility window is seven years, and for biotech startups it’s ten years.
Maharashtra lets eligible firms file self-certifications for selected compliances and stay free from inspections for seven years. There’s a practical touch: filings can be done via a mobile app or an online portal, which suits small founding teams who can’t spend time on bureaucracy.
Tamil Nadu
Tamil Nadu requires registration under TANSIM — the Tamil Nadu Startup and innovaTN Mission — to access state benefits. The conditions track the usual pattern: incorporation as a private limited, partnership, or LLP; turnover under INR 25 crore in any year; and the seven-year window, extended to ten years for biotech, AI and ML ventures.
What Tamil Nadu adds is a clear split between non-technical and technical compliances. For routine rules — EPFO, ESIC, minimum wages, bonus, gratuity — self-certification is accepted. But where technical safety rules apply, for instance under the Boilers Act or the Factories Act, third-party certification is required. TANSIM also engages in policy advocacy and works to enable faster exits for startups that need to wind down in line with central guidelines.
Rajasthan
Rajasthan goes digital. The Labour Department Management System, LDMS, is the portal where startups apply and submit self-declarations. Once in, the scheme stays valid for five years provided the startup files the annual return. LDMS also supports a single online return that covers multiple labor laws, which reduces repetitive paperwork and saves time.
Andhra Pradesh
Andhra Pradesh focuses on IT and ITeS firms. For these industries, the state allows self-certification under a set of laws relevant to their operations. That list includes the Factories Act, the Maternity Benefit Act, the Contract Labour Act, the Payment of Wages Act, the Minimum Wages Act, the Employment Exchanges Act, and the AP Shops & Establishments Act. In practice this helps tech companies hire and scale without getting bogged down by routine administrative checks.
Others
Big startup hubs such as Delhi and Bangalore have significant venture activity, but currently they don’t offer extra state-specific labor relaxations beyond the central provisions. So startups in those places rely on the national self-certification mechanism.
Our Comments
These relaxations are pragmatic. They swap routine inspection for written accountability, which is a better fit for fast-moving startups. But there are caveats and practical steps every founder should follow.
First, act early. The one-year window to submit the initial self-declaration is real. Miss it and you lose the simplified path. Second, keep records. Self-certification means you must have clean, auditable payrolls, contribution proofs and other documents ready. Third, plan for technical checks. Where third-party certification is mandated, schedule those audits in advance to avoid surprises. Fourth, use the portals. Where states offer single-return or mobile filing, use them — they reduce errors and save time. Finally, treat this relief as a tool not a loophole: statutory obligations like PF, ESI, minimum wages and gratuity still apply.
Used properly these measures reduce administrative burden and let teams focus on hiring and building. Used carelessly they can lead to enforcement action if filings turn out to be false or deadlines are missed. The smart approach is disciplined: use the breathing room to grow, while keeping a tidy compliance record.
