Union Budget 2025-26: Know Which Startups Will Benefit The Most
With the Union Budget 2025-26, the Indian government has made some exciting announcements to boost India’s startup ecosystem and drive innovation. Finance Minister Nirmala Sitharaman unveiled several initiatives to support startups in India.
A Deep Tech Fund of Funds has been proposed to support the next generation of startups. This aims to catalyze growth in the technology sector, create a conducive environment for innovation, and drive India’s economy forward.
Industry leaders have welcomed these initiatives, seeing them as a crucial step towards building a stronger Digital India. Many business leaders have praised the government’s vision of building Viksit Bharat by 2047 with AI and technology.
What is the Deep Tech Fund of Funds?
The Union Budget announced a new Fund of Funds to support startups, with an additional Rs 10,000 crore contribution. This fund expands the scope of existing Alternative Investment Funds (AIFs) for startups, which have already received commitments exceeding Rs 91,000 crore.
The Deep Tech Fund of Funds aims to enhance access to capital for emerging businesses, stimulating innovation and entrepreneurship. Although details are awaited, the fund promises to support agile and creative teams in deep tech sectors. Furthermore, the enhanced credit guarantee cover for startups, increasing from Rs 10 crore to Rs 20 crore, facilitates easier access to funding.
The new Fund of Funds will provide impetus to India’s growing startup ecosystem. The government’s decision to extend the startup incorporation window by five years enables startups incorporated until April 1, 2030, to avail benefits under Section 80-IAC of the Income Tax Act. This initiative supports sectors significant for Atmanirbhar Bharat by improving access to capital and stimulating innovation.
How does the Budget impact the Indian startup ecosystem?
(News link: Big Boost For MSMEs & Startups | Union Budget 2025-26 )
The Budget reinforces the government’s commitment to a business-friendly environment, making it easier for startups and Micro, Small & Medium Enterprises (MSMEs) to access capital, scale operations, and innovate. Here are some of the ways the Budget will impact the Indian startup ecosystem:
1. More Funding & Credit Support
- ₹10,000 Cr Fund of Funds (FFS) will boost startup investments
- Expanded credit guarantees for easier access to capital
2. Extended Tax Benefits
- Startups can enjoy 100% tax holiday for 3 consecutive years within the first 10 years
- Eligibility extended to March 31, 2030, ensuring long-term relief
3. Simplified Taxation for Investment Funds
- Alternative Investment Funds (AIFs) now taxed under capital gains, not business income
- Aligns AIFs with Foreign Portfolio Investors (FPIs) for a stable tax structure
4. Encouraging Innovation & Growth
- Focus on value creation over valuations for sustainable startups
- Stronger support for AI, MSMEs, and deep-tech startups
- Policies that drive self-reliance and business innovation
Ultimately, the budget provides financial stability, tax relief, and growth opportunities, making it a game-changer for India’s startup ecosystem!
Which startups can benefit from the Budget?
The Union Budget 2025-26 provides significant financial and policy support to accelerate growth in several startup sectors. Here are the top five startup sectors that will benefit the most:
1. Deep-Tech & AI Startups
- ₹20,000 Cr Deep-Tech Fund of Funds for AI, quantum computing, and semiconductor research
- 10,000 research fellowships at IITs & IISc to boost R&D-driven innovation.
- Helps Indian startups compete globally in cutting-edge technologies.
2. Fintech & MSME-Focused Startups
- Credit guarantee cover doubled from ₹10 Cr to ₹20 Cr, improving access to capital
- ₹10,000 Cr infusion into Fund of Funds supports fintech lending and MSME-focused financial solutions
- Strengthens digital payments, neobanking, and SME credit platforms
3. Women-Led & Social Impact Startups
- New loan scheme offering ₹2 Cr term loans for five years, benefiting 5 lakh first-time women entrepreneurs from SC/ST communities
- Encourages women-led startups in education, healthcare, and financial inclusion
4. Semiconductor & Hardware Startups
- Deep-Tech Fund of Funds supports semiconductor research, chip manufacturing, and hardware innovation
- Aims to boost India’s self-reliance in electronics and reduce import dependence
5. Green Energy & EV Startups
- Focus on clean energy, sustainability, and electric vehicle (EV) innovations
- Encourages solar, wind, and battery tech startups to drive India’s energy transition
How does the Budget change the future of startups in India?
The Union Budget 2025 introduces key measures to enhance India’s startup ecosystem, focusing on capital access, innovation, digital infrastructure, and regulatory reforms.
In digital infrastructure, ₹15,000 crore for BharatNet will expand broadband in rural areas, enabling startups to grow beyond urban markets. A ₹5,000 crore Digital Innovation Fund will support the development of advanced technologies.
(X post link: Union Budget 2025-26 – Revolutionising the future of startups in India )
Tax reforms, including a reduced TDS on e-commerce and the removal of the equalization levy, simplify compliance for digital businesses. Tax parity between unlisted and listed equities further makes startup investments more appealing.
Overall, the Budget 2025 sets a strong foundation for Indian startups, providing funding, fostering innovation, and simplifying regulations, establishing India as a global startup hub.
How can your startup benefit from the Budget?
The Union Budget 2025-26 presents several key benefits for startups, including increased funding, a deep tech push, simplified regulations, and tax incentives. The FFS will provide much-needed capital to startups, helping them scale and grow. The government’s emphasis on deep tech investments will bolster India’s position in cutting-edge technology development. Regulatory reforms will streamline the operating system for startups, and tax initiatives will encourage investment and growth.
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FAQs:
The Union Budget 2025-26 supports startups through increased funding, extended tax holidays, simplified regulations, enhanced credit guarantees. Additionally it provides funds that give more benefits to women-led startups and deep tech innovations like AI, quantum computing, and semiconductor research.
Tech startups can benefit from the Union Budget 2025-26 through various initiatives. These include enhanced funding of ₹10,000 crore, a dedicated Deep Tech Fund for AI, robotics, and clean energy, and extended tax holidays. Additionally, simplified regulations, support for research and development, and the establishment of a Centre of Excellence for AI in Education will also foster growth and innovation in the tech startup ecosystem.
The Union Budget 2025-26 is expected to benefit startups in sectors such as agriculture, MSMEs, deep tech, clean tech and sustainability, and manufacturing, with a focus on promoting innovation, sustainability, and domestic manufacturing.
